Small Businesses in South Africa : Who Outsources Tax Compliance Work and Why?

Small Businesses in South Africa : Who Outsources Tax Compliance Work and Why?

The authors use firm-level survey data on 998 small and medium enterprises registered for tax in South Africa regarding tax compliance costs to investigate the use of outsourcing to complete tax compliance tasks. Overall, about 43 percent of the en...

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Bibliographic Details
Main Authors: Coolidge, Jacqueline, Ilic, Domagoj, Kisunko, Gregory
Format: Policy Research Working Paper
Language:English
Published: 2012
Subjects:
ACCOUNTANT
AUDITS
BALANCE SHEET
BALANCE SHEETS
BANK POLICY
BUSINESS SERVICES
BUSINESS TAX
BUSINESS TAXES
CAPITAL TAXES
CERTIFICATE
CLIENT BASE
COMPANY TAX
COMPETITIVENESS
COMPLIANCE BURDEN
COMPLIANCE COST
COMPUTERS
CORE BUSINESS
CORE BUSINESS ACTIVITIES
CORPORATE INCOME TAX
DATA ANALYSIS
DEDUCTIONS
DEVELOPING COUNTRIES
DUMMY VARIABLE
DUMMY VARIABLES
ECONOMIC ACTIVITY
EXCHANGE RATE
EXTERNAL CONSULTANT
FINANCIAL INSTITUTIONS
FINANCIAL STATEMENTS
FINANCIAL SUPPORT
FOREIGN INVESTMENT
IMPUTATION
INCOME TAX
INFORMATION SYSTEMS
INSPECTION
INSPECTIONS
INTERNATIONAL BANK
INVESTMENT CLIMATE
LARGE TAXPAYERS
LATE PAYMENTS
MANUFACTURING
MEDIUM ENTERPRISES
MICRO ENTERPRISES
MICRO-ENTERPRISES
MISSING VALUES
NATIONAL TREASURY
OUTSOURCING
PAYMENT OF TAX
PAYROLL TAXES
PDF
PHONE
POSITIVE COEFFICIENTS
PRODUCTIVITY
PUBLIC FINANCE
QUERIES
REAL ESTATE
REGRESSIVE TAX
RESTRICTED SHARE
RESULT
RESULTS
RETAIL TRADE
SAVINGS
SENSITIVITY ANALYSIS
SMALL BUSINESS
SMALL BUSINESSES
TAX
TAX ACCOUNTING
TAX ADMINISTRATION
TAX ADVISORS
TAX ASSESSMENTS
TAX AUTHORITIES
TAX BREAKS
TAX BURDEN
TAX CHANGES
TAX COMPLIANCE
TAX COMPLIANCE COSTS
TAX FORMS
TAX FREE
TAX LAW
TAX LAWS
TAX LEGISLATION
TAX POLICY
TAX REFORM
TAX REGIME
TAX RESEARCH
TAX RETURN
TAX RETURNS
TAX SYSTEMS
TAXABLE INCOME
TAXATION
TAXPAYERS
TECHNICAL KNOWLEDGE
TRANSITION COUNTRIES
TREASURY
TURNOVER
TURNOVER TAX
USE TAX
USERS
USES
WEB
WORKING HOURS
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090323132017
http://hdl.handle.net/10986/4068
Description
Summary:The authors use firm-level survey data on 998 small and medium enterprises registered for tax in South Africa regarding tax compliance costs to investigate the use of outsourcing to complete tax compliance tasks. Overall, about 43 percent of the enterprises do all their tax compliance work in-house, 11 percent outsource all their tax compliance work, and the remaining 46 percent use a combination of both ("partial outsourcing"). The data display an inverted-U shape for outsourcing of tax compliance tasks: the smallest firms (those under R 300,000 turnover or well under US$50,000) tend not to outsource, due to a combination of relatively higher cost-burden and less complexity. Relatively larger firms (those with more than R 14 million turnover or about US$2 million) report that they have sufficient in-house capacity and therefore do not need to outsource. Those in the middle are most likely to outsource at least some of their tax compliance work, mostly because tax is a specialist field and they presumably lack sufficient capacity in-house. The survey data show that the costs of tax compliance are clearly the highest for those who engage in partial outsourcing, as it appears there is likely duplication of effort. Most such firms could reduce their tax compliance costs (and probably minimize the incidence of post-filing problems) by moving from partial to full outsourcing of all tax compliance work.

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