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Key issues for designing presumptive tax regimes

Key issues for designing presumptive tax regimes. Michael Engelschalk and Jan Loeprick Investment Climate Advisory Services World Bank Group. Summary of Key Issues. How simple is simple enough? When are we trying to be too simple? What is “small”? – and should we differentiate “micro ”?

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Key issues for designing presumptive tax regimes

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  1. Key issues for designing presumptive tax regimes Michael Engelschalk and Jan Loeprick Investment Climate Advisory Services World Bank Group

  2. Summary of Key Issues • How simple is simple enough? When are we trying to be too simple? • What is “small”? – and should we differentiate “micro”? • Alignment is the key! • Including corporates?! • Avoiding/curbing abuses • Who administers – central, regional, local? • Aligning accounting requirements • Implementation and outreach – linking costs and benefits of compliance

  3. Example – exacerbating compliance costs for small businesses in Georgia Significant improvements since 2005, but not for small firms

  4. Example - How simple is simple enough? Indicators in Bulgaria • Bulgaria • Annual license tax - In 2005, the schedule had over 900 different rates, differentiated according to location and with more than 100 different kinds of services

  5. Example – Misalignment in Kazakhstan

  6. Example - The pitfall of simplicity: Side effects of patent regimes (Kyrgyz Republic) • A strong disincentive for graduation (and possibly formal growth) as patent payments are determined irrespective of the turnover of the individual businesses • The patent system opens the door for abuses • The SRS only collects information on patent contribution and not on the number of taxpayers registered under the patent scheme → impedes the monitoring of migration in and out of the patent regime

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