Transformation of small business taxation - lessons for Ukraine: a study of the experience of EU countries with transitional economies

Introduction. The significance of the simplified taxation system (STS) on the socio-economic processes in the micro-business sector cannot be overstated, especially in the context of the outflow of citizens abroad due to the war. Taxation of the smallest and most vulnerable business entities is an important component of the state’s tax policy. Problem Statement. In Ukraine, in conditions of full-scale Russian aggression there is a pressing need to align the tax policy for small business taxation with the National Revenue Strategy until 2030, based on pan-European approaches. The purpose is to substantiate scientific and methodological approaches and practical proposals regarding the directions of transformation of the STS in the context of preparations for Ukraine’s acquisition of membership in the European Union, taking into account its role as the main tax instrument for supporting small businesses in the current institutional conditions. Methods. General scientific and special methods were used: analysis, synthesis, grouping, description, comparison, generalization, and abstract-logical. Results. The main approaches and methodological features of tax regulation and the application of tax incentives for small businesses in certain EU countries have been studied. The genesis of the regulatory framework for small business taxation has been examined. The conditions and prospects for harmonizing small business taxation in Ukraine with the corresponding practices in European Union countries have been revealed. Conclusions. It has been found that the main task of tax support for small businesses is to reduce administrative and financial burdens by applying reduced and fixed rates, lump-sum expenses, etc.; simplifying accounting procedures; applying a significant range of deductions from income aimed at ensuring social justice; applying a non-taxable minimum to entrepreneurs’ incomes, etc. The transformation of STS in our country should take into account the taxation practices in EU countries.