Resource information
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.
