The Impact of COVID-19 on Formal Firms : Micro Tax Data Simulations across Countries
How is the COVID-19 pandemic affecting firm profits and tax payments in developing countries? This paper uses administrative corporate tax records from 10 low- and middle-income countries around the world to provide plausible estimates. Modeling th...
| Main Authors: | , , |
|---|---|
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/432861602682833105/The-Impact-of-COVID-19-on-Formal-Firms-Micro-Tax-Data-Simulations-across-Countries http://hdl.handle.net/10986/34632 |
| Summary: | How is the COVID-19 pandemic affecting
firm profits and tax payments in developing countries? This
paper uses administrative corporate tax records from 10 low-
and middle-income countries around the world to provide
plausible estimates. Modeling the lockdown-triggered revenue
shock with simple and transparent assumptions, the analysis
predicts that less than half of all firms will remain
profitable by the end of 2020, about 5-10 percent of the
formal aggregate annual payroll will be lost, and firm exit
rates will double. As a result, it is expected that tax
revenue remitted by the corporate sector will fall by at
least 1.5 percent of baseline gross domestic product.
Differences in sectoral composition and firms' cost
structures generate heterogeneity in the results across
countries: wage subsidies are less effective in low-income
countries and government revenue losses are smaller. |
|---|