While quantifying the impact of corporate taxes on firms’ investment, location decisions and tax avoidance has attracted considerable interest over recent years, other corporate adjustment margins are less well studied. In this paper, we use rich customs and tax return information for South Africa to establish that corporate taxes impact firms’ competitiveness in international product markets. Drawing on a difference-in-differences strategy that allows us to non-parametrically absorb confounders at the level trading partner countries and 6-digit product categories, we show that exports by South African firms decline significantly when host country-corporate taxes of foreign competitors decrease. The effect emerges across a broad set of industries and is concentrated among large, regular exporters. Affected firms’ real activity and profits in South Africa drop significantly when foreign competitors’ corporate tax costs decline.

Credible corporate tax announcement allows the government to exploit its reputation and impose a high tax rate by attracting investment, but amplifies tax distortion on investment as firms become more responsive to the announced tax rate. While the latter effect is outweighed by the first effect in a general model of corporate taxation with government reputation, introducing firms' profit-shifting makes the latter effect dominant. Reputation is modeled as the probability of government committing to the announced tax rate, and the optimal tax rate decreases in reputation when firms can shift profits across countries. This induces higher investment and less profit-shifting under higher levels of reputation. The model predictions are consistent with empirical facts on how government reputation is related to statutory corporate tax rate, foreign direct investment inflows, and multinational firms' profit-shifting.

Rising globalization has exerted a downward pressure on global tariffs, thereby eroding tariff revenues in developing nations. We analyze how gains from lowering import tariffs are distributed within the firm and the corresponding tax (base) implications. First, we study the effect of tariff changes on imports. Second, we estimate the firm-level semi-elasticities of profits, sales, capital, and wages with respect to import tariffs. Using linked employer-employee data and firm-product-level import data for South Africa we find that lowering tariffs, leads to higher imports and lower import prices, raises within firm wage inequality and favors capital owners, while overall government revenues decline. The latter is attributable to the insufficient expansion of alternative tax bases (profits, sales, and wages) after a tariff cut. This limits the government's capacity to mitigate the adverse distributive effects arising from tariff reductions.

Developing country growth is expected to reduce aid dependence and mobilize domestic revenues (DRM) to finance public expenditure. Income status upgrades by the World Bank represent milestones in this transition and may anticipate a decline in aid precipitating an increase in tax collection to complement the shortfall in government revenue. Applying the synthetic control method (SCM) and synthetic difference-in-differences (SDID) to countries with sufficient data in the UNU-WIDER GRD tax database and the WDI, I investigate whether the income status upgrades raise government revenue in sub-Saharan African (SSA) countries. Robustness checks confirm findings of little impact, except for SSA countries ineligible to International Development Association (IDA) lending relative to other SSA countries, suggesting economic growth may not translate into DRM before the IDA eligibility threshold has been crossed.