PwC *connectedthinking Reducing the regulatory burden on SMEs Simplification of tax compliance procedures for SMEs PwC Tomas Balco PricewaterhouseCoopers Tax & Advisory LLP, Kazakhstan

PwC *connectedthinking Getting Started… Does Taxation effect business behaviour and entrepreneurship? PwC

*connectedthinking Taxation It is a cost… To pay it – one suffers additional costs … Mistakes…. Penalties… PwC

*connectedthinking Costs for SME’s vs…. SME - Ratio between total tax-related compliance costs and paid taxes) of 30.9% Large Company – 1.9% !!!!! PwC

*connectedthinking Comparison Company < 10 employees 2 times costs more than company 10<20 3 times costs more than company 20<50 5 – 10 times more than large companies

PwC *connectedthinking Because… Tax systems build mostly same for all… Complexity … Lack of qualification, focus… PwC

*connectedthinking Main Hurdles for SME’s 1.Frequent changes of tax laws 2.Complexity of tax systems (tax systems are more geared to large enterprises) 3.Existence of different tax administrations 4.Incomprehensible language of tax laws, including incomprehensible forms 5.Short and inflexible deadlines for tax payments (resulting in cash flow problems) 6.Costs of tax consultants 7.Registration procedures

PwC *connectedthinking What can be done at the EU level? Taxes –Public law – sovereignty issues Some areas possible harmonization - VAT Way forward –Display and promotion of best practices DG Enterprise and Industry –Expert Group ( ) REPORT OF THE EXPERT GROUP –SIMPLIFIED TAX COMPLIANCE PROCEDURES FOR SMES »(PERSONAL INCOME TAX, CORPORATE INCOME TAX, PAYROLL TAX) »June 2007 –

PwC *connectedthinking Lessons?… PwC

*connectedthinking Lessons of Best Practices A stable and predictable regulatory environment The integration of registration for tax purposes within general business registration Tailor-made information - reduce compliance costs for small businesses Small businesses need information and assistance on changes in tax laws Binding interpretations of existing tax laws and rulings reduce uncertainty Simplified methods for tax accounting and for establishing the tax base Tax forms and reporting requirements adjusted to reality of SMEs The electronic filing of tax returns - speed up procedures and reduce costs Payment reminders and individual tax accounts - speed up payment/refund Penalty procedures can be avoided or reduced

PwC *connectedthinking How healthy and dynamic do we want Europe to be? Vision? What role will SMEs play in the this?

PwC *connectedthinking Tomas Balco Senior Manager Tel.: Fax: Thank you! © 2007 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. PricewaterhouseCoopers 29/6 Satpaev Ave., 4th Floor Almaty Kazakhstan Telephone Facsimile