Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185475
Authors: 
Boonzaaier, Wian
Harju, Jarkko
Matikka, Tuomas
Pirttilä, Jukka
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7277
Abstract: 
We study the responsiveness of small and medium-sized firms to a small-business corporate income tax schedule using population-wide administrative data from South Africa. We find sizeable bunching of firms at the corporate income thresholds where the corporate tax rate increases, implying active responses to corporate income taxes. The observed bunching is very sharp, and reacts immediately to changes in the location of the kink points. These observations suggest that a sizeable part of the response is driven by reporting responses rather than real economic behavior. We find indicative evidence that reporting behavior is linked to underreporting of sales and legal tax-planning activities.
Subjects: 
corporate taxation
small firms
emerging economies
bunching
JEL: 
H21
H25
H32
O12
Document Type: 
Working Paper

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