Recommendations for reducing the scale of the shadow economy and its consequences

Abstract

This article discusses the key issues related to the scale of the shadow economy and its consequences for the socio-economic development of the country. The focus is on analyzing the factors contributing to the expansion of the shadow sector and the consequences of its existence, such as the reduction in tax revenues, loss of control over economic activities, and the growth of social inequality. The paper offers recommendations for reducing the scale of the shadow economy, including improving tax legislation, enhancing the effectiveness of control and auditing, and increasing information transparency. Special attention is given to the need to create incentives for business legalization, implementing technologies to improve financial transparency, and educational programs to raise awareness among entrepreneurs and citizens about the negative consequences of the shadow economy. The article is aimed at supporting government agencies and organizations working in the field of tax and economic control in their efforts to reduce the shadow economy and minimize its negative consequences.

Based on the results of the research, the authors conclude that reducing the scale of the shadow economy requires a comprehensive approach, including improvements in legislation, increasing tax transparency, and stimulating business legalization. The key aspects are strengthening control over economic activities, introducing modern information technologies to monitor financial flows, and developing measures to reduce economic inequality caused by shadow practices. The research also emphasizes the need for active interaction between government agencies and the business community, enhancing their awareness of the risks and consequences of the shadow economy.