engleski

Preferential Corporate Income Tax Treatment for SMEs : An International Perspective

The paper analysis all forms of preferential tax treatment (tax rates, all sorts of incentives, simplification measures and reliefs from other taxes that are based on corporate income) of corporate income tax of SMEs as one of the measures to boost the economic growth. The analysis is concentrated on incorporated SMEs, with the objective to give the comparative analysis of OECD/EU/SEE countries, with reference to Slovenia and Croatia. The main methodology is international comparison, based on different basic and preferential corporate and personal income tax rates (including local taxes and surcharges), as well as additionally calculated overall effective statutory dividend tax rates (overall tax on distributed profits, which comprises corporate income tax and personal tax rates on dividend inclusive different methods of integration of both taxes). The “incentive to incorporate” is assessed by comparison of top personal income tax rates and overall effective statutory tax rates on dividends. The papers shows that lower corporate income tax rate for SMEs is not restricted only to the countries with relatively high corporate income tax rates. The relative difference between basic and lower /preferential tax rates could be even higher than half of the basic rate. It could be concluded that in general overall lower statutory effective dividend tax rates for SMEs compensate for relatively higher overall effective statutory dividend rates. Most countries with reduced corporate income tax rates for SMEs do not possess the disincentive to incorporate and vice versa. However, Croatia and Slovenia, with no preferential corporate income tax rate for SMEs are at the advantage concerning both analyses done. Two thirds of the old EU members apply different tax reliefs for SMEs. Almost all of them allow classical investment incentives as well as some additional incentives (R&D, innovations…). Most new EU members and almost all SEE allow also some corporate income tax reliefs/incentives for SMEs, but the predominant here are different simplification measures, mostly in the form of less frequent or no tax prepayments at all. Some countries even apply simplified calculation of corporate income tax for SMEs that is not based on corporate profit.

SMEs, corporate income tax, tax rates, tax incentives

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