VAT administration in Ukraine: current state, challenges, and directions for improvement

Abstract

The article is devoted to the study of value-added tax (VAT) administration as one of the key instruments for forming the revenue side of the state budget of Ukraine and regulating economic processes. The essence of VAT is revealed as an indirect tax included in the price of goods and services and paid by the final consumer but administered by business entities. Special attention is given to analyzing scientific approaches to interpreting the nature of VAT and the importance of its effective administration for the stability of the state’s financial system.Based on statistical data, the dynamics of VAT revenues to the state budget are analyzed, revealing general trends of tax revenue growth and structural changes under the influence of martial law, economic instability, and fluctuations in foreign economic activity. The sectoral analysis demonstrated the uneven recovery of economic activity: faster development in agriculture, industry, and trade, while the construction sector experienced a slowdown.The main problems of VAT administration are identified — complexity of accounting, frequent legislative changes, corruption risks, tax evasion schemes, and technical failures in electronic systems. It is shown that the introduction of electronic administration and automated inspections has increased the transparency of processes, although further improvement is still required. Directions for reforming the administration mechanism are proposed, including simplification of procedures, legislative stability, harmonization with European norms, expansion of automation, and strengthening control over high-risk operations. The implementation of these measures will contribute to strengthening tax discipline, reducing the shadow economy, and ensuring stable budget revenues even under wartime and economic challenges. Based on the generalization of theoretical provisions and practical aspects, a concept for improving the VAT administration mechanism is proposed, aimed at enhancing the efficiency of tax collection and reducing tax risks. The concept is based on the following key directions: digitalization and automation of tax processes, harmonization of legislation with EU norms, strengthening control over VAT reimbursement and taxpayer accountability, as well as simplifying administration for businesses. The obtained results have practical significance for improving state tax policy and enhancing the efficiency of financial control in Ukraine.