The paper aims to provide a detailed description and evaluation of the Italian experience in tax auditing and enforcement for SMEs which we believe may have some lessons for developing countries with similar sized shadow economies and large numbers of micro-enterprises. We focus on an audit strategy known as Studi di settore, which roughly translates as business sector analyses, which relies on statistical methods to select the taxpayers to be audited. We show how Studi di settore can be used as an audit rule or as a presumptive tax and we compare it with optimal audit rules and with alternative presumptive taxes on the basis of the available evidence for Italy. We discuss whether Studi di settore may be a useful policy tool for establishing presumptive taxation for SMEs in developing countries when resources for tax auditing are scarce. A presumptive regime may naturally evolve in a full-fledged audit selection mechanism following the development of the private and public sectors.