The Importance Of Taxation Systems For Sme Tax Compliance

SME tax systems need to be designed in such a way as to minimise compliance costs and maximize accessibility. The reforms of the SME tax system would then need to require compliance commensurate to capacity. Simplification of the income tax system for SMEs in a more comprehensive manner is strongly supported. This should take account the countries’ past experiences, taxpayer views, specific suggestions on legislative detail and the lessons learnt from other tax regimes. These factors should provide a sound basis for tax policy decision-making in any country.However, most SMEs see that the taxation system is not fair for them and that they pay the same amount as large enterprises. In this case, the system should apply differently to each one, and the large enterprise should pay more that the SME. Governments can simplify or make a new system that suits SMEs, which would remove the comparison with larger enterprises because SMEs would have a system of their own. In order to implement effective reform, governments and SMEs need to make an agreement to satisfy both parties. This would require both parties to compromise on the considerable benefits they are seeking.