Offshore centers in the international taxation system

It is worth noting that today the system of monitoring domestic pricing contains many omissions and shortcomings and needs to be improved to strengthen the fight against money laundering through tax havens. In addition, our state is not making much effort to increase information transparency in the fiscal sphere and improve the data exchange system to violate tax laws using offshore businesses. The presence of loopholes in domestic legislation and the lack of regulations on cooperation with international institutions and organizations significantly facilitates the process of avoiding responsibility for crimes in the tax sphere and facilitates their concealment. This requires a thorough study of the tools and methods used to evade mandatory payments to the budget through offshore centers.

Today in Ukraine the shadow segment of the economic system is gaining significant momentum (about 50% according to various expert estimates). The main reason is the untimely identification of tax evasion transactions in the following main areas (Fig. 2).

Fig. 2 The main directions of counteraction to evasion of obligatory tax payments in the national economy formed by the authors

Domestic business structures use a wide range of ways to violate tax laws, which usually result in false tax returns and concealment of the real scale of operations and objects of taxation, respectively. This necessitates the construction of effective mechanisms to prevent the implementation of such crimes in the fiscal sphere, which are systematized in Fig. 3. Such a mechanism will make it possible to reduce losses in the revenues of the budget system and perform the functions and tasks assigned to it by the state to ensure the socio-economic development of the country.

Fig. 3 Key schemes and methods of money laundering received as a result of a violation of tax legislation with the help of offshore formed by the authors using [7, p. 85]

Accumulation of funds obtained as a result of certain activities in the shadow sector of the economic system is carried out by underestimating the actual amount of income to significantly reduce the tax base and non-payment of mandatory payments. Offshore centers play a key role in this process, as they greatly facilitate the process of bleaching the proceeds of crime. This is facilitated by: a low or zero tax burden; distribution of the lion's share of tax preferences only to non-resident enterprises operating outside the territory of the tax haven; high level of secrecy of information on banking transactions; only citizens of other countries can register a company offshore; the existence of contracts to eliminate double tax administration; commercial transactions are conducted exclusively with the use of foreign currency funds of external origin; mandatory payment of customs duties.

It should be noted that offshore jurisdictions allow for various types of transactions that are accompanied by significant flows of financial resources. This allows foreign jurisdictions to pay significant or no taxes at all and are more likely to ensure the safety of such abuses.

The main directions in the field of combating evasion of mandatory payments to the budget by Ukrainian enterprises are to improve the domestic regulatory framework for their activities, taking into account the possibility of cooperation with offshore jurisdictions. It is also necessary to strengthen consultations and the practical component with international organizations involved in the fight against money laundering and terrorist financing, as well as to take into account the experience of developed countries in this area. It is advisable to take into account all possible methods and tools available to offshore centers used for tax evasion and to develop appropriate measures to prevent their use, which will avoid large losses in the budget system of Ukraine.

Today, global companies often use mechanisms to erode or disperse the tax base and transfer property and financial results from the field of taxation to offshore zones with the help of their structural units. Under these conditions, large corporations have gained significant competitive advantages in the world by avoiding paying taxes and putting small and medium-sized businesses on the brink of extinction, which is limited in their potential to cooperate with offshore jurisdictions. To reduce the number of such phenomena in the international economy, the OECD in cooperation with several leading countries has developed a comprehensive plan to facilitate the fight against the use of mechanisms to disperse tax bases and transfer financial resources to avoid mandatory payments to national budgets. systems.

The Organization for Economic Cooperation collects and analyzes a significant amount of information to develop recommendations to prevent the erosion of the tax base by companies for member states and is the basis for organizing consultations on financial issues. With the help of this organization, effective mechanisms have been established, the aim of which is to completely stop the use of offshore centers by some countries to attract a significant amount of financial resources into the national economic system, regardless of their origin. As a result of the use of methods of erosion of the tax base, the state budget of Ukraine also incurs significant losses.

Today, the global strategy to combat tax evasion and money laundering is being modernized with the involvement of many nations, as globalization alone will be difficult to overcome. It has become clear that the use of existing methods to prevent such abuse is not effective enough. In addition, several countries have benefited significantly from investing in the national economy of unknown origin, so today it is important to join forces to overcome the growing trends in this area. This is evidenced by the annual aggregate losses of states from corporate income tax evasion of close to $ 240 billion, the main reason for which is the use of international companies' aggressive planning of the number of mandatory payments to budgets.

The OECD, in cooperation with leading countries, developed 2013 a comprehensive program of measures to prevent tax evasion, which includes stricter international standards and outlines special forms of assistance to governments in preventing BEPS (tax erosion and extortion). This plan covered fifteen stages, which are presented in Fig. 4.

Fig. 4 The main stages of the OECD plan to prevent the development of the tax base and the relocation of capital outside the country formed by the authors

In modern conditions, the OECD creates the preconditions for the introduction of all actions envisaged in the concept at the international level by each state and works to improve existing and develop new standards in the fight against concealment of performance. To this end, an innovative mechanism has been developed for the participation of states that have agreed to cooperate in the fight against BEPS, the essence of which is to conduct thorough consultations and negotiations to attract new countries to develop effective measures to prevent violations of national tax laws. The purpose of such cooperation is to increase the level of transparency of the global tax system, and the program itself contains the following proposals: setting standards for other outstanding issues; introducing the general minimum level of standards with the formation of an effective control mechanism; monitoring of current problems in the field of erosion of the tax base, taking into account modern information technologies; creating preconditions for the economic development of OECD member states.

To implement the BEPS plan, the following key areas need to be identified. It is first necessary to adjust the agreements on the prevention of double collection of taxes by concluding the MLI Agreement, which provides for the granting of tax preferences to the business entity, provided that the reality of the business is confirmed. In case of detection of signs of tax optimization or aggressive planning, it is necessary to immediately cancel the benefits provided and return them. Our state also concluded such an agreement, according to which amendments were made to 44 agreements regulating the field of double taxation of financial results.

The next important step in the development of regulations that will apply to foreign businesses operating in Ukraine. They should include requirements for controlled foreign firms to report financial results for tax purposes. Such obligations should create the conditions of the unprofitability of concealment and erosion of the object of taxation and prevent the concealment of capital in offshore jurisdictions. It is also advisable to oblige the citizens of Ukraine to show in the reporting declarations the income they received from their business structures for taxation under Ukrainian law. Under such conditions, the motives for registering a business abroad to withdraw financial resources will disappear.

Strengthening the processes of offshoring of national economic systems today poses a significant threat to the development of individual countries, as they stimulate the outflow of financial resources from the state and create the conditions for tax evasion on a large scale. This situation has given rise to reverse processes at the international level, which have been called «deoffshorization». These processes have not left Ukraine out either, as the amount of money withdrawn from the national economy is estimated at $ 170 billion, and the annual losses from Ukrainian companies' cooperation with tax havens are close to 2% of gross domestic product. Given the large amount of public debt in Ukraine and the difficult socio-economic situation, the problem of deoffshorization is becoming increasingly important today.

The deoffshorization mechanism should include the following sectors:

1. Legislative sector, which forms an effective legal regulation in the field of offshore companies and an effective system of tax collection in the state. This component is responsible for the legal limits of cooperation of Ukrainian companies with international offshore jurisdictions and state fiscal authorities.

2. Motivational sector, which is the main parameter in the national mechanism of deoffshorization. Today, Ukraine is in a difficult socio-political and economic situation, so Ukrainian businesses lack incentives and reasons to return financial resources to the national economic system and stop cooperating with the tax havens of foreign countries.

3. Institutional sector, which includes a set of relationships between the state budget and tax institutions at all levels of the financial system of the national economy.

4. Information sector, which includes the transfer of information at the international level, within the country, between economic entities, etc. The main task of this subsystem is to increase the transparency of information flows at all levels for the government to make effective decisions.

The main purpose of the process of deoffshorization at the international level is to create fair competitive conditions for the circulation of financial resources between different states and to prevent the monopoly of individual countries over others in the field of mandatory payments. The anti-offshore policy also takes into account the legislative, political, administrative, and fiscal components, which in the long run will help achieve economic growth in Ukraine by increasing the business activity of businesses and improving the conditions of business structures.

Thus, an effective regulatory financial policy should be formed in our country, which will help reduce the interest in offshoring taxes and increase the responsibility of taxpayers.

The strategic goals of the state in strengthening financial security are to prevent tax evasion using offshore by implementing the following measures: reducing unpaid taxes and fees using tax havens, preventing the withdrawal of resources from the country, reducing the size of the shadow sector, preventing antisocial behavior, creating a favorable climate for economic activity and the introduction of modern innovative management technologies.

To achieve these, it is necessary to implement the following tasks in the field of financial incentives: to improve the management mechanism for combating tax evasion with the help of jurisdictions; increase the effectiveness of state control over unfair cooperation with offshore business; build an effective institutional component for the implementation of deoffshorization policy; to create interest among taxpayers in conducting legal business; strengthen antitrust measures in the national economic system and improve the investment climate; to create preconditions for the introduction of modern achievements in the field of digital information technologies in all parts of the financial system.

Conclusions from this study and prospects for further exploration in this direction

Thus, the increasing globalization of finance in the world contributes to the accelerated circulation of financial resources and intensified the process of struggle for investment, which has led to the emergence of offshore centers in different countries. The activities of such tax havens have positive and negative aspects of the impact on national economies. The first includes attracting foreign investment, using local infrastructure, using the services of office workers, and more. The latter include tax evasion, withdrawal of capital from the country, and money laundering. It is worth noting that the world's leading countries usually use double standards about offshore jurisdictions and try to get the most out of them and often «turn a blind eye» to the sources of capital.

Література

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2. Васильєва М. О. Офшори як метод оптимізації оподаткування в Україні. Науковий вісник Ужгородського Національного університету. Серія: Право. 2015. Вип. 35. Ч. 1. Т. 2. С. 105-107.

3. Васильців Т. Г., Мульска О. П., Василечко Н. В. Стратегічні пріоритети державної політики протидії ухиленню від сплати податків з використанням офшорних юрисдикцій. Регіональна економіка. 2020. №1(95). С. 113-122.

4. Василечко Н. В., Васильців Т. Г. Сутнісні характеристики, ризики та загрози фінансової безпеки держави внаслідок ухилення від сплати податків з використанням офшорних зон. Ефективна економіка. 2019. №11. URL: http://www.economy.nayka.com.ua/?op=1&z=7451 (дата звернення: 24.05.2022).

5. Замасло О. Т., Козак Д. А. Відмивання «брудних» грошей в офшорні зони: негативний вплив і шляхи його врегулювання. Бізнес Інформ. 2021. №8. C. 140-150.

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8. Красовський В. І. План BEPS як переломний момент міжнародної податкової співпраці: стан та перспективи втілення. Право та інноваційне суспільство. 2019. №1(12). С. 37-42.

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