Tashkent Financial Institute
ISSN (печатный вариант): 2073-0071
tax incentives, preferences, taxpayers, mechanism of the functioning of tax incentives, state regulation of the economy/
In this paper analyzed using of tax incentives in the current conditions. Identified shortcomings and problems of the mechanism of tax incentives, as well as proposed measures for the effective use of tax incentives.
As it is known, the term of "tax incentives" appears in many works of scientists and economists legislation. Tax incentives are presented to some categories of taxpayers, advantages of taxpayer compared to other categories which provided by tax legislation, including the possibility of not paying tax payments or payment in the small amount. These definitions reflect the essence of the concept of tax incentives and the mechanism of their functioning only as an element of taxation, but this definition narrows the understanding of the tax incentive as an economic category. In the above definition, tax incentives are not examined as a tool of regulating function of taxes. Current tax system includes about 500 different types of tax incentives and privileges. On the base of the empirical analysis, introduction of new tax incentives will not change (to get best results) the economic situation in the country. It is necessary take into account advisability of existing and newly introduced tax incentives. For this reason we need to evaluate the effectiveness of tax incentives, by continuously monitoring them. We will divide tax incentives into some groups according to their objective goals (Table-1). Table 1 Typical Tax Incentives Type of tax incentives Definition and meanings Tax holidays Temporary exemption of a new firm or investment from certain specified taxes, typically at least corporate income tax. Sometimes administrative requirements are also waived, notably the need to file tax returns. Partial tax holidays offer reduced obligations rather than full exemption. Special zones Geographically limited areas in which qualified firms can locate and thus benefit from exemption of varying scope of taxes and/or administrative requirements. Zones are often aimed at exporters and located close to a port. In some countries, however, qualifying companies can be declared “zones” irrespective of their location. Investment tax credit Deduction of a certain fraction of an investment from the tax liability. Rules differ regarding excess credits (credits in excess of tax liability) and include the possibility that they may be lost, carried forward or refunded. Investment allowance Deduction of a certain fraction of an investment from taxable profits (in addition to depreciation). The value of an allowance is the product of the allowance and the tax rate. Unlike a tax credit, its value will thus vary across firms unless there is a single tax rate. Moreover, the value is affected by changes to the tax rate, with a tax cut reducing it. Accelerated depreciation Depreciation at a faster schedule than available for the rest of the economy. This can be implemented in many different ways, including a higher first year depreciation allowances, or increased depreciation rates. Tax payments in nominal terms are unaffected, but their net present value is reduced and the liquidity of firms is improved. Reduced tax rates Reduction in a tax rate, typically the corporate income tax rate. Today there are many evaluation methods of economic efficiency of the tax incentives, which are used on the basis of economic, social and budgetary efficiency. In our opinion, absence of unified and generalized system of indicators to evaluate effectiveness of tax incentives, which fixed at the legislation, complicates the application tax incentives as a tool of the tax system. By the giving tax incentives on various levels of management leads to decrease in budget revenues, according to this arises necessity of the effectiveness of tax incentives for making decisions on the extension or termination of existing incentives. As is known, the analysis of the effectiveness of tax incentives carried out at the state level and there wasn’t analysis in the municipal level. On this basis, existing diversity of tax incentives did not bring expected effectiveness, and in many cases tax breaks are used as a means of minimizing taxation, which leads to decrease of budget revenues. Despite of this, a role of tax incentives in improving the fiscal capacity is crucial. For exacting analysis of the effectiveness of tax incentives needs further monitoring of the using of tax incentives. At the moment the current evaluation mechanism of tax incentives did not meet modern requirements, since it has some shortcomings and problems: - the absence of statutory established mechanism of tax benefits that would expand the powers of local representatives in the development and using of tax incentives; - there are many different type of valuation methodologies of tax incentives to the regions and sectors of the economy; - the absence of integral evaluation mechanism of tax incentives for branches of economy depending on the specifics of their activities; - the absence of single complex financial indicators for the analysis of the effectiveness of existing tax incentives. The above mentioned problems are not allowed to make a clear idea of the analysis of tax incentives, to conduct it as planned action and as an element of regulation of the tax system of the country. A modern method of evaluating the effectiveness of the using of tax incentives should allow for a comprehensive analysis of the effectiveness of the tax incentives and the achievement of their introduction, to optimize the list of tax incentives by avoiding opportunities for tax minimization. We believe that, for effective using of tax incentives, necessary following measures: - It is very crucial strengthening of the methods for determining the parameters of the budget effectiveness of tax incentives, as well as value terms of tax incentives; - Tax incentives should be provided on the results of the analysis of its effectiveness; - Also, effectiveness of tax incentives should be based on the potential to supplement the budget as a result of the growth of economic indicators. In our opinion, if the above stages of using tax incentives meet all the above parameters, tax system of the country begins functioning more efficiently, and consequently budget receive more income in the form of taxes and mandatory payments, as well as encourage and support various industries of the economy.
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