The transformation of local taxes in the tax system of Ukraine

Original version. invalidation.

Collected from 01.01.2000 to 13.05.2000 Source: summarized by the author.

The analysis of regulations and legal acts approved by local self-government bodies that establish the mechanism for charging a retail and service license fee (http://parus- consultant.com/?doc=03R3147185, http: // consultant.parus.ua/?doc=01SCY7AAFD, etc.) indicates that they were developed under Art. 17 of Decree No. 56-93. In other words, local self-government bodies independently determined the procedure for charging retail and service license fee by relying on the procedure established by the law for charging a retail license fee.

Difference in the terms of legal confirmation of a dog tax.

The local fee under study, in accordance with Decree No. 56-93, was charged from 20.05.1993 to 01.01.2011. However, it was included in the list of local fees, enshrined in the Law of Ukraine No. 1252-XII, as of 20.03.1997 VR by relying on the Law of Ukraine No. 77/97.

Short-term existence of some local taxes. “To attract additional funds to settle the arrears of wages and social benefits for employees of educational institutions of the general secondary education system”, based on the Law of Ukraine dated 17.09.1999 № 1065-XIV, Art. 1 of Decree No. 56-93 was supplemented with the following paragraph: “a fee for the right of business entities to use premises located in the central part of the settlement and buildings that are monuments of history and culture” and Art. 17-2, which determined the procedure for its collecting. The fee was effective from 01.01.2000 to 13.05.2000. Due to the abolition of the Law of Ukraine No. 1065- XIV, para. 19 of Art. 1 and Art. 17-2 (the Law of Ukraine No. 1661-III dated 20.04.2000) were excluded from Decree No. 56-93.

Let's pay attention to the fact that the Verkhovna Rada of Ukraine, deciding to make the above additions to Decree No. 56-93, ignored the need to amend the interrelated document - the Law of Ukraine No. 1252-XII. Consequently, the relevant local fee could not be collected because it had not been introduced into the tax system of the state.

In addition to the above fee, there was another short-term local fee in the domestic tax system.

Pursuant to the Law of Ukraine No. 1805-III dated 08.06.2000, para.1 of Art. 15 of the Law of Ukraine “On the Taxation System” was supplemented with [26] sub-para. 15, and Art. 1

of the Decree “On Local Taxes and Fees” - with paragraph 20: “excursion and tourist fee”. The decree was also supplemented with Article 17-2, which defines the payers and the maximum fee amount. The excursion and tourist fees were available from 01.01.2001 to 26.06.2001. It was canceled by the Law of Ukraine dated 07.06.2001 № 2515-111.

Local taxes collected during the taxation experiment

Analyzing the legal regulation of local taxes, one cannot disregard the taxes that were collected from 2003 to 2006 solely on the territory of the Autonomous Republic of Crimea (ARC). “Given the specifics of the socio-economic development of the region”, the taxes were introduced by the Verkhovna Rada of the Autonomous Republic of Crimea (VR of the ARC) in agreement with the Cabinet of Ministers of Ukraine.

Pursuant to Art. 39 of the Law of Ukraine No. 380-IV dated 26.12.2002 “On the State Budget of Ukraine for 2003”, resolution No. 434-3/03

dated 19.02.2003 of the VR of ARC approved four provisions that establish the mechanism for the collection of the following local fees in the Autonomous Republic of Crimea: 1) for the development of municipal public transport; 2) resort; 3) for the development of the recreational complex; 4) from the owners of real estate for the use of engineering infrastructure and improvement of cities and settlements.

However, on May 28, 2003, the Cabinet of Ministers of Ukraine decided “to agree with the proposal of the Verkhovna Rada of the Autonomous Republic of Crimea relating to the introduction of local fees in 2003 as an experiment, i.e., the fee for the development of the recreational complex in the Autonomous Republic of Crimea and the fee for the development of passenger e-transport in the Autonomous Republic of Crimea” (Resolution of the Cabinet of Ministers of Ukraine dated 28.05.2003, No. 875). That kind of parliament decision encouraged the VR of the ARC to make specific amendments to the prior resolution No. 434-3/03 dated 19.02.2003 (see sub-paras. 1.3--1.4, para. 1 of the Decree of the VR of the ARC as of 05.06.2003 No. 587-3/03). Consequently, the mentioned statutory act was expanded by para. 301, and para. 30 was recognized as invalid. Thus, the Regulation on the fee for the development of the recreational complex in the ARC and the Regulation on the fee for the development of passenger e-transport in the ARC were approved.

Initiated in 2003, the experiment on collecting the abovementioned two local fees in the ARC, based on the Law of Ukraine No. 1344-IV dated 27.11.2003 and the Resolution of the CMU No. 875 dated 28.05.2003, lasted until 01.01.2005.

During the experiment, the concept of “tax agent” was used for the first time - its definition was also enshrined. Thus, para. 4.1. para. 4 of the Regulation on the fee for the development of the recreational complex in the AR of Crimea determined that “the fee is collected by tax agents - legal entities or individuals who, regardless of their organizational and legal status and their methods of payment of other taxes, are obliged under this Regulation to accrue, deduct or collect and pay the fee to the budget on behalf and at the expense of a taxpayer, to keep tax records and submit tax reports to tax authorities following the current legislation, as well as to be responsible for violation of the provisions of this Regulation”.

The normative legal acts regulating the procedure for collecting the aforementioned local fee enshrined their intended use. Thus, tax revenues from the fee for the development of the recreational complex, which was collected from organized holidaymakers and unorganized holidaymakers who arrived in the Autonomous Republic of Crimea in their vehicles, were to be allocated to implement joint projects with local governments for the development of resort cities, finance activities related to reconstruction, maintenance of the infrastructure of the resort and tourism complex and preparation for the resort season, and obtained revenues from the fee, which was collected from other unorganized holidaymakers, to cover the costs specified by local councils during the approval of budgets for the relevant year.

The fee for the development of passenger electric transport was an additional source of funds for developing public transport, first of all, intercity passenger electric transport, the purchase of school buses. As you can see, the statutory purposes of the concerned local fee were not fully consistent with its name.

The procedure for collecting fees defined the budget type for their crediting, payment name, and the code of income budget classification (Table. 3).

At the same time, the order of the Ministry of Finance of Ukraine (MFU) No. 441 dated 09.07.2003 additionally introduced code 16011800 “Fee for the development of a recreational complex in the Autonomous Republic of Crimea and code 16011900 “Fee for the development of passenger electric transport in the Autonomous Republic of Crimea” into the systematized grouping of income (Order of the Ministry of Finance of Ukraine No. 604 dated 27.12.2001 “On Budget Classification and its Implementation”).

As we can see, the MFU did not fix a budget classification code for analytical accounting of revenues from the fee for the development of the recreational complex in the ARC. However, the VR of the ARC did not amend sub-paras. 4.7-4.8 of the normative legal act establishing the procedure for the collection of the relevant fee throughout the period of its validity.

During the study of the legal regulation of the collection of the fee for the development of the recreational complex and the fee for the development of passenger electric transport in the ARC, it was found that the experiment on their collection in the ARC was not agreed with the Cabinet of Ministers of Ukraine after 2004. In addition, the fees were administered in the ARC throughout 2005 and for some time in 2006.

Therefore, there raised a logical matter of the legal grounds for conducting a taxation experiment in the Autonomous Republic of Crimea. It is known that:

Only the laws of Ukraine establish the taxation system, taxes, and fees. From 01.04.1994

Table 3

Conditions for the transfer of local fees approved by the Verkhovna Rada of the Autonomous Republic of Crimea

`The fee is paid by unorganized holidaymakers who arrived in the Autonomous Republic of Crimea in own vehicles.

Source: summarized by the author by relying on sub-paras. 4.7-4.8, para. 4 of the Regulation on the fee for the development of the recreational complex in ARC, and sub-para. 6.2, para. 6 of the Regulation on the fee for the development of passenger electric transport in the ARC.

To 01.01.2011, the role of that kind of a legal act was the Law of Ukraine “On the Taxation System”. Art. 1 of the Law determined that “taxes and fees (mandatory payments), the payment of which is not prescribed by this Law, are not payable” (from 2o.03.1997 to 17.02.2000) and “any taxes and fees (mandatory payments) introduced by the laws of Ukraine must be included in this Law” (from 20.03.1997 to 01.01.2011).

The Budget Code of Ukraine (BCU) in force at that time enshrined that tax revenues are considered only “... local ... fees stipulated by the tax laws of Ukraine” (para. 2 of Art. 9) and regulated the indicators and provisions of the law on the State Budget of Ukraine (para. 2 of Art. 38). According to the BCU, the mentioned law cannot make changes in the tax system and amend the powers of the Cabinet of Ministers of Ukraine.

The Autonomous Republic of Crimea is authorized, pursuant to the legislation of Ukraine, ... to conduct taxation experiments, set local taxes and fees, ... exercise other powers in the field of taxation” (Constitution of the Autonomous Republic of Crimea dated 23.12.1998). The Constitutional Court of Ukraine [decision No. 1-rp/2003 as of 16.01.2003 (case No. 1-3/2003)] recognized the provision of the Constitution of the Autonomous Republic of Crimea, approved by the Law of Ukraine “On Approval of the Constitution of the Autonomous Republic of Crimea” as of December 23, 1998, as complying with the “Constitution of Ukraine (constitutional): “in accordance with the legislation of Ukraine ... conducting taxation experiments”.

The list ofissues in respect ofwhich the Autonomous Republic of Crimea carries out statutory regulation is enshrined in Art. 137 of the Constitution of Ukraine (Constitution of Ukraine dated June 28, 1996, No. 254k/96-BP) -taxation issues are out of its scope.

“Normative legal acts of the Verkhovna Rada of the Autonomous Republic of Crimea ... may not contradict the Constitution and laws of Ukraine and are adopted in accordance with the Constitution of Ukraine, laws of Ukraine, acts of the President of Ukraine and the Cabinet of Ministers of Ukraine and for their implementation” (Constitution of Ukraine dated June 28, 1996, No. 254k/96-VR).

In view of the above, we must state that the Verkhovna Rada of the Autonomous Republic of Crimea, having set local fees on the territory of the ARC that are not prescribed by the laws of Ukraine and having approved the regulations governing the procedure for their collection, exceeded its authority.

Thus, violations of the above rules called into question the legality of the experiment on collecting local fees in the ARC.

By the way, in 2006, the Commercial Court of the ARC declared para. 30.1 of the Resolution of the Verkhovna Rada of the Autonomous Republic of Crimea No. 434-3/03 dated 19.02.2003 “On the Budget of the Autonomous Republic of Crimea for 2003” illegal and invalid: it concerns the part of the approved Regulation on the fee for the development of passenger electric transport in the Autonomous Republic of Crimea (15.03.2006, case No. 2-28/5895-2006A [45]) and the part of the Regulation on the fee for the development of the recreational complex in the AR of Crimea (Resolution of the Commercial Court of the Autonomous Republic of Crimea dated 17.08.2006, case No. 2-10/11684-2006A).

The Sevastopol Commercial Court of Appeal dismissed the appeals of the VR of the ARC and upheld the above rulings of the Commercial Court of the ARC (Rulings of the Sevastopol Commercial Court of Appeal dated 22.05.2006, case No. 2-28/5895-2006A and dated 15.11.2006, case No. 2-10/11684-2006A). The Verkhovna Rada of the Autonomous Republic of Crimea, in accordance with the procedure established by law, did not appeal the court rulings.

However, despite the fact that the aforementioned court rulings of the Sevastopol Commercial Court of Appeal entered into force on November 30, 2006, the Parliament adopts the Law of Ukraine No. 398V, sub-para. 8, para. 3 of the final provisions of which, in 2007, “extended the experiment on the introduction of some local fees consolidated in 2003 by the Verkhovna Rada of the Autonomous Republic of Crimea in agreement with the Cabinet of Ministers of Ukraine (fee for the development of the recreational complex in the Autonomous Republic of Crimea and fee for the development of passenger electric transport in the Autonomous Republic of Crimea)”. In this regard, the order of the Cabinet of Ministers of Ukraine dated 07.02.2007, No. 36-r instructed “the Council of Ministers of the AR Crimea ... to quarterly inform the Ministry of Finance about the experiment's progress, the receipt of funds to the budget and their use”. It should be noted that, the resolution of the VR of the ARC No. 315-5/06 dated 28.12.2006 annulled the legal acts establishing the procedure for collecting the relevant fees in 2007. Based on the information provided by the State Tax Administration in the Autonomous Republic of Crimea (the letter of the State Tax Administration in the Autonomous Republic of Crimea “On Regulation of the Recreational Fee” dated 18.10.2007 No. 1206/G/15-3), throughout 2007, that is, at the time of adoption of the CMU order, both fees were not collected.

Regulations on the fee for the development of the recreational complex in the Autonomous Republic of Crimea and Regulations on the fee for the development of passenger electric transport in the Autonomous Republic of Crimea became null and void pursuant to the decree of the VR of the ARC dated 16.01.2008 № 728-5/08.

Thus, due to the study of legal acts regulating tax relations, the author holds that from 01.01.2004 to 31.12.2010, the tax system of Ukraine included (Table. 1) 12 local fees, of which five were subject to mandatory collecting (a fee for vehicle parking, a market fee, a housing allocation fee, a fee for a trade and service license, a dog tax). Village, settlement, and city councils decided to set local fees, the list of which was enshrined in para. 2 of Art. 15 of the Law of Ukraine “On the Taxation System”; developed and approved the collection mechanism for each established fee guided by the relevant norms of Decree No. 56-93.

Local fees collected on the basis of the Tax Code of Ukraine

With the enactment of the Tax Code of Ukraine, the powers of local self-government bodies in terms of establishing local taxes have been preserved in full, while the list of local taxes has changed. Three local fees began to be administered from 01.01.2011, namely: a vehicle parking fee, a tourist fee, and a fee for a business license (Table 4). The latter was mandatory for establishment by local self-government bodies and was collected until 01.01.2015. The fee for a commercial activity license was excluded from the tax system due to the entry into force of the Law of Ukraine dated 08.12.2014 No. 71-VIII, which modified para. 10.2 of Art. 10 and Art. 267 of the TCU.

As you can see (Tables 1-3), the parking fee has been collected since 20.05.1993 until the present. However, during this time, not only the mechanism of its collection changed, but also the name: from 01.04.1994 to 20.03.1997 - parking fee, from 20.03.1997 to 01.01.2011 - automobile parking fee, from 01.01.2011 and until now - a vehicle parking fee.

Table 4

Types of local fees under sub-para. 10.2 of Art. 10 of the Tax Code of Ukraine

The TCU text as of the following date

Tourist fee

Source: summarized by the author.

Conclusions

The mechanism of collecting local taxes, which started working after the proclamation of Ukraine's independence in 1991, is constantly developed and being improved. The Verkhovna Rada of Ukraine Legal adopt acts which regulate tax relations and have the status of a law. However, there is the case of the Parliament's delegation of its legislative powers to the Cabinet of Ministers of Ukraine. As a result, the Gov-ernment adopted the Decree “On Local Taxes and Fees” which laid the groundwork for the collection of local taxes. The process of application of delegated legislation was accompanied by hasty decision-making: the delegation of powers by the Verkhovna Rada of Ukraine to the Cabinet of Ministers of Ukraine and the beginning of their implementation by the latter took place before amending the Constitution (Basic Law) of Ukraine; the Parliament adopted two laws of Ukraine, different in name and content, which had the same number that subsequently adversely affected modification of one of them.

From01.10.1994 until the adoption ofthe Tax Code of Ukraine, the tax system included 12 local fees, of which 5 were subject to manda-tory charging. Amendments to their structure, simultaneously enshrined in the Law of Ukraine “On the Taxation System” and the Decree “On Local Taxes and Fees”, resulted in the non-identity of the names and terms of fixing individual local fees. The tax system of that period was characterized by the short-term existence of some local fees, which were introduced to attract additional funds to local budgets. For the same purpose, during 2003-2006, an experiment on fee collection was carried out on the territory of the Autonomous Republic of Crimea. In the normative legal acts regulating the procedure for collecting the fees in the ARC, the intended use of their tax revenues was established and the legal consolidation of the concept of “tax agent” was implemented for the first time. The modern tax system has two local fees. The local self-government body decides on their collection in a particular territory.

A retrospective analysis of the legal regulation of the collection of local fees in Ukraine has allowed concluding that the rulemaking process requires the following: 1) to improve the coordination of actions of legislative and executive authorities; 2) to take into account the norms enshrined in interrelated documents; 3) executive authorities to comply with the limits of tax authority established by law.

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