SHADOW ECONOMY: ESSENCE, SIGNIFICANCE, DEFINITION METHODS AND IMPACT ON THE STATE'S TAX POLICY

Abstract

The article examines such a global phenomenon as the shadow economy, which is an integral part of the functioning of any economic system. The article is devoted to a comprehensive study of the essence, historical development, and structural components of the shadow economy, as well as the analysis of its systemic impact on the formation of modern tax policy. The study aims to identify the relationship between the scale of the informal sector and the transformation of fiscal instruments, particularly in the context of global digitalization and the specific challenges faced by transitional economies like Ukraine. The main attention is paid to the influence of the shadow economy on the construction of the state's tax policy. The study was conducted on the basis of an analysis of domestic and foreign literary sources, statistical data. The work draws on statistical data from the World Bank, IMF, OECD, and national monitoring to compare global and Ukrainian trends. It was established that despite the large number of studies on this topic, interest in this phenomenon does not disappear, but rather increases. The research focuses on improving methods for measuring the shadow economy, its impact on the economic security of the state, as well as on assessing its scale and factors of formation. The definition of the shadow economy is clarified, its development over time is studied. Special attention is paid to Ukraine. The structure of the shadow economy, methods and measurements are considered. Statistical assessments of the shadow economy and their impact on tax policy are summarized. Special attention is paid to the analysis of the impact of the shadow economy on the effectiveness of tax policy, namely: the volume of tax revenues, the structure of taxes and tax administration tools. It has been established that effective shadow economy reduction requires a transition from purely restrictive measures to complex institutional reforms. Key tools for modern tax policy include digitalization, simplifying tax systems, and increasing trust in state institutions. For Ukraine, the path to formalization specifically involves reducing corruption and balancing control with the creation of a favorable business environment.