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Taxation, SMEs and Entrepreneurship

Author

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  • Duanjie Chen

    (Macrosys Research and Technology)

  • Franck Lee

    (OECD)

  • Jack M. Mintz

    (University of Toronto and C.D. Howe Institute)

Abstract

This paper discusses the implications of tax policy for the growth of entrepreneurship and small and medium-sized enterprises (SMEs). Some existing features of OECD tax systems are biased against entrepreneurs and small firms. For instance, double taxation of distributed corporate profits can discourage incorporation of small firms while it can also favour debt over equity financing, the latter most required by SMEs. Conversely, a number of OECD countries have features in their tax systems that favour selfemployed individuals and SMEs to encourage growth. These include lower corporate income tax rates, exemptions from value-added taxes and investment tax credits. It is, however, not clear that the benefits of preferential tax treatment of self-employed individuals and SMEs outweigh the costs of moving away from tax neutrality. There are a number of areas where OECD governments can improve the tax climate for small firms and entrepreneurs. They can reduce progressivity in personal ... Fiscalité, PME et entreprenariat Le présent document traite des effets de la politique fiscale sur l’entreprenariat et les PME. Les systèmes fiscaux en vigueur dans les pays Membres de l'OCDE présentent parfois des aspects qui pénalisent les entrepreneurs et les petites entreprises. A titre d’exemple, la double imposition des bénéfices distributes peut dissuader les petites entreprises de se constituer en sociétés anonymes, ou peut favoriser l’endettement au détriment du financement par augmentation des fonds propres, ce dont ont le plus besoin les PME. A l’inverse, un certain nombre de pays Membres de l'OCDE ont mis en place, pour stimuler la croissance, des mesures fiscales en faveur des travailleurs indépendants et des PME : baisse des taux de l’impôt sur les sociétés, exonération de la taxe sur la valeur ajoutée et crédit d’impôt pour les investissements, par exemple. Il n’est pas évident toutefois que les avantages de ce traitement fiscal préférentiel à l’intention des travailleurs indépendants et des PME ...

Suggested Citation

  • Duanjie Chen & Franck Lee & Jack M. Mintz, 2002. "Taxation, SMEs and Entrepreneurship," OECD Science, Technology and Industry Working Papers 2002/9, OECD Publishing.
    • Handle: RePEc:oec:stiaaa:2002/9-en
    DOI: 10.1787/013245868670
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    Citations

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    Cited by:

    1. Răzvan V. BALABAN, 2021. "Case study: The impact on the Romanian State Budget in the case of EU adoption of the CCCTB Directive," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(627), S), pages 135-154, Summer.
    2. Bernard Hoekman, 2004. "Policies Facilitating Firm Adjustment to Globalization," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(3), pages 457-473, Autumn.
    3. Bergner, Sören Martin & Bräutigam, Rainer & Evers, Maria Theresia & Spengel, Christoph, 2017. "The use of SME tax incentives in the European Union," ZEW Discussion Papers 17-006, ZEW - Leibniz Centre for European Economic Research.
    4. Veronika Solilová, 2012. "Small and medium sized enterprises (SMEs) and transfer pricing," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 60(2), pages 349-356.
    5. Gordon, Roger & Sarada,, 2018. "How should taxes be designed to encourage entrepreneurship?," Journal of Public Economics, Elsevier, vol. 166(C), pages 1-11.
    6. Ergete Ferede, 2013. "Tax progressivity and self-employment: evidence from Canadian provinces," Small Business Economics, Springer, vol. 40(1), pages 141-153, January.
    7. Chang Woon Nam, 2013. "Comparison of Reduced Corporate Tax Rate in the EU," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(01), pages 69-70, May.
    8. Mark Parsons, 2011. "Rewarding Innovation: Improving Federal Tax Support for Business R&D in Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 334, September.
    9. Walch, Florian & Dwenger, Nadja, 2011. "Tax Losses and Firm Investment: Evidence from Tax Statistics," VfS Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48699, Verein für Socialpolitik / German Economic Association.
    10. Michele Bernini & Tania Treibich, 2013. "Killing a Second Bird with One Stone? Promoting Firm Growth and Export through Tax Policy," GREDEG Working Papers 2013-30, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.

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