Tax Potential of Small Business in the Kyrgyz Republic: The Main Directions of Mitigating Shadow Economy

Abstract

The article is devoted to the study of the tax potential role of small business in the Kyrgyz Republic, during the pandemic and in the current situation of active reform of small business taxation. The authors carried out a scientific review of the theoretical and legal foundations of small businesses taxation in the process of reform, where the main directions for creating a favorable tax climate in order to mitigate the shadow economy are considered. The aim of the study is to determine the effectiveness of small business taxation as an integral part of the state’s tax strategy. To achieve the aim of the study the tax strategy of small businesses in the Kyrgyz Republic was analysed; the main indicators of entrepreneurial activity in the Kyrgyz Republic was assessed; ways to improve the taxation mechanism to stimulate the activities of small businesses and improve management efficiency in solving the strategic task of mitigating the shadow economy were identified. In the process of studying the subject of the tax potential of small business in the Kyrgyz Republic, scientific works of both foreign and domestic researchers were analysed. Furthermore, the composition of potential taxpayers of the Kyrgyz Republic and the economic and legal regime for supporting business entities in the country are considered. The article will be of interest to researchers of the system of economic and legal support of business entities in the Kyrgyz Republic, as well as issues related to the transition to special tax regimes in the context of cash registers introduction, which at the present stage of tax regulation in the Kyrgyz Republic goes through conflicts and mass refusal from cash registers, since small business prefers applying a voluntary patent.