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Tax code complexity, tax advisor services and firm outcomes: Evidence from South Africa

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  • Nadine Riedel
  • Franziska Sicking
  • Ida Zinke

Abstract

We study the impact of tax preparers on corporate tax optimization in South Africa. The analysis draws on the population of corporate income tax returns linked to data on tax preparer use. Consistent with tax code complexity and frictions in the take-up of tax advantages, we document that firms' reported taxable income and tax payments decline significantly when they start utilizing tax preparer services.

Suggested Citation

  • Nadine Riedel & Franziska Sicking & Ida Zinke, 2025. "Tax code complexity, tax advisor services and firm outcomes: Evidence from South Africa," WIDER Working Paper Series wp-2025-64, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2025-64
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    References listed on IDEAS

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    1. Guyton, John L. & O'Hare, John F. & Stavrianos, Michael P. & Toder, Eric J., 2003. "Estimating the Compliance Cost of the U.S. Individual Income Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 56(3), pages 673-688, September.
    2. Eric Zwick, 2021. "The Costs of Corporate Tax Complexity," American Economic Journal: Economic Policy, American Economic Association, vol. 13(2), pages 467-500, May.
    3. Hauck, Tobias & Wallossek, Luisa, 2024. "Optional (non-)filing and effective taxation," Journal of Public Economics, Elsevier, vol. 238(C).
    4. Joel Slemrod & Jon Bakija, 2008. "Taxing Ourselves, 4th Edition: A Citizen's Guide to the Debate over Taxes," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262693631, December.
    5. Wier, Ludvig, 2020. "Tax-motivated transfer mispricing in South Africa: Direct evidence using transaction data," Journal of Public Economics, Elsevier, vol. 184(C).
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