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We show that delegating tax collection to large firms can help build tax capacity in weak-enforcement settings. We exploit two reforms in Argentina that dramatically expanded and subsequently reduced turnover tax withholding by firms. Combining firm-to-firm data with regression discontinuity and difference-in-differences methods around revenue eligibility thresholds we find that: (i) large firms appointed as collection agents (CAs) are not affected, (ii) firms commercially linked to CAs self-report more sales by 5.8 percent in response to higher withholding, (iii) firms respond symmetrically to a decrease in withholding by reporting lower sales. Tax-collecting firms can thus boost compliance and tax revenue.
Authors

Research Associate World Bank
Dario is a Research Associate of the IFS, interested in Public Finance and Labour Economics, with a particular interest in developing countries.

Research Economist World Bank
Working Paper details
- DOI
- 10.1920/wp.ifs.2024.4344
- Publisher
- Institute for Fiscal Studies
Suggested citation
Garriga, P and Tortarolo, D. (2022). Firms as tax collectors. 22/44. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/firms-tax-collectors (accessed: 15 July 2025).
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