The impact of COVID-19 on formal firms: Lessons from administrative tax data

Pierre Bachas, Anne Brockmeyer, Pablo Garriga and Camille Semelet

Journal of Development Economics, 2025, vol. 175, issue C

Abstract: Most low-income countries lack high-frequency firm-level data to monitor the effect of economic shocks in real time. We examine whether administrative tax data can help fill this gap, in the context of the COVID-19 pandemic. In spring 2020, we used the full population of corporate tax returns for 2019 in six developing countries to predict the effect of COVID-induced shocks on formal firms’ activity. Comparing the predictions to the realized 2020 data, we find that firms were more resilient than predicted: the share of unprofitable firms increased by only 7 percentage points, while aggregate profits and taxes paid remained stable. The simulations failed to anticipate that labor and capital inputs would flexibly adjust and that large firms would be very resilient. Complementing our simulations with higher-frequency VAT data would have markedly improved predictions.

Keywords: COVID-19; Firms; Corporate income tax; Administrative tax data (search for similar items in EconPapers)
JEL-codes: H25 H32 H61 O12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:175:y:2025:i:c:s0304387825000124

DOI: 10.1016/j.jdeveco.2025.103461

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