PECULIARITIES OF TAXATION UNDER MARTIAL LAW IN UKRAINE: CHALLENGES, TRANSFORMATIONS, AND PROSPECTS

Abstract

Ukraine's modern economic system is facing unprecedented challenges due to the full-scale aggression, necessitating a flexible adaptation of fiscal policy to ensure financial stability and economic functionality. This has driven profound transformations in tax regulation. Research Objective: A comprehensive analysis of the functioning of Ukraine's tax system under martial law, an assessment of the effectiveness of the implemented changes, and substantiation of directions for its further transformation to ensure the state's economic resilience and financial independence. Methodology: A systemic approach to fiscal policy was applied. Methods of historical and logical analysis were used to structure the stages of tax changes (pressure mitigation, restoration of control, wartime systemic policy). Comparative analysis and synthesis were employed to evaluate the effectiveness of fiscal stimuli, specifically the 2% single tax regime and benefits for the IT sector ("Diia City"). Statistical analysis methods (based on data from the Ministry of Finance and the State Tax Service - STS) allowed for the assessment of revenue dynamics and budget fiscal stability. The formal-legal method was used to analyze the specifics of taxation in frontline and temporarily occupied territories. Results: It was established that wartime fiscal policy has evolved from emergency relief to a more structured and predictable system. Key transformation tools included: the introduction and subsequent abolition of the 2% single tax regime, an increase in the military levy (to 5% in 2024), differentiation of corporate tax (up to 50% for banks), and enhanced digitalization of administration (e-cabinet, monthly reporting for PIT/social contributions). It is proven that, despite the initial decline in revenues, the measures taken and the gradual restoration of control ensured the stabilization of fiscal indicators in 2023–2024, evidenced by the growth in general fund state budget revenues, demonstrating the high adaptability of both the system and businesses. Originality/Value: A comprehensive approach to assessing fiscal policy effectiveness under prolonged military threat is proposed, combining fiscal necessity (resource mobilization) and the stimulating function (business support). Proposals were formulated for further optimization of administration, particularly regarding fiscal decentralization (redistribution of military personnel PIT) and the investment-reconstructive function of taxes (relocation benefits, "green" incentives). The findings serve as a valuable information base for state authorities when adjusting tax mechanisms and developing Ukraine's post-war economic recovery strategy.