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TAXATION OF SMALL BUSINESS AND ENTREPRENEURSHIP
ENTITIES: FOREIGN PRACTICES
Turanboyev Boburjon Qodirjon o‘g‘li
Lecturer, Department of International Tourism and
Economics, Kokand University
ABSTRACT
In the process of improving the taxation of small business and entrepreneurship
entities, it is important to analytically study the practical experiences of foreign
countries. By analyzing tax systems, incentives, and support measures aimed at
promoting small businesses in developed countries, and by applying these practices,
important insights can be gained. This study develops specific proposals and
recommendations for improving the tax system based on international experience,
which can contribute to further liberalization of the national economy and support
small business development.
Keywords:
small business entities, tax, tax incentive, taxation, tax system.
INTRODUCTION
In today's era of globalization, where economic competition among countries is
intensifying, supporting small businesses, facilitating their operations, and simplifying
the taxation system remain among the key strategic priorities. Global experience shows
that the growth and development of small businesses largely depend on favorable tax
policies and convenient tax procedures applied to them.
Some developed countries have introduced special tax regimes for small business
entities and, by providing incentives, have succeeded in increasing economic activity.
In countries such as the USA, Germany, Turkey, Poland, and Singapore, taxation
mechanisms for small businesses are well established and can serve as practical models
for Uzbekistan as well.
This study analyzes the taxation practices for small business entities in various
countries, examining their advantages and disadvantages. Based on international
experience, it aims to develop practical recommendations for improving the tax system
in Uzbekistan.
MAIN PART
Analyzing the foreign practices of taxing small businesses and studying the tax
systems and incentives used in various countries is essential for improving national tax
policy. Below is an analysis of tax systems, incentives, and support measures for small
businesses in developed countries.
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Corporate tax rates and privileges for small businesses differ significantly among
developed countries. According to the 2024 OECD data, the average corporate tax rate
in EU countries is 21.27%, and across all OECD countries, it stands at 23.85%. Some
countries have introduced significantly lower tax rates for small business support. For
instance, in the UK, the corporate tax rate for small businesses with annual net income
below £50,000 is only 19%. Similarly, countries like Canada, Ireland, and Japan offer
tax benefits, simplified reporting formats, and reduced audit requirements for small
businesses. These measures are vital in ensuring the growth and competitiveness of
small businesses.
According to the 2021 OECD database, 33 out of 38 OECD members have
introduced preferential tax regimes for R&D (research and development) expenditures
by business entities. These incentives account for an average of 55% of R&D support
in OECD countries, highlighting the growing importance of tax tools in promoting
innovation. For example, France’s tax credit program allows companies to deduct 30%
of R&D expenses directly from their annual tax liabilities. This mechanism benefits
not only large corporations but also small and medium-sized enterprises, promoting
technological innovation and scientific capacity.
Many developed countries have implemented simplified tax regimes for small
businesses. These systems regulate the allocation of privileges based on annual income
or number of employees. For example, in Poland, small enterprises below a set income
threshold can utilize a simplified tax regime. These businesses enjoy reduced income
tax, VAT, and social insurance contributions with lighter reporting obligations. Such
regimes reduce the tax burden, improve financial discipline, and encourage small
businesses to join the formal economy. Additionally, they reduce administrative costs
for tax authorities and improve the ease of doing business.
Studies indicate that tax incentives can positively influence small business
development, but their effectiveness depends on a country’s economic and institutional
conditions. OECD analyses show that while incentives can stimulate investment and
innovation, poorly designed incentives may reduce the tax base.
CONCLUSION
An analysis of international experiences shows that tax incentives and simplified
regimes aimed at supporting small businesses have a positive effect on their
development. However, for these benefits and regimes to be effective, their
implementation must align with the country’s economic and institutional conditions.
Therefore, incorporating international practices and adapting them to local realities is
crucial when formulating national tax policy.
Based on the analytical results of the research, the following recommendations
are proposed:
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Tax relief should be tailored regionally, considering the economic potential of
regions and the share of small businesses;
Drawing from OECD experience, tax incentives should be introduced in
Uzbekistan for R&D (research and development) activities conducted by small
business entities;
A systematic monitoring mechanism should be implemented to assess the
economic impact of tax incentives, evaluating the positive outcomes achieved through
them.
If transparency and stability in the tax system are ensured, small businesses will
be able to achieve growth. Therefore, implementing proposals based on advanced
international practices will be a key factor in expanding the activities of small business
entities and ensuring the sustainability of economic growth.
References:
1.
Bird, R., & Zolt, E. (2014). Tax policy in emerging economies: The role of small
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2.
Schneider, F. (2015). The shadow economy and taxation policies: A global
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Qodirjon o‘g‘li, T. B. (2024). THE IMPORTANCE OF INCREASING THE
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4.
Turanboyev, B. (2024). ANALYSIS OF THE PROSPECTS FOR DEVELOPING
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Turanboyev, B. (2024). WAYS TO IMPROVE THE TAXATION OF E-
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https://taxfoundation.org/
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https://www.oecd.org/
