Economic-Analytical Tools for Taking Management Decisions on Tax Optimization for the Ukrainian Business

Abstract

The article is devoted to the issue of economic justification for management decisions on tax planning at Ukrainian enterprises. The research objective is to elaborate an approach to comparative analysis of tax alternatives, which would account for the specifics of the national tax environment and the resource capacities of businesses. A review of scientific approaches to the efficiency assessment of tax strategies was made, with showing the need to adapt the methods of investment analysis, multicriteria selection, and risk management to the Ukrainian context. The proposed approach, based on a phased algorithm for taking tax-related decisions, encompasses verification of legislative requirements, quantitative assessment of the efficiency (by NPV, profitability, and tax burden indicators), risk analysis and accounting for industry- and size-specific features of enterprises. Three principal approaches to tax strategy assessment of were analyzed: accounting-based, market-based, and monetary; their advantages and limitations were revealed. A set of indicators measuring the efficiency of tax decisions was constructed, combining quantitative and qualitative indicators and assuring the reliability of assessment. Applications of the methods for scenario analysis, sensitivity analysis, benchmarking, and cost-benefit comparison were analyzed. Special emphasis was placed on the tax planning specifics for enterprises across three sectors (IT, trade, and services), with reference to the current norms of the Tax Code of Ukraine. Simplified analytical tools were recommended for small enterprises, multicriteria assessment models for medium ones, and complex algorithms using computerized systems for large ones. It is argued that the efficiency of tax decisions is largely dependent on the stability of regulatory environment, the quality of accounting information, and the capabilities for forecasting monetary flows. The author provides a set of guidelines for practical applications of economic and analytical tools for tax planning, which can be used by enterprises of various sizes and property forms. Results of this work, being of applied nature, aim to make tax-related management decisions better informed.