FINANCIAL INCENTIVES FOR THE DEVELOPMENT OF SMALL AND MEDIUM BUSINESSES IN THE AGRICULTURAL SECTOR OF UKRAINE IN THE CONTEXT OF ECOLOGICAL PRODUCTION

Abstract

The article examines financial incentives for the development of Ukraine’s agricultural sector, focusing on the fiscal instruments of the simplified taxation system and on the financial stimulation of ecological (organic) production. The relevance of the topic is driven by the strategic role of agriculture in the national economy, its contribution to gross domestic product, exports and rural employment, and its decisive importance for food security under martial law. The authors substantiate the essence and classification of financial incentives applied to the agricultural sector, distinguishing tax instruments, budgetary support, preferential lending and grant mechanisms. Particular attention is paid to the single tax of the fourth group as the principal fiscal stimulus for agricultural producers, whose tax base is the normative monetary valuation of land rather than income, which provides predictability of the tax burden for family farms and agricultural enterprises. Based on official data, the dynamics of single tax revenues from small and medium-sized agricultural businesses during 2019–2025 were analyzed and a steady decrease in their share in the revenue structure was identified. The study also outlines the legislative and financial framework for organic production in Ukraine, including the Law on the basic principles and requirements for organic production, and generalises foreign experience of tax stimulation of the green economy. On this basis, the authors propose directions for improving financial stimulation, in particular the ecological differentiation of fiscal instruments, the combination of tax and budgetary mechanisms, the digitalisation of tax administration, and the orientation of agrarian policy towards the goals of sustainable development. The findings may be useful for public authorities in shaping tax and agrarian policy.