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A Critical Review of the Characteristics of Presumptive Tax Systems in Developing Countries

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  • Munyaradzi Duve

    (DEPARTMENT OF ACCOUNTING _ INFORMATION SYSTEMS_ GREAT ZIMBABWE UNIVERSITY_ MASVINGO_ ZIMBABWE)

  • Daniel P. Schutte

    (SCHOOL OF ACCOUNTING SCIENCES_ NORTH-WEST UNIVERSITY_ POTCHEFSTROOM_ SOUTH AFRICA)

Abstract

This paper considers the effect of the presumptive tax system characteristics on the tax compliance behaviour of small businesses in developing countries. Since the concept of presumptive taxation involves several features influencing the formalisation of small businesses, this paper seeks to survey three key areas of literature: targeted taxpayers, thresholds and timeframe. This paper differs fundamentally from previous studies in that it analyses presumptive tax system characteristics. A descriptive review approach was followed in evaluating the empirical literature on presumptive tax system characteristics. A content analysis was then performed on literature about categories and subcategories provided in the classification framework. The review highlights similarities and conflicting evidence of presumptive tax system characteristics in transforming the compliance behaviour of small businesses. It was concluded that the blended use of information technology and existing presumptive tax systems can facilitate the movement of small businesses from the informal to the formal sector.

Suggested Citation

  • Munyaradzi Duve & Daniel P. Schutte, 2021. "A Critical Review of the Characteristics of Presumptive Tax Systems in Developing Countries," Theory Methodology Practice (TMP), Faculty of Economics, University of Miskolc, vol. 17(02), pages 27-43.
    • Handle: RePEc:mic:tmpjrn:v:17:y:2021:i:02:p:27-43
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    File URL: http://tmp.gtk.uni-miskolc.hu/volumes/2021/02/TMP_2021_02_03.pdf
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    References listed on IDEAS

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    3. Wian Boonzaaier & Jarkko Harju & Tuomas Matikka & Jukka Pirttilä, 2019. "How do small firms respond to tax schedule discontinuities? Evidence from South African tax registers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(5), pages 1104-1136, October.
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    10. Danie SCHUTTE & Danelle LABUSCHAGNE & Maria-Andrada GEORGESCU & Cornelia POP, 2019. "An evaluation of the turnover tax system in South Africa," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(620), A), pages 59-70, Autumn.
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    More about this item

    Keywords

    presumptive tax system; targeted taxpayers; threshold; timeframe; tax compliance behaviour;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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