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THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Key issues for designing presumptive tax regimes Michael Engelschalk and Jan Loeprick.

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Presentation on theme: "THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Key issues for designing presumptive tax regimes Michael Engelschalk and Jan Loeprick."— Presentation transcript:

1 THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Key issues for designing presumptive tax regimes Michael Engelschalk and Jan Loeprick Investment Climate Advisory Services World Bank Group

2 THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 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 2

3 THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Significant improvements since 2005, but not for small firms 3 Example – exacerbating compliance costs for small businesses in Georgia

4 THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 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 4 Annual tax (BGL) per square meter of a retail trader in Sofia Zone IZone IIZone IIIZone IV Size of business premises less than 100 sq m 2016116 Size of business premises 100 sq m and above 50403020

5 THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Example – Misalignment in Kazakhstan 5

6 THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 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 6


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