Abstract:

This paper deals with the experience of countries with a significant proportion of those employed in the informal economy with regard to the effectiveness of using tax incentives, such as the application of patent based tax system to small and micro-small business as tools for legalization of informal employment. The authors pay special attention to the experience of the countries with a high level of official unemployment and a large informal labor market, such as Lithuania, Albania, Latvia, Poland, Kazakhstan and Belarus. By projecting experience of these countries on current initiatives of the Government of the Russian Federation on introduction of a patent based tax system, the authors predict possible macro- and microeconomic effects and identify systemic contradictions that arise in the process of introduction and implementation of such a system in Russia.