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

Author

Listed:
  • Luisa Esser
  • Gereon Mertens
  • Nadine Riedel
  • Luisa Wallossek

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.

Suggested Citation

  • Luisa Esser & Gereon Mertens & Nadine Riedel & Luisa Wallossek, 2026. "Optional non-filing and tax over-withholding: Evidence from South Africa," WIDER Working Paper Series wp-2026-96, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2026-96
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    File URL: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2026-96-optional-non-filing-tax-over-withholding.pdf
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