PRECONDITIONS AND ECONOMIC EXPEDIENCY OF OFFSHORE AREAS IMPLEMENTATION IN UKRAINE

Kobushko Igor, PhD, Docent of chamber of finance,

Panchenko Sergiy, 5th year student

SumyStateUniversity, Sumy, Ukraine

Themostimportantfeatureof modern economic development is a globalization, which is shown in the increase of dependence between separate countries. Permanent considerable volumes of counter flows of goods, services, capitals and scientific innovations became an external feature of this process. In the middle of XX century in the international practice there was implemented a new financial instrument, known as international tax planning. Creation of offshore areas in different countries became a precondition of this process.

Offshore area is a kind of free economic area. It referrers to free service economic areas, which are characterized by creation of positive financial, cash and fiscal regimes, high level of bank and commercial secrecy, loyalty of state regulation to enterprises. In general these are the countries, which participants of financial and credit operations are non-residents of the country, where contracts are signed and realized. At the same time participants have a special legal and tax status, but an important feature in this process is prohibition by offshore companies for any activity at the territory of registration country [1].

By means of offshore areas there can be reached:

  • Optimalfinancingofowninvestmentprojects, creationanddevelopmentofworkingcapital, alsobymeansofnonproductiveexpensesdecrease (includingtax expenses);
  • Freeinternationalmovementofcapital;
  • Anonymityofownershipandmanagement of property, finances and business in general;
  • Implementationof “comfortableflag” principleforbusinessandattainmentofoptimalconditions, formed by legislation,forcommercialoperations [2].

Wideuseofoffshorezonesinbusinessleadscountrieswithdifferentlevelofsocialandeconomicdevelopmenttonecessityofformationoffirmpositionconcerningthisphenomenon.Decisions can be different: from restriction of foreign offshore areas practice to creation of offshore centre at the own territory.

An idea about creation of native “tax paradise” appeared in Ukraine a long time ago. Concerning the place of such an offshore area, there can be chosen some possible regions – Chernobyl (almost the only region in Ukraine, which is known or at least recognized by foreigners, and which has its special “history”), Crimea region (nearness to the sea, in the center of sea routes), Carpathian region (center of Europe).

ThuspossibleprofitsfromfunctioningofanoffshoreareainUkrainecanbethefollowing: statetaxincaseofregistration; statetaxfromthesumofreportedstatutorycapital; minimaldeterminedincometax; paymentforadministrativeservices – secretary, registrationoffice, nominaldirector (residentofUkraine), paymentforreportpreparation, etc.

But there also exist problems in the process of Ukrainian offshore creation:

  • Firstly,fornormalfunctioningtheremustbebrokendistrustofforeigninvestors, whichappearedintheyearsofUkrainianindependence.
  • Secondly,possibleownersofenterprisesin “Ukrainianoffshore” areworriedbystrictattentionofUkrainiancontrollingbodiestoactivityofenterprises’ activity.

ExceptformentionedproblemsofsubjectivecharacterthereexistalsoobjectiveobstaclesforlifeofUkrainianoffshoreinaninternationaleconomicspace, which are connected with acceptance by national legislation of international right for offshore relations regulation.

Offshoreareais a specificinstrumentofinvestmentactivitystimulationandincreaseofinflowstobudgetsofdepressedterritories, whicheconomiceffectisbasedonthephenomenonofstateprofitsincrease, owingtoenlargementoftaxbasis (usage of its peculiar profit type, got only from international activity) and minimization of tax pressure size. Profits of offshore business are nearly the half of state budgets volume.

This investigation showed clearly, that an offshore organization is an effective method of increase of international economic operations profitability, as it helps to save considerable sums by means of taxes. Quite this item and also almost absence of state control over the activity of organizations with offshore capital, conditioned their widening in business practice of all countries in the world.

References

  1. KoseD.D. Placeoflegalregimeofoffshoreterritorytaxationinthesphereofeconomicrelationsregulation // Magazine of Kyiv university of law. – 2008. - №1
  2. Garasiyk О. Somequestionsofoffshorecompaniesandzonesactivity //Formation of market relations in Ukraine. Edition 7. - Kyiv, 1999.
  3. OfficialwebsiteofKyivAuditAgency, article «Offshore: made in Ukraine?»