Tax control in e-commerce in Ukraine and the EU

Abstract

Problem setting. Tax authorities face a number of significant challenges in the area of tax control of e-commerce. One of the key challenges is determining the jurisdiction for taxation, as a significant number of electronic platforms operate in several countries simultaneously, making it difficult to determine the country in which taxes are due. An additional challenge is the tracking of financial transactions, which are increasingly conducted using cryptocurrencies, digital platforms or mechanisms that ensure data confidentiality.

Analyses of recent researches and publications. The study of certain aspects of e-commerce taxation in Ukraine and the EU has been carried out by such domestic scholars as: I. Balabanov, A. Bereza, N. Boreiko, L. Goncharenko, O. Dmytryk, K. Yefremova, A. Koren, M. Krutko, T. Tatarova, L. Tovkun, K. Solodan and others. However, the problems of tax control in the e-commerce market faced by the authorised tax authorities have remained almost unaddressed by scholars.

Purpose of research is to study the legal framework and tax control measures, to analyse the main challenges related to taxation of e-commerce of domestic companies in Ukraine and the EU, and to identify the ways to harmonise Ukrainian tax legislation with the norms of European.

Article’s main body. The article examines the peculiarities of tax control in the field of e-commerce in Ukraine and the EU, focusing on the challenges and the need to implement European practices. The author analyses the impact of digital transformation on tax administration, in particular in the context of cross-border transactions, which complicate the determination of jurisdiction for taxation. Modern approaches to the taxation of electronic services and transactions, including the implementation of OSS and IOSS systems in the EU, are highlighted. The study examines challenges Ukrainian companies operating under European jurisdiction face, particularly regarding VAT applications. Special attention is paid to the legal aspects of registration and reporting of non-resident companies providing electronic services in Ukraine. The article suggests ways to harmonise Ukrainian tax legislation with European norms, in particular through the introduction of tax control automation and data exchange between countries.

Conclusions and prospects for the development. The author defines a set of tax control measures carried out by tax authorities with a view to ensuring correctness of calculations, timely receipt and completeness of payment of taxes as a result of digital trade, in particular: registration of business entities as taxpayers; introduction of special mechanisms for taxation of digital services (the principle of digital presence), monitoring of payment transactions; establishment of requirements for disclosure of information by electronic platforms at the legislative level; automation of tax control; international data exchange. The author concludes that there are insufficient standards for monitoring digital transactions at the international level.