Importance Value added tax (VAT) is the most common form of universal excise taxes playing an important role in the system of fiscal regulators of economic processes of the State. This tax form has a domestic specificity, i.e. special tax treatment and administration. The latter includes special VAT treatment in agriculture (VAT-accumulation) aimed at supporting the agricultural production development. Meanwhile, its further unified application in agriculture has become economically unjustified. Objectives The study aims to review the efficiency of using the special treatment of VAT as a tool of financial incentive system for Ukrainian agriculture, to evaluate possible results of its reform in order to summarize possible effects of realigning the existing mechanism of VAT collection in the Ukraine's agricultural sector. Methods Using economic and statistical methods, namely, comparison, monographic, graphical, tabular techniques and scientific generalization, I analyze the efficiency of special VAT treatment functioning in agriculture and assess possible results of its reform. Results The tools of taxation of agricultural enterprises in Ukraine, which have been applied since the late nineties, fail to meet the requirements of the new economic realities. In 2016, the special VAT treatment in agriculture was reformed with regard to a differentiated approach, under which the share of VAT accumulation depends on profitability of a certain type of agricultural products. Conclusions The findings show that the reform is aimed at the differentiation of taxation of agricultural producers to implement tax incentives for development of strategic areas of activities and prioritized business patterns.
Keywords: value added tax, tax incentives, tax mechanism, agricultural producers, special treatment
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