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Legal tax liability, legal remittance responsibility and tax incidence: Three dimensions of business taxation

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  • Anna Milanez

Abstract

This paper examines the role of businesses in the tax system. In addition to being taxed directly, businesses act as withholding agents and remitters of tax on behalf of others. Yet the share of tax revenue that businesses remit to governments outside of direct tax liabilities is under-studied. This paper develops two measures of the contribution of businesses to the tax system and applies both these measures for 24 OECD countries. The results show that businesses play an important role in the tax system, both as taxpayers and as remitters of tax. However, care should be taken in interpreting any measure of the business tax burden, which must be understood against the backdrop of economic incidence. This paper highlights that the economic incidence, or burden, of a tax is not necessarily borne by the person on whom the tax is imposed under legal statute, but may be passed on to others in the economy, whether it be owners of capital, workers or consumers.

Suggested Citation

  • Anna Milanez, 2017. "Legal tax liability, legal remittance responsibility and tax incidence: Three dimensions of business taxation," OECD Taxation Working Papers 32, OECD Publishing.
    • Handle: RePEc:oec:ctpaaa:32-en
    DOI: 10.1787/e7ced3ea-en
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    Cited by:

    1. Andrea Colciago & Vivien Lewis & Branka Matyska, 2023. "Corporate taxes, productivity, and business dynamism," Working Papers 512, University of Milano-Bicocca, Department of Economics, revised May 2023.
    2. Léo Czajka & Bassirou Sarr & Mattea Stein, 2024. "Fraud Detection Under Limited State Capacity: Experimental Evidence From Senegal," CSEF Working Papers 731, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    3. Thiess Buettner & Carolin Holzmann & Felix Kreidl & Hendrik Scholz, 2020. "Withholding-tax non-compliance: the case of cum-ex stock-market transactions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(6), pages 1425-1452, December.
    4. Laszlo Goerke, 2021. "Tax Evasion by Firms," IAAEU Discussion Papers 202104, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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