DIGITALIZATION AS A TOOL FOR SHADOW ECONOMY REDUCTION WITHOUT INCREASING REGULATORY CONTROL

Abstract

This article examines the relevance of digitalizing tax administration as
one of the key approaches to improving the efficiency of the tax system and reducing the
scale of the shadow economy without expanding the state's regulatory control. It is
established that the digital transformation of the tax sector reshapes the traditional model
of interaction between the state and taxpayers by promoting a service-oriented approach,
simplifying administrative procedures, and enhancing the accessibility of public services.
The study demonstrates that contemporary research has primarily focused on individual
aspects of tax system digitalization, whereas the relationship between the development of
digital services, the voluntary legalization of economic activity, and the reduction of the
shadow economy requires comprehensive scientific substantiation. The purpose of the
study is to determine the impact of tax administration digitalization on the processes of
economic formalization by substantiating the role of digital services, information and
communication technologies, and organizational and legal mechanisms in increasing
voluntary tax compliance. It is emphasized that the implementation of electronic services,
automated information processing, digital document management, and modern
information systems contributes to greater transparency of fiscal processes, reduced
administrative costs, and stronger incentives for conducting business activities legally.
The study finds that the practical implementation of digital instruments, including the
Taxpayer's Electronic Cabinet, software-based cash registers (software RROs), the Diia
application, the Trembita interoperability system, the Vchasno electronic document
exchange platform, the e-Excise system, and the Unified Account mechanism, improves
the quality of tax administration, expands opportunities for electronic interaction, and
minimizes the administrative burden on taxpayers. It is determined that the current
organizational and legal framework for the digital transformation of the tax sector
creates appropriate conditions for the functioning of electronic document management,
digital identification, an integrated information environment, and the harmonization of
the national tax system with European principles of digital governance. It is substantiated
that further development of tax administration digitalization should focus on expanding
the functional capabilities of digital services, integrating state information resources,
strengthening cybersecurity, and enhancing users' digital competencies. These measures will facilitate the voluntary formalization of economic activity, strengthen public trust in
state institutions, and improve the overall effectiveness of tax administration.

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