FISCAL SIGNIFICANCE OF VALUE ADDED TAX AND IT’S IMPACT ON ECONOMIC GROWTH

In terms of mobilizing financial resources in the budget, value added tax has a leading position among other taxes. The analysis of the fiscal value of the value added tax, how it affects the current processes in the economy and economic growth in general, is highly relevant. Indirect taxes are a mechanism that affects the formation of the final price of products, the profit of entrepreneurs, its profitability and, in general, the financial situation of economic entities. Over the last few years, the system of taxation with value added tax (VAT) is developing more and more, its administration measures are being improved, reasonable benefits are established for the supply of various types of goods and services. The taxation mechanism is becoming closer to the European Union standards, although there are still a lot of shortcomings. Undoubtedly, as soon as the system of taxation with indirect taxes takes a more complete form, it will be a prerequisite for it to effectively perform the regulatory function of the economy. In turn, this will lead to an increase in production, an increase in the well-being of the society and economic growth. Value added tax has an important fiscal function in the formation of budget revenues. According to the Budget Code, the equalization transfer was canceled and instead of this, VAT was introduced into the budget of local territorial units according to the respective municipalities. 81% of VAT will be credited to the state budget, and 19% - to the budgets of relevant local self-governing units. This approach is adopted in many developed countries. The mentioned method is an additional incentive for each local self-governing unit, as they are given the opportunity to plan the budget in a more targeted way, which will be the basis for the economic development of the respective territorial unit. In general, indirect taxes affect both demand and supply. They are added to the price of goods and services and increase their value. Therefore, it is important to consider the impact of VAT on demand and supply and thus on economic growth. If we look at the dynamics of economic growth in the recent period, we can be sure that there is a trend of economic growth. One of the reasons for this, along with many other factors, can be considered the recent changes in VAT, which made the indirect tax system more loyal. The existing system of indirect taxes in the country should, first of all, ensure the fulfillment of the tasks and measures set before the state, however, at the same time, the amount of the tax rate should be reasonable and differentiated and tax administration measures are simpler, which will help business entities to carry out their activities without interruption.