Tax Credits as a Form of Public Assistance to Business Entities

Abstract

Problem setting. The article reveals the correlations features of the definitions of “public support” and “public assistance”. Various approaches to determining the content of tax credits in financially-legal science are analysed. Particular attention is paid to establishing signs of tax credits as a form of public assistance to business entities.

Analysis of recent researches and publications. That issue, it should be noted, was investigated by different scientists, including Y. Y. Shaptala, L. K. Voronova, D. A. Kobylnik, V. I. Gureev, N. P. Kucheryavenko. The target of the article is to consideration the concepts of “public support” and “public assistance” to business entities. It is also about analyzing of tax credits as one of the common means of public assistance to business entities.

Article’s main body. Based on the analysis of acts of commercial legislation we can conclude that the concepts of public support” and “public assistance” are not identical. They differ in content. Public assistance is narrower in content and involves only financial assistance – the transfer of funds accumulated in the relevant budget or from other state or local resources, as well as the loss of revenues of the respective budgets. Public support is a broader category, encompassing any support from business entities other than financial support. In particular, it is information, advisory and organizationalmanagement support.

The support of business entities through the application of tax credits is to reduce the amount of tax payments to be paid by the taxpayer, or in the absence of any obligation to pay the corresponding payment. Through the establishment of tax credits, the state aims to improve the position of the persons concerned and to provide a more favorable regime for the attainment of its public interests. It is possible to talk about the tax credit right as an element of the taxpayer’s legal status.

At the same time, there are no effective mechanisms (procedure, grounds) for refusing the subject from such state support or suspension of tax credits in practice. In our opinion, the lack of appropriate regulatory provisions on the above issues does not allow taxpayers to fully exercise their rights. In fact, in such an approach, the entity must either use clear legislative provisions regarding the application of tax credits, or “keep its support rights and tax incentives with itself”, since the current tax law is currently conflicting and inconsistent.

Conclusions and prospects for the development. Therefore, tax credits are tax element; element of taxpayer’s legal status. Thanks to them it is possible to provide: a combination of formal and actual equality of taxpayers in taxation; support for business entities that results in a reduction in the amount of tax payments to be paid by the taxpayer, or in the absence of any obligation to pay the relevant payment; a more favorable regime for the attainment of public interests and the pursuit of private interests.