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...
| Main Authors: | , , |
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| Language: | English |
| Published: |
2012
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| Subjects: | |
| 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 |
| 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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