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

Munyaradzi  Duve; Daniel P.  Schutte

doi:10.18096/TMP.2021.03.03

Authors

Munyaradzi Duve Department of Accounting and Information Systems, Great Zimbabwe University
Daniel P. Schutte School of Accounting Sciences, North-West University, Potchefstroom

DOI:

https://doi.org/10.18096/TMP.2021.03.03

Keywords:

presumptive tax system, targeted taxpayers, threshold, timeframe, tax compliance behaviour

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.

Author Biographies

Munyaradzi Duve, Department of Accounting and Information Systems, Great Zimbabwe University

Lecturer

Daniel P. Schutte, School of Accounting Sciences, North-West University, Potchefstroom

Professor

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