The Optimal Turnover Threshold And Tax Rate For Smes

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The Optimal Turnover Threshold and Tax Rate for SMEs

Feng Wei,Jean-François Wen
The Optimal Turnover Threshold and Tax Rate for SMEs Book PDF

Author : Feng Wei,Jean-François Wen
Publisher : International Monetary Fund
Page : 34 pages
File Size : 41,9 Mb
Release : 2019-05-07
Category : Business & Economics
ISBN : 9781498314268

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The Optimal Turnover Threshold and Tax Rate for SMEs by Feng Wei,Jean-François Wen Pdf

Presumptive income taxes in the form of a tax on turnover for SMEs are pervasive as a way to reduce the costs of compliance and administration. We analyze a model where entrepreneurs allocate labor to the formal and informal sectors. Formal sector income is subjected either to a corporate income tax or a tax on turnover, depending on whether their turnover exceeds a threshold. We characterize the private sector equilibrium for any given configuration of tax policy parameters (corporate income tax rate, turnover tax rate, and threshold). Given private behavior, social welfare is optimized. We interpret the first-order conditions for welfare maximization to identify the key margins and then simulate a calibrated version of the model.

How to Design a Presumptive Income Tax for Micro and Small Enterprises

Jean-François Wen
How to Design a Presumptive Income Tax for Micro and Small Enterprises Book PDF

Author : Jean-François Wen
Publisher : International Monetary Fund
Page : 26 pages
File Size : 43,8 Mb
Release : 2023-06-29
Category : Business & Economics
ISBN : 9798400241154

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How to Design a Presumptive Income Tax for Micro and Small Enterprises by Jean-François Wen Pdf

Turnover taxes are prevalent in developing countries as a simple form of presumptive taxation of business income. Such simplified tax regimes can reduce the relatively high compliance costs of micro and small enterprises, which might otherwise discourage entrepreneurs from formalizing their activities and paying taxes. The note addresses design issues for a turnover tax regime—which taxes it replaces, what the criteria are for eligibility, how to determine the optimal threshold, and how to set the tax rate. A key observation is that, although low turnover tax rates may incite larger firms to artificially reduce their sales, the rate should also not be so high as to discourage formalization of activities. A table of tax rates and turnover thresholds observed internationally is provided. The note concludes by suggesting analytical steps to guide practitioners in designing turnover tax regimes.

OECD Tax Policy Studies Taxation of SMEs

Organisation for Economic Co-operation and Development
OECD Tax Policy Studies Taxation of SMEs Book PDF

Author : Organisation for Economic Co-operation and Development
Publisher : Org. for Economic Cooperation & Development
Page : 172 pages
File Size : 47,7 Mb
Release : 2009-10-19
Category : Business & Economics
ISBN : UCR:31210022970188

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OECD Tax Policy Studies Taxation of SMEs by Organisation for Economic Co-operation and Development Pdf

This publication examines the taxation of SMEs in OECD countries and covers a broad range of SME taxation issues, including possible effects of taxation on the creation and growth of SMEs, and considerations arising from a relatively high compliance burden.

The Optimal Turnover Threshold and Tax Rate for SMEs

Feng Wei,Jean-François Wen
The Optimal Turnover Threshold and Tax Rate for SMEs Book PDF

Author : Feng Wei,Jean-François Wen
Publisher : International Monetary Fund
Page : 34 pages
File Size : 47,5 Mb
Release : 2019-05-07
Category : Business & Economics
ISBN : 9781498312295

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The Optimal Turnover Threshold and Tax Rate for SMEs by Feng Wei,Jean-François Wen Pdf

Presumptive income taxes in the form of a tax on turnover for SMEs are pervasive as a way to reduce the costs of compliance and administration. We analyze a model where entrepreneurs allocate labor to the formal and informal sectors. Formal sector income is subjected either to a corporate income tax or a tax on turnover, depending on whether their turnover exceeds a threshold. We characterize the private sector equilibrium for any given configuration of tax policy parameters (corporate income tax rate, turnover tax rate, and threshold). Given private behavior, social welfare is optimized. We interpret the first-order conditions for welfare maximization to identify the key margins and then simulate a calibrated version of the model.

A Firm Lower Bound: Characteristics and Impact of Corporate Minimum Taxation

Aqib Aslam,Maria Delgado Coelho
A Firm Lower Bound Characteristics and Impact of Corporate Minimum Taxation Book PDF

Author : Aqib Aslam,Maria Delgado Coelho
Publisher : International Monetary Fund
Page : 50 pages
File Size : 46,8 Mb
Release : 2021-06-08
Category : Business & Economics
ISBN : 9781513561073

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A Firm Lower Bound: Characteristics and Impact of Corporate Minimum Taxation by Aqib Aslam,Maria Delgado Coelho Pdf

This paper examines the role of minimum taxes and attempts to quantify their impact on economic activity. Minimum taxes can be effective at shoring up the corporate tax base and enhancing the perceived equity of the tax system, potentially motivating broader taxpayer compliance. Where political and administrative constraints prevent reforms to the standard corporate income tax, a minimum tax can help mitigate base erosion from excessive tax incentives and avoidance. Using a new panel dataset that catalogues changes in minimum tax regimes over time around the world, firm-level analysis suggests that the introduction or reform of a minimum tax is associated with an increase in the average effective tax rate of just over 1.5 percentage points with respect to turnover and of around 10 percent with respect to operating income. Minimum taxes based on modified corporate income lead to the largest increases in effective tax rates, followed by those based on assets and turnover.

Peru: Technical Assistance Report-Tax Regime for Small Taxpayers and Special Economic Zones

International Monetary,International Monetary Fund. Fiscal Affairs Dept.
Peru Technical Assistance Report Tax Regime for Small Taxpayers and Special Economic Zones Book PDF

Author : International Monetary,International Monetary Fund. Fiscal Affairs Dept.
Publisher : International Monetary Fund
Page : 68 pages
File Size : 51,9 Mb
Release : 2022-02-11
Category : Business & Economics
ISBN : 9798400200533

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Peru: Technical Assistance Report-Tax Regime for Small Taxpayers and Special Economic Zones by International Monetary,International Monetary Fund. Fiscal Affairs Dept. Pdf

The topics discussed in this report are tax regimes for small taxpayers (Chapter II) and the tax treatment of special economic zones (Chapter III). Although these aspects of the tax system have little direct effect on public finances, they affect many people and how those people make decisions or impact the positioning of certain regions relative to the rest of the country. Both are of social and political scope that is disproportionate to their magnitude of tax revenue collection, which is why their design must remain focused in its most strategic sense.

Lebanon

International Monetary,International Monetary Fund. Fiscal Affairs Dept.
Lebanon Book PDF

Author : International Monetary,International Monetary Fund. Fiscal Affairs Dept.
Publisher : International Monetary Fund
Page : 79 pages
File Size : 43,7 Mb
Release : 2023-01-13
Category : Business & Economics
ISBN : 9798400230738

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Lebanon by International Monetary,International Monetary Fund. Fiscal Affairs Dept. Pdf

Lebanon’s tax revenue more than halved between 2019 and 2021, in the face of the deepest economic crisis since the end of the civil war. This report identifies tax policy reform options to stop the drain on Lebanon’s tax revenue in the immediate and near-terms and to move toward a more efficient, effective, and inclusive tax system in the medium-term.

Albania: Technical Assistance Report-Tax Policy Reform Options for the MTRS

International Monetary,International Monetary Fund. Fiscal Affairs Dept.
Albania Technical Assistance Report Tax Policy Reform Options for the MTRS Book PDF

Author : International Monetary,International Monetary Fund. Fiscal Affairs Dept.
Publisher : International Monetary Fund
Page : 57 pages
File Size : 41,8 Mb
Release : 2022-02-17
Category : Business & Economics
ISBN : 9798400203305

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Albania: Technical Assistance Report-Tax Policy Reform Options for the MTRS by International Monetary,International Monetary Fund. Fiscal Affairs Dept. Pdf

Albania is preparing a Medium-Term Revenue Strategy (MTRS) to finance its development spending of an estimated 2.2–3.0 percent of GDP over five years. Revenue mobilization will be supported by comprehensive tax policy and administration reforms. International and regional comparisons suggest that there is room for additional revenues as well as improvement in the composition of tax revenues. This report presents options for tax policy reform to raise at least an additional 1.34 percent of GDP in revenues over five years and to improve the quality and efficiency of the tax system, that will enable the mobilization of further domestic revenues.

Designing a Presumptive Income Tax Based on Turnover in Countries with Large Informal Sectors

Feng Wei,Jean-François Wen
Designing a Presumptive Income Tax Based on Turnover in Countries with Large Informal Sectors Book PDF

Author : Feng Wei,Jean-François Wen
Publisher : International Monetary Fund
Page : 47 pages
File Size : 49,9 Mb
Release : 2023-12-22
Category : Business & Economics
ISBN : 9798400261015

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Designing a Presumptive Income Tax Based on Turnover in Countries with Large Informal Sectors by Feng Wei,Jean-François Wen Pdf

Turnover (sales) is frequently used in developing countries as a presumptive income tax base, to economize on the costs of tax administration and taxpayer compliance. We construct a simple model where a size threshold separates firms paying turnover tax from those paying profit tax (regular income tax), and where firms have the option of producing in the untaxed, informal sector. The optimal turnover tax rate trades off two policy concerns: reducing informality and avoiding strategic reductions in sales by firms seeking to remain below the threshold for the profit tax. We provide analytical results and calibrate the model to compute the optimal policy using realistic parameter values. The optimal turnover tax rate for countries with large informal sectors is found to be around 2.5% across most scenarios, while the threshold separating the turnover tax regime from profit tax lies for the most part between $65,000 and $95,000. Introducing an optimally designed turnover tax reduces the rate of informality of businesses by about 12 percentage points in the calibrated model.

Maldives

International Monetary Fund. Fiscal Affairs Dept.
Maldives Book PDF

Author : International Monetary Fund. Fiscal Affairs Dept.
Publisher : International Monetary Fund
Page : 74 pages
File Size : 40,5 Mb
Release : 2019-04-17
Category : Business & Economics
ISBN : 9781498310918

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Maldives by International Monetary Fund. Fiscal Affairs Dept. Pdf

This Technical Assistance Report discusses that in the Maldives, public investment trends have been influenced by a number of contextual factors including the economic dependency on tourism, the high exposure to climate change, and the recent democratization. The mission assessed the strength and quality of public investment management (PIM) in the Maldives using the IMF Public Investment Management framework, based on the three phases of the PIM cycle. The report highlights that the most significant weakness in the PIM and the wider Public Financial Management system is poor budget credibility and budget execution. However, some progress has been made in improving PIM institutions, and reforms are ongoing in a number of areas. It is imperative to strengthen the project appraisal process by developing a standard methodology for project appraisal, publishing this methodology and verifying that it is consistently applied by the line ministries. It is also important to develop a framework for ex-post evaluations and ensure that lessons learned from past projects are incorporated in revised guidelines and practices.

OECD Tax Policy Studies Taxation of SMEs Key Issues and Policy Considerations

OECD
OECD Tax Policy Studies Taxation of SMEs Key Issues and Policy Considerations Book PDF

Author : OECD
Publisher : OECD Publishing
Page : 147 pages
File Size : 55,8 Mb
Release : 2009-10-12
Category : Electronic
ISBN : 9789264024748

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OECD Tax Policy Studies Taxation of SMEs Key Issues and Policy Considerations by OECD Pdf

This publication examines the taxation of SMEs in OECD countries and covers a broad range of SME taxation issues, including possible effects of taxation on the creation and growth of SMEs, and considerations arising from a relatively high compliance burden.

Brazil: Tax Expenditure Rationalization Within Broader Tax Reform

Maria Delgado Coelho
Brazil Tax Expenditure Rationalization Within Broader Tax Reform Book PDF

Author : Maria Delgado Coelho
Publisher : International Monetary Fund
Page : 46 pages
File Size : 41,7 Mb
Release : 2021-09-24
Category : Business & Economics
ISBN : 9781513596624

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Brazil: Tax Expenditure Rationalization Within Broader Tax Reform by Maria Delgado Coelho Pdf

The excessive complexity and burden of the Brazilian tax system, riddled by cumulative indirect taxes and heavy payroll contributions, have led to an accumulation of fiscal incentives aimed at reducing its burden on taxpayers and productive activities. Federal and subnational tax expenditures currently stand at over 5 percent of GDP. Rationalizing them can only be comprehensively feasible in the context of a broader sequenced tax reform, and could reduce resource misallocation and income inequality, as well as provide new revenues.

OECD Tax Policy Studies Taxation of SMEs in OECD and G20 Countries

OECD
OECD Tax Policy Studies Taxation of SMEs in OECD and G20 Countries Book PDF

Author : OECD
Publisher : OECD Publishing
Page : 152 pages
File Size : 48,7 Mb
Release : 2015-09-05
Category : Electronic
ISBN : 9789264243507

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OECD Tax Policy Studies Taxation of SMEs in OECD and G20 Countries by OECD Pdf

SMEs are important for their contribution to employment, innovation, economic growth and diversity. This report examines the tax treatment of SMEs, the case for SME preferences, and the use of tax preferences and simplification measures for SMEs in thirty-nine OECD and G20 countries.

Presumptive Taxation in Sub-Saharan Africa

Mr.Günther Taube,Mr.Helaway Tadesse
Presumptive Taxation in Sub Saharan Africa Book PDF

Author : Mr.Günther Taube,Mr.Helaway Tadesse
Publisher : International Monetary Fund
Page : 50 pages
File Size : 42,6 Mb
Release : 1996
Category : Business & Economics
ISBN : UCSD:31822021344833

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Presumptive Taxation in Sub-Saharan Africa by Mr.Günther Taube,Mr.Helaway Tadesse Pdf

This paper analyses presumptive taxation methods and their application in Sub-Saharan Africa. Presumptive taxation involves simple techniques to capture domestic transactions and sources of income that frequently escapes conventional taxation.

Fiscal Reforms in the Middle East

Ehtisham Ahmad,Abdulrazaq Al Faris
Fiscal Reforms in the Middle East Book PDF

Author : Ehtisham Ahmad,Abdulrazaq Al Faris
Publisher : Edward Elgar Publishing
Page : 353 pages
File Size : 45,8 Mb
Release : 2010-01-01
Category : Political Science
ISBN : 9781849805827

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Fiscal Reforms in the Middle East by Ehtisham Ahmad,Abdulrazaq Al Faris Pdf

This insightful book focuses on the role of fiscal policy in common markets, especially in the context of the supranational constructs in the Gulf Cooperation Council, comprising Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman. It draws on the experience of the EU and the importance of VAT, and reflects on the other main common market in Central America. Although oil windfalls have opened a window of opportunity for the Gulf States, at the same time they have created numerous problems. In particular, the uncertainty associated with periods of boom and bust in the oil market has made the formulation and implementation of sound fiscal policies a formidable task. In this study, the distinguished authors present the background to current fiscal reforms and address the critical challenges facing the Gulf States including the choice between consumption and saving (or current needs and future requirements); intra-generational equity issues; the pro-cyclicality of fiscal policy; fiscal sustainability and the prudent management of revenues from finite oil reserves. They examine the case for VAT to substantially replace customs duties, a significant source of non-oil revenue which would be lost as a result of free trade agreements between the GCC and key trading partners. They also demonstrate how an agreed design for VAT would assist in furthering economic integration, and enhance trade and exports. If properly sequenced, VAT would have a negligible impact on both inflation and the poor, and would be progressive in relation to the customs duties replaced. This highly topical book will be of great interest to academics specializing in public sector economics and public finance, and to national and international policymakers involved in fiscal reform.