Exploring the potential incidence of corporate income tax in South Africa

De Jong, Jesse Rae Phumlani

Exploring the potential incidence of corporate income tax in South Africa

Thesis / Dissertation

2026

Publisher

University of Cape Town

Department

School of Economics

Faculty

Faculty of Commerce

Abstract

The prevailing thinking amongst policymakers, researchers and the public has been that the burden of corporate income taxation has been borne by capital. As a result of this, there has been insufficient investigation into the passthrough mechanisms of corporate income taxation, particularly in the developing world. However, in recent years there has been an increasing amount of research being conducted, particularly from the developed world, that argues that a significant proportion of the burden of corporate income taxation is borne by labour. There is reason to believe that this is also the case in South Africa. I describe the equity outcomes for the South African tax system given passthrough of the corporate income tax onto labour. This suggests that if there is passthrough of the CIT onto labour, this would reduce the progressivity of South Africa's direct taxes. This suggests that the design and rate at which the corporate income tax is set must be considered through the lens of potential passthrough and that the corporate income tax may be reducing the degree to which South Africa's tax system is progressive and redistributive.

Keywords

Tax

South Africa

Reference:

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Masters

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