TAX REGULATION AS A TOOL FOR COMBATING THE SHADOW ECONOMY

Abstract

The article evaluates the scale of the shadow economy and develops proposals to improve tax regulation aimed at reducing its scope. The shadow economy poses a threat to the economic security of the country, reduces the level of tax revenues, and distorts fair competition conditions. The analysis highlights the importance of strengthening tax regulation as a necessary step toward economic formalization. It was found that the current tax regulation system in Ukraine does not fully meet modern requirements and requires significant changes and improvements. Therefore, the relevance of this topic lies in the need to enhance the efficiency of tax regulation as an essential component of a comprehensive strategy for formalizing Ukraine's economy. The dangers of the shadow economy manifest through its harmful consequences, particularly the reduction of revenues to state and local budgets, complicating the coverage of public expenditures. This leads to increased tax pressure on legal businesses, creating unequal conditions for entrepreneurial activity due to corrupt practices and bribery, undermining trust in the authorities, and enhancing the financial capabilities of criminal groups. Combating the shadow economy is impossible without the implementation of effective tax measures. Key steps that can be introduced at the current stage include strengthening control and improving the legal framework to reduce shadow activities; enhancing the efficiency of monitoring processes; fostering cooperation between the State Financial Monitoring Service of Ukraine, other national supervisory bodies, law enforcement agencies, and major financial oversight entities; expanding international partnerships in combating the shadow economy; and improving the professional training of specialists dealing with this issue. The practical significance of the results lies in the possibility of applying the theoretical conclusions of this article in the work of government agencies. This will contribute to the development and implementation of a new tax policy aimed at significantly reducing the level of the shadow economy and corruption.