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Tax Administration and Firm Performance: New Data and Evidence for Emerging Market and Developing Economies

Author

Listed:
  • Ms. Era Dabla-Norris
  • Florian Misch
  • Mr. Duncan Cleary
  • Munawer Khwaja

Abstract

Tax compliance costs tend to be disproportionately higher for small and young businesses. This paper examines how the quality of tax administration affects firm performance for a large sample of firms in emerging market and developing economies. We construct a novel, internationally comparable, and multidimensional index of tax administration quality (the TAQI) using information from the Tax Administration Diagnostic Assessment Tool. We show that better tax administration attenuates the productivity gap of small and young firms relative to larger and older firms, a result that is robust to controlling for other aspects of tax policy and of economic governance, alternative definitions of small and young firms, and measures of the quality of tax administration. From a policy perspective, we provide evidence that countries can reap growth and productivity dividends from improvements in tax administration that lower compliance costs faced by firms.

Suggested Citation

  • Ms. Era Dabla-Norris & Florian Misch & Mr. Duncan Cleary & Munawer Khwaja, 2017. "Tax Administration and Firm Performance: New Data and Evidence for Emerging Market and Developing Economies," IMF Working Papers 2017/095, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/095
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    Citations

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    Cited by:

    1. Ana María Iregui-Bohórquez & Ligia Alba Melo-Becerra & Antonio José Orozco-Gallo, 2020. "Corporate taxes and firms' performance: A meta-frontier approach," Borradores de Economia 1116, Banco de la Republica de Colombia.
    2. Mzalendo, Ryoba & Chimilila, Cyril, 2020. "Tax administration, Taxpayer’s Reciprocity and Compliance in Tanzania: Empirical Evidence from a Survey," African Journal of Economic Review, African Journal of Economic Review, vol. 8(2), July.
    3. Arun Kumar Deshmukh & Ashutosh Mohan & Ishi Mohan, 2022. "Goods and Services Tax (GST) Implementation in India: A SAP–LAP–Twitter Analytic Perspective," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 23(2), pages 165-183, June.
    4. Ján Dobroviè & Rastislav Rajnoha & Petr Šuleø, 2021. "Tax evasion in the EU countries following a predictive analysis and a forecast model for Slovakia," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 701-728, September.
    5. Serhan Cevik & Fedor Miryugin, 2018. "Does Taxation Stifle Corporate Investment? Firm‐Level Evidence from ASEAN Countries," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(3), pages 351-367, September.
    6. Ismail Kintu & Faisal Buyinza & Yusuf Kiwala, 2019. "Tax Administration and Entrepreneurial Performance: A Study of SMEs in Uganda," International Business Research, Canadian Center of Science and Education, vol. 12(12), pages 1-39, November.
    7. Sebastian Kot & Róbert Štefko & Ján Dobrovič & Rastislav Rajnoha & Jan Váchal, 2019. "The Main Performance and Effectiveness Factors of Sustainable Financial Administration Reform Using Multidimensional Statistical Tools," Sustainability, MDPI, vol. 11(13), pages 1-21, June.

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