Optional non-filing and tax over-withholding: Evidence from South Africa

Luisa Esser, Gereon Mertens, Nadine Riedel and Luisa Wallossek

No wp-2026-96, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Tax withholding in Pay-As-You-Earn systems is common across developing countries and considered essential for the effective enforcement of personal income taxation. To limit administrative burdens, Pay-As-You-Earn is often coupled with generous tax non-filing options. Drawing on rich tax administrative data for South Africa, we show that such Pay-As-You-Earn systems are associated with sizeable and non-refunded over-withholding of taxes, raising taxpayers' effective tax rates above legally applicable rates.

Keywords: Personal income tax; Tax evasion; Low-and middle-income countries (search for similar items in EconPapers)
Date: 2026
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