FISCAL CAPACITY OF INDIRECT TAXES IN THE CONDITION OF SHADOW ECONOMY

Abstract

The recent growth of the shadow economy has prompted all countries' governments to look for effective tools to combat this phenomenon. The impact of the shadow economy on various aspects of state development is complex and requires detailed analysis. The shadow economy's exact definition is quite difficult because the shadow economy is constantly evolving, adapting to the changes taking place in both the economy and society. Factors that lead to increased shadowing include high crime rates, high bureaucratization, lack of an effective system of control and punishment for informal employment and non-taxation of wages, imperfect monetary regulation, inefficient tax administration, low control over the use of budget funds, inconsistencies, and duplication of the legal and regulatory framework, electronic trading systems and real estate networks. The shadowing of the economy significantly affects economic processes. As a result, the state loses an excessive amount of money that does not go to the state budget in tax revenues. It is indirect taxes in a growing shadow economy that are an instrument of criminal schemes. At the same time, indirect taxes are considered one of the most important and complex taxes in the domestic tax system. Therefore, a detailed analysis of their administration and budget revenues is important for taxpayers and the state represented by its executive bodies. An in-depth analysis in terms of indirect taxes shows that the main one from the standpoint of budgeting is the value added tax. In general, this tax plays a key role in generating state budget revenues, as it is the least prone to fluctuations in world prices for raw materials and energy compared to other budget-generating taxes. At the same time, it remains one of the most problematic taxes in the domestic tax system. As tax evasion is currently the largest component of the value added tax deficit, it is necessary to determine the extent to which value added tax revenues can be increased by ensuring more efficient tax collection in the medium and long term, other things being equal. Given the study, it can be argued that the improvement of the existing system of administration of indirect taxes will allow in the shadow economy to introduce mechanisms for withdrawing liquid assets from the shadows in order to deepen the fiscal function of indirect taxes.