Wait no more: how the administration of VAT refunds impacts firm behaviour

Giacomo Brusco, Marlies Piek and Tejaswi Velayudhan

No wp-2024-58, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Refunds are an essential feature of well-functioning VAT systems and take up a sizeable portion of government spending. In South Africa, refunds amount to 50 percent of gross VAT collection, representing a substantial transfer from the government to taxpayers that has to occur at relatively high frequency, often monthly. We show that delays in these refund payments reduce domestic investment, especially by small firms. We use administrative data to provide extensive evidence that firms respond to incentives created by delays and denials of refunds.

Keywords: Value-added tax; event study; Firm behaviour (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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