doi.org/10.52340/eab.2024.16.04.11

In the conditions of the modern market economy, small business is given a very big advantage in the developed and developing countries of the world. It helps the economy of the country to overcome the difficult socio-economic situation, to maintain stability, to form the middle class of the population, etc. Along with a number of functions, the innovative economy in the country is developed through small businesses. It is the development of entrepreneurship and the increase in the number of registered small businesses that contribute to the reduction of the unemployment level, which in turn is one of the main prerequisites for overcoming the poverty level.
As international practice testifies, small business represents more than 98% of private businesses registered in the country and in terms of employment, it is not inferior to large and medium-sized businesses in the entire industry. Therefore, the trends of the modern economy brought the role and importance of small business to the fore. Taxation of small businesses and the amount of the tax burden is one of the topical issues in the current period, as it is an important determining factor of their development. Tax reforms and agreements implemented in the country can greatly influence their development. Therefore, it is necessary to analyze each tax reform or agreement in detail, not only at the tax level, but also to determine the effect of its operation from the point of view of entrepreneurs, which should be accompanied by step-by-step monitoring.
The purpose of the research paper is to determine the influence of the tax system on the entrepreneurial activity of small businesses, from the point of view of the experience of the USA and Georgia.
The article discusses the American and Georgian experience of small business taxation mechanisms. The taxes with which the small business sector is taxed are given, the trend of the tax burden and its impact on their financial situation are estimated. Based on all this, appropriate conclusions and recommendations have been prepared.
As the results of the conducted research revealed, in terms of promoting the development of small businesses, the USA really stands out from the highly developed countries. The system of tax regulation and taxes in the US, on the other hand, is distinguished by its complexity. Complexity is caused by the fact that taxes are imposed at three main levels: state, local and federal. Taxes at all three levels are sharply separated from each other. In the US, the issue of improving tax administration in the area of small businesses is of great importance. The Tax Cuts and Jobs Act (TCJA) significantly reduced the corporate tax rate for the small business sector from 35% to 21%. And the average combined federal and state rate went from 38.9% to 25.8%.
Small businesses in Georgia are divided into three categories: micro, small and fixed tax payer categories. For which a special, preferential system of taxation is considered. The article discusses the impact of the tax reform implemented on July 1, 2018 on the small business sector and the economy of the country as a whole. In the given period, the change should affect approximately 120 thousand entrepreneurial individuals with small business status. By means of the mentioned reform, entrepreneurs significantly reduced their tax and administrative costs, as the tax accounting system was also simplified. The decrease in tax rates had a positive effect on the financial situation of small businesses operating both in the
USA and in Georgia, and accordingly, the percentage share of their profits in total revenues increased significantly.
In the development of the small business sector in the USA and Georgia, agreements on avoiding double taxation, which as of today, the USA has signed with 69 countries of the world, and Georgia with 58 sub-counties, also make a significant contribution. As international research shows, double taxation avoidance agreements have reduced tax costs for entrepreneurs, deepened economic cooperation, facilitated attracting more investments, prevented taxpayers from trying to reduce the amount of tax, or completely avoid it, etc.
The scientific novelty of the article is the determination of the effect of tax reforms on the small business sector, their financial situation and economic and entrepreneurial activities in the selected research object countries (USA and Georgia).
To achieve the research goal, the following main research methods are used in the work: quantitative and qualitative research method, induction and deduction method, statistical analysis, data collection, grouping and systematic approach methods.
The article uses the works of both Georgian and foreign scientists related to small business taxation and tax burden. Prepared reports, periodicals and internet resources from various international organizations and Georgian state agencies.

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Keywords: Small business; small business taxation; Avoidance of double taxation.
JEL Codes: E62, E64, H20, H26