Join us for a seminar with Nadine Riedel, who will present research on the role of tax advisors and corporate tax outcomes in South Africa. The seminar will take place on 7 October, 11:15–12:00, in Room T216.
If you are unable to join us at NMBU, you can follow the seminar online through this link.
Title: Tax Code Complexity, Tax Advisor Services and Firm Outcomes: Evidence from South Africa
Authors: Nadine Riedel, Franziska Sicking, Ida Zinke
Abstract:
We study the impact of tax preparers on corporate tax optimization in South Africa. The analysis draws on the population of corporate income tax returns linked to data on tax preparer use. Consistent with tax code complexity and frictions in the take up of tax advantages, we document that firms’ reported taxable income and tax payments decline significantly when they start utilizing tax preparer services. Additional analyses provide direct evidence that the use of a tax preparer increases the take-up of legal tax benefits: Eligible firms become more likely to seek access to a regime with special low tax rates; they are more likely to claim an employment tax incentive (ETI) for young workers and to run losses (which can be offset against future profits). Our findings, on the one hand, imply that tax preparers are instrumental in reducing frictions in corporate income taxation. In the context of the ETI, they increase the effectiveness of the tax incentive in stimulating the employment of young workers. On the other hand, tax preparers are shown to drive a wedge between the tax costs of firms that do and do not rely on their services – which may, in itself, be a source of inefficiency and inequities.
Practical Information:
- Date & Time: 7 October, 11:15–12:00
- Room: T216
- Speaker: Nadine Riedel