Experts from the Financial Monitoring Group of the Central Reform Office under MinRegion provided an analysis of the requirements to local self-government decisions regarding local taxes and fees.
One of the main principles of successful state development is an efficient and operative system of local self-government. In order to ensure the fulfillment of its functions and create of a proper living environment for hromada’s population, local self-government bodies should have sufficient financial resources with funds of the corresponding budgets as their basis.
Local taxes and fees are one of the important sources of local self-government budget revenues. Increase of the role of local taxes and fees, as well as their share in local self-government revenues, is one of the main tasks of the state financial and budget policy.
According to the results of 2017, the share of local taxes and fees in the structure of own revenues of all local budgets of Ukraine amounted to 27.3%, and the budgets of amalgamated hromadas by means of local taxes and fees formed almost 32% of the revenue part of their budgets.
In future it is expected that due to the available tools and interest of local self-government bodies, the share of local taxes and fees will increase in obtaining additional resources.
One of the important aspects to be addressed is a clear compliance with legal procedures when fixing local taxes and fees. Undoubtedly, the Tax Code of Ukraine, which regulates all relations arising in the field of collection of taxes and fees, is the main document in this domain.
As the result, the following situation emerges:
Therefore, the best option is to make a decision on the establishment of local taxes and fees, with the definition of all mandatory elements of the tax, which should take into account the form of annexes to the typical decisions, determined by resolution No 483. It should also be noted that resolution No 483 approved the forms of annexes only for the purpose of fixing the rates and providing privileges for payment of land tax and real estate tax, other than the land plot. Regarding other local taxes and fees (single tax, transport tax, tourist fee, parking fees for vehicles), the local councils determine the form of the decision independently, observing the abovementioned requirements of the Tax Code of Ukraine.
The materials were prepared by the Expert Group on Financial Monitoring of the Central Reform Office under MinRegion (with the support of the U-LEAD with Europe Programme) – Yanina Kazyuk, financial decentralisation coordinator, and Viktor Ventsel, financial monitoring expert.
The full version is available in Ukrainian – please click HERE
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