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

Author

Listed:
  • Bachas, Pierre
  • Brockmeyer, Anne
  • Garriga, Pablo
  • Semelet, Camille

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.

Suggested Citation

  • Bachas, Pierre & Brockmeyer, Anne & Garriga, Pablo & Semelet, Camille, 2025. "The impact of COVID-19 on formal firms: Lessons from administrative tax data," Journal of Development Economics, Elsevier, vol. 175(C).
    • Handle: RePEc:eee:deveco:v:175:y:2025:i:c:s0304387825000124
    DOI: 10.1016/j.jdeveco.2025.103461
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    More about this item

    Keywords

    COVID-19; Firms; Corporate income tax; Administrative tax data;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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