Do foreign corporate tax cuts affect South African exports?

The debate on corporate tax rates often focuses on how to attract investment, prevent profit shifting, or raise state revenues. Yet recent research shows that corporate tax rates also influence firms’ export performance in global markets. As countries adjust their corporate tax rates, these changes affect exporters elsewhere by altering relative costs and competitive conditions. New research examines whether corporate tax changes in competitor countries influence South African exports. Using detailed administrative customs and tax data from 2012 to 2019, the study analyses South African firms’ export performance when competitors elsewhere benefit from changes in corporate tax rates, finding that reductions in corporate tax rates among foreign competitors are associated with weaker export performance among South African firms competing in the same product destination markets. Firms mandated to use system-to-system e-invoicing reported nearly 150% higher VAT liabilities Reported purchases fell by 43% among mandated firms, consistent with a reduction in exaggerated input VAT claims Negative VAT balances carried forward declined sharply, increasing the share of firms with a positive amount of VAT to pay in a given month The number of firms filing VAT declarations increased rapidly following the introduction of e-invoicing, with around 12,000 firms filing for the first time