TAX INCENTIVES OF SUSTAINABLE BUSINESS IN THE EU AND THEIR IMPACT ON UKRAINE

Abstract

The article examines the theoretical and practical foundations of tax incentives for sustainable business in the context of deepening European integration processes in Ukraine. It is substantiated that the implementation of sustainable development principles is a key prerequisite for adapting the national economy to the standards of the European Union, particularly within the framework of the European Green Deal and the achievement of climate neutrality. The essence of sustainable business is defined as a form of entrepreneurial activity that integrates economic, social, and environmental development goals, and the role of tax policy as an important instrument of state influence on the economic behavior of business entities is revealed. The main types of tax incentives are analyzed, including tax benefits, tax credits, investment deductions, accelerated depreciation mechanisms, and environmental taxes, as well as their classification, functional features, and mechanisms of influence on investment and innovation activities of enterprises. It is established that tax incentives can significantly transform the structure of investments, promote the development of green technologies, improve energy efficiency, and foster environmentally responsible business practices. It is proved that the combination of fiscal and regulatory instruments ensures a comprehensive impact on economic processes and contributes to the achievement of strategic environmental goals. The current state of tax incentives for sustainable business in Ukraine is assessed, revealing their fragmented nature, limited effectiveness, and key challenges, including instability of tax policy, imperfections in the regulatory framework, low investment activity, and limited range of incentive instruments. The necessity of adapting European experience through the implementation of modern tax mechanisms, development of carbon pricing systems, support for environmental innovations, digitalization of tax administration, and enhancement of its transparency is substantiated. It is demonstrated that improving tax policy will contribute to the creation of a favorable investment environment, intensification of entrepreneurial activity, development of sustainable business, and enhancement of the competitiveness of Ukraine’s economy in the context of integration into the European economic space.