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The Revenue Administration–Gap Analysis Program: Model and Methodology for Value-Added Tax Gap Estimation

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  • Mr. Eric Hutton

Abstract

The IMF Fiscal Affairs Department’s Revenue Administration Gap Analysis Program (RA-GAP) assists revenue administrations from IMF member countries in monitoring taxpayer compliance through tax gap analysis. The RA-GAP methodology for estimating the VAT gap presented in this Technical Note has some distinct advantages over commonly used methodologies. By using a value-added approach to estimating potential VAT revenues, as compared to the more traditional final consumption approach used by most countries undertaking VAT gap estimation, the RA-GAP methodology can provide VAT compliance gap estimates on a sector-by-sector basis, which assists revenue administrations to better target compliance efforts to close the gap. In addition, the RA-GAP methodology uses a unique measurement for actual VAT revenues, which isolates changes in revenue performance that might be due to cash management (e.g., delays in refunds) from those due to actual changes in taxpayer compliance.

Suggested Citation

  • Mr. Eric Hutton, 2017. "The Revenue Administration–Gap Analysis Program: Model and Methodology for Value-Added Tax Gap Estimation," IMF Technical Notes and Manuals 2017/004, International Monetary Fund.
    • Handle: RePEc:imf:imftnm:2017/004
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    1. Ali-Yrkkö, Jyrki & Koski, Heli & Kässi, Otto & Pajarinen, Mika & Valkonen, Tarmo & Hokkanen, Marja & Hyvönen, Noora & Koivusalo, Elina & Laaksonen, Jarno & Laitinen, Juha & Nyström, Enni, 2020. "The Size of the Digital Economy in Finland and Its Impact on Taxation," ETLA Reports 106, The Research Institute of the Finnish Economy.
    2. Gemmell, Norman, 2021. "What is happening to tax policy in New Zealand and is it sensible?," Working Paper Series 21110, Victoria University of Wellington, Chair in Public Finance.
    3. Serhan Cevik & Jan Gottschalk & Eric Hutton & Laura Jaramillo & Pooja Karnane & Mousse Sow, 2019. "Structural transformation and tax efficiency," International Finance, Wiley Blackwell, vol. 22(3), pages 341-379, December.
    4. Gemmell, Norman, 2021. "What is happening to tax policy in New Zealand and is it sensible?," Working Paper Series 9464, Victoria University of Wellington, Chair in Public Finance.
    5. Aleksandra L. Osmolovskaya-Suslina & Sofiia R. Borisova & Victoria A. Moskvina, 2021. "Integral Tax Collection Index as a New Approach to Assessing Tax Administration," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 54-80, December.
    6. Robert Kelm, 2022. "Determinants of the VAT Gap in EU Member States from 2000 to 2016," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 14(4), pages 225-262, December.
    7. Francesco Berardini & Fabrizio Renzi, 2022. "Mind the Gap! The (unexpected) impact of COVID-19 pandemic on VAT revenue in Italy," Questioni di Economia e Finanza (Occasional Papers) 669, Bank of Italy, Economic Research and International Relations Area.
    8. Gemmell, Norman, 2021. "Economic Lessons for Tax Policy Advisers," Working Paper Series 21109, Victoria University of Wellington, Chair in Public Finance.
    9. Gemmell, Norman, 2021. "Economic Lessons for Tax Policy Advisers," Working Paper Series 9463, Victoria University of Wellington, Chair in Public Finance.
    10. Nafi Almuzani & Imam Fahcruddin & Antoni Arief Priadi & April Gunawan Malau, 2019. "Beyond Standard: Do The Marine Engineers Competence?," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 9(5), pages 13-20, May.
    11. Nafi Almuzani & Imam Fahcruddin & Antoni Arief Priadi & April Gunawan Malau, 2019. "Beyond Standard: Do The Marine Engineers Competence?," International Journal of Business and Social Research, LAR Center Press, vol. 9(5), pages 13-20, May.

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    Keywords

    TNM; RA-gap VAT gap estimation methodology;

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