The article explores the problems related to the content, forms, and consequences of the taxpayer’s bad faith behavior. It affirms the unconditional right of a taxpayer to determine the optimal tax model for the lawful reduction of tax expenses. At the same time, taxpayers often abuse this right, acting in bad faith when minimizing their tax liabilities, even though such behavior may not formally violate the direct provisions of tax legislation. The article highlights the absence of a definition, criteria, and legal consequences of a taxpayer’s bad faith behavior in the Tax Code of Ukraine, which results in legal uncertainty. However, given the imperative regulation method in tax relations and the constitutional foundations of legal order, the article proposes to enshrine in tax law the duty of taxpayers to act in good faith. Failure to fulfill such a duty would imply a breach of imperative norms and qualify the taxpayer’s behavior as unlawful. It is emphasized that modern tax planning tools are becoming increasingly sophisticated and complex. Although taxpayers’ actions may not formally contradict the letter of the law, they often fail to meet the criteria of good faith behavior and display signs of abuse of rights. The evaluation of such actions poses significant challenges due to the lack of clear legislative criteria for their qualification and determination of their legal consequences. To ensure proper legal regulation of the boundaries of tax planning in cases of bad faith behavior, the article suggests establishing legal characteristics that would define such behavior. These characteristics should reflect global experience in combating tax abuse and be based on recognized and widely applied judicial doctrines. The article notes that expanding the list of taxpayers’ duties may complicate their legal status. Therefore, it is necessary to introduce appropriate safeguards to maintain the balance between private and public interests and to protect taxpayers’ rights. To this end, the article proposes to establish the principle of presumption of good faith behavior by taxpayers in legislation and to vest the authority to determine bad faith behavior exclusively with the judiciary, excluding it from the powers of tax authorities.
Yaroslav Hretsa (Thu,) studied this question.