Problem

The tax authorities are responsible for performing the fiscal function, but the prioritization of this particular function of the tax authorities leads to a number of problems.
For example, in the past, the authorities that conducted pretrial investigations of financial crimes exerted unreasonable pressure on taxpayers by sanctioning them for violations of the law. For a long time, financial crimes had been investigated by several agencies, including the Security Service of Ukraine, the National Police, and the Tax Police, which led to overlapping powers of these bodies and excessive pressure on taxpayers. The situation changed after the establishment of the Bureau of Economic Security, but there are a number of problematic aspects in the activities of this agency, which may not foster a high level of public confidence in its activities.
In addition, another problematic aspect is that in order to reflect the high growth of additional tax revenue to the budget, the tax authorities use all possible measures, including sanctions, to put pressure on taxpayers and in this way properly perform their fiscal function. At the same time, tax officials pay much less attention to preventive measures. This leads to a number of negative consequences, including corruption risks, which give rise to situations in which agreements have to be reached in order to avoid prosecuting the taxpayer; conflicts between taxpayers and tax authorities; taxpayers develop distrust of the tax authorities; a declining number of taxpayers who voluntarily pay taxes.
A low level of activity is observed when it comes to providing generalized tax consultations because the tax authorities prefer to provide consultations through a publicly available information and reference resource, since it, unlike generalized tax consultations, does not formally have any legal force. In addition, this leads to a lack of understanding and the formation of a unified approach to certain problematic issues that are not regulated by law, but for which there are no clarifications from the tax authorities or generalized tax consultations. In this case, the local tax authorities have discretionary powers when considering such situations – they can apply different approaches that will significantly affect the tax implications for taxpayers. Accordingly, the presence of discretion in such situations entails corruption risks.