MSME Taxation in Transition Economies : Country Experience on the Costs and Benefits of Introducing Special Tax Regimes

The paper analyzes the design of simplified small business tax regimes in Eastern Europe and Central Asia and the impact of such regimes on small business tax compliance. Although many approaches for tax simplification exist, a general trend in the region is to offer small businesses the option to be taxed based on their turnover instead of net income. The study finds that many of the regimes in place are overly simplistic and neither take into account fairness considerations nor do they facilitate business growth and migration into the standard tax regime. Although revenue generation is not a main objective of such regimes, low revenue performance and the risk of system abuse by larger businesses should be issues of concern. More attention should therefore be devoted to improving the design of simplified regimes and monitoring their application. This will require in particular a more profound analysis of the economic situation and the tax compliance challenges in the small business segment and increased efforts to improve the quality of bookkeeping.

Bibliographic Details

Main Authors:	Engelschalk, Michael, Loeprick, Jan
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-10
Subjects:	NOTARIES, TRANSITION ECONOMY, LIMITED‐LIABILITY, TAX COLLECTION, PRODUCT TAXES, TAX TREATMENT, INDIRECT TAXATION, REGRESSIVE TAX, PENSION, BUSINESS TAX, CORPORATE TAX, TAX OFFICES, TAX COMPLIANCE COSTS, TAXABLE INCOME, MICRO‐ENTERPRISE, INVESTMENT, ESTIMATED TAX, TAX COLLECTIONS, TAX BRACKETS, LAND TAX, TAX RATE, TAX REFORMS, TAX RETURNS, RETURNS, TAX POLICY, PROFIT MARGIN, TAX WEDGE, GUARANTEE, INTERNATIONAL FINANCE, SHARES, TAX MINIMIZATION, FLAT TAX, VALUE ADDED TAX, CASH FLOW, EXCHANGE RATE, TAX REFORM, TAX COMPLIANCE, TAX SYSTEMS, PUBLIC FINANCE, TAX LIABILITY, TURNOVER TAX, TAX ADMINISTRATION, MONETARY FUND, INVESTMENT ACTIVITIES, TAX AVOIDANCE, SALES TAX, DIRECT TAXATION, TAX EVASION, PAYMENT OBLIGATIONS, INSURANCE, LIMITED LIABILITY, PROPERTY TAX, RULE OF LAW, GOODS, LIQUIDITY, ACCOUNTING, GOOD, TAX RATES, TAX RETURN, MARGINAL TAX RATES, TAX LIABILITIES, BENEFICIARIES, LOCAL GOVERNMENTS, CHECK, BUDGETS, VALUE OF ASSETS, TREASURY, TAX CODE, EXCHANGE, PROGRESSIVE TAX, TAX SIMPLIFICATION, TAXPAYERS, DEDUCTIONS, INTEREST, MICRO‐ ENTERPRISES, SMALL BUSINESS, TURNOVER, TAX SYSTEM, BUSINESS TAXES, PERSONAL INCOME, VALUE‐ADDED TAX, DEVELOPING COUNTRIES, TAX REVENUES, REGULATORY FRAMEWORK, FLAT RATE INCOME TAX, TRANSITION COUNTRIES, FINANCE, TAX REVENUE, TAXES, TAX LAW, INCOME TAX, INFLATION RATES, INTERNATIONAL BANK, INSTRUMENTS, TAX REGIME, PERSONAL INCOME TAX, LIABILITIES, PROPERTY, SMALL BUSINESSES, TURNOVER TAXES, PROFITS, BALANCE SHEET, TRANSACTIONS, INTELLECTUAL PROPERTY, ADDED TAX, TRANSPARENCY, LOCAL BUSINESS, TRADING, PENSION FUND, TAX DEDUCTIBLE, SINGLE TAX, CAPACITY CONSTRAINTS, INFLATION, ENTRY BARRIERS, LOCAL MARKET, SHARE, TAX REGULATION, SHAREHOLDERS, PENSIONS, COMPLIANCE COSTS, INCOME TAXES, PROFIT MARGINS, RETURN, TRANSACTION, LOCAL GOVERNMENT, BANK POLICY, REVENUE, TAX OBLIGATIONS, ASSET VALUE, COMPLIANCE COST, COMMERCIAL LAWS, CORPORATE INCOME TAX, TAX LAWS, TAX REGIMES, TAX AUDITS, LIABILITY, TAX, MARKET, MARKETS, PAYROLL TAXES, TAXATION, OPTION, FLAT TAXES, MICRO ENTERPRISE, LABOR MARKET, SECURITY, PROFIT, TAX BASE, REVENUES, ACCOUNTING STANDARDS, MARKET ECONOMIES, TRANSITION ECONOMIES, LIQUIDITY PROBLEMS,
Online Access:	http://documents.worldbank.org/curated/en/2015/10/25167890/msme-taxation-transition-economies-country-experience-costs-benefits-introducing-special-tax-regimes http://hdl.handle.net/10986/22864
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