Abstract
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Legislation and tax authority conduct upon it play a very important role in determining overall business environment by defining the rules under which the enterprises have to operate. Nonetheless, the complexity of legislation creates also unnecessary administrative burdens and consequently hinders entrepreneurial activity. In terms of creating friendly business environment it is therefore of crucial importance that governments ensure clear, transparent, unambiguous and stable legislation. Red tape, as well as its reduction, is characteristic of both national and broader settings, such as the EU and globally, as a horizontal administrative reform. Especially the extensive legislation adopted in recent years in the EU member countries is becoming increasingly burdensome for enterprises. Tax legislation is consequently a major concern since taxes or tax policy often represent a central parameter defining the business environment.
It is particularly underlined within the literature, that administrative barriers hinder the performance, productivity and growth of small and medium enterprises (SMEs). Also, according to the literature, it may be assumed that the characteristics of SMEs play a key role in perceiving administrative barriers, although the current acts and action plans in Slovenia do not attach a priority role to the latter. Therefore, this paper aims to provide a comprehensive analysis of the administrative barriers SMEs in Slovenia face as regards the tax compliance area. The main hypothesis of this study is that significant differences in the perception of administrative barriers exist among characteristic SME groups (size, age, turnover, legal form of organization). The data for the research is collected using an original questionnaire on a sample of 925 SMEs. In order to determine the characteristic SME groups as regards differences in administrative barriers perception, the Orange open source machine learning and data visualization tool is used. With application of the innovative data mining technique, discovering the main groups of hampered SMEs and their characteristics in the large data set is made possible.
The results of the analysis confirm the main hypothesis that there are significant differences in the perception of administrative barriers among characteristic SME groups. Moreover, the paper reveals the mainly influenced SME groups as regards administrative barriers and the most promising measures to be implemented by the tax authorities in order to improve the current state. Based on these results, unexploited potential in Slovenia is indicated by eradicating such administrative barriers, while important differences in the challenges the different company groups face are revealed. Thus, it is shown that what is most promising for addressing their impact as an administrative barrier is to adopt a tailored approach that targets specific enterprise groups, which should be facilitated by a definition of guidelines for responsible tax authorities to foster the removal of such barriers. In this context, the implementation of the European Small Business Act is extremely important, emphasizing a critical view when adopting legislation and policies. Namely, any proposal for a new or amended regulation must have a prepared impact assessment on the economy and the environment, in particular on SMEs (i.e., the "SME test") in compliance with EU directives. Therefore, policymakers should ensure a stable and predictable tax legislative environment for those companies on the one hand and provide simplified methods for tax accounting and financial reporting.
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