Jakarta | A cautious tax policy is considered capable of driving the growth of small and medium enterprises (SMEs) in G20 member countries.
Some of the challenges faced by SMEs in these countries include access to financial institutions and relatively high costs in tax payments.
The latest OECD report, Taxation of SMEs in OECD and G20 Countries, found that tax systems can affect SMEs in several ways. One way is through the implementation of income tax.
"In many countries, the imposition of SME income tax provides incentives for them to incorporate and distribute income in the form of capital," the report stated.
The OECD also found that tax regulations applicable to all businesses can disproportionately affect SMEs, particularly in their early years and those experiencing credit constraints.
The report also found that the proportional tax burden on SMEs is relatively higher compared to larger companies.
Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, stated that a cautious tax policy, particularly preferences and simplifications for SMEs, is crucial to support the growth of this business sector.
"SMEs are a significant source of employment and growth for both OECD and G20 countries," he said.
Source: Bisnis.com