Abstract: The shadow economy, which reflects unrecorded economic relations, is specific to
each country, and each country is carrying out serious reforms to reduce the scale of the shadow
economy. Scientists conducting research in the field of the shadow economy point out the tax
burden as the first reason for the increase in the scale of the shadow economy. Therefore, it is
necessary to continuously carry out tax regulation. In order to ensure the sustainable development
of each country, the shadow economy must be minimized and protected from the consequences it
may cause. The article shows the negative effects of the shadow economy and the reasons for its emergence. The factors that cause the increase in the scale of the shadow economy are grouped.
The article conducts a comparative analysis of the number of employed and unemployed people and
changes in retail trade turnover. It is shown that the change in these indicators is related to tax
regulation measures. The necessity of tax regulation carried out to reduce the scale of the shadow
economy is shown. Tax reforms aimed at reducing the scale of the shadow economy should be
carried out continuously. Prevention of tax evasion is an important factor in reducing the scale of
the shadow economy. For this purpose, complex measures should be taken.
Keywords: shadow economy, tax regulation, sustainable economic development, tax breaks,
minimum wage, tax burden, level of self-employment, tax culture