The Impact of Covid-19 on Formal Firms: Lessons from Administrative Tax Data

37 Pages Posted: 21 Mar 2024

See all articles by Pierre Jean Bachas

Pierre Jean Bachas

World Bank

Anne Brockmeyer

World Bank

Pablo Garriga

affiliation not provided to SSRN

Camille Semelet

affiliation not provided to SSRN

Abstract

Most low-income countries lack high-frequency firm-level data to monitor the effect of economic shocks in real time. We examine whether administrative tax data can help fill this gap, in the context of the COVID-19 pandemic. In spring 2020, we used the full population of corporate tax returns for 2019 in six developing countries to predict the effect of COVID-induced shocks on formal firms' activity. Comparing the predictions to the realized 2020 data, we find that firms were more resilient than predicted: the share of unprofitable firms increased by only 7 percentage points, while aggregate profits and taxes paid remained stable. The simulations failed to anticipate that labor and capital inputs would flexibly adjust and that large firms would be very resilient. Complementing our simulations with higher-frequency VAT data would have markedly improved predictions.

Keywords: COVID-19, firms, corporate income tax, administrative tax data

Suggested Citation

Bachas, Pierre Jean and Brockmeyer, Anne and Garriga, Pablo and Semelet, Camille, The Impact of Covid-19 on Formal Firms: Lessons from Administrative Tax Data. Available at SSRN: https://ssrn.com/abstract=4760303 or http://dx.doi.org/10.2139/ssrn.4760303

Pierre Jean Bachas

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Anne Brockmeyer (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Pablo Garriga

affiliation not provided to SSRN ( email )

No Address Available

Camille Semelet

affiliation not provided to SSRN ( email )

No Address Available

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