IMF Working Papers

Quantifying the Revenue Yields from Tax Administration Reforms

By Hassan Adan, Jean-Marc B. Atsebi, Nikolay Gueorguiev, Jiro Honda, Manabu Nose

November 10, 2023

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Hassan Adan, Jean-Marc B. Atsebi, Nikolay Gueorguiev, Jiro Honda, and Manabu Nose. Quantifying the Revenue Yields from Tax Administration Reforms, (USA: International Monetary Fund, 2023) accessed December 10, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Despite the criticality of tax administration (TA) reforms in enhancing domestic revenue mobilization, few studies have attempted to quantify the revenue impact of such reforms. This paper fills this gap by estimating the revenue yields associated with various tax administration capabilities, based on the International Survey on Tax Administration (ISORA), the Tax Administration Diagnostic Assessment Tool (TADAT), and TA reform episodes datasets (identified by Akitoby et al., 2020). It uses a Hausman-Taylor cross-country panel regression and an event study for specific TA reform episodes. Our results (using the ISORA data) show that an increase in the overall strength of TA from the 40th percentile to the 60th percentile is associated with an increase in tax revenue by 1.8 pp. of GDP (with a 95 percent confidence range of 0.5‒2.6 pp. of GDP). Similarly, the event-study assessment shows that sustained TA reforms led to an increase in tax revenues between 2 to 3 pp. of GDP, in line with the experience in three country cases (Jamaica, Rwanda, and Senegal). Also, the revenue yields are increasing over time to more than 3 pp. of GDP after the 6th year following a comprehensive reform. The analysis also highlights the significant impact of specific measures including: i) strengthening compliance risks management, ii) enhancing public accountability, iii) establishing Large Taxpayer Offices (LTO), iv) strengthening accountability and transparency, and v) enhancing timely filing of tax declarations.

Subject: International Survey on Revenue Administration (ISORA), Revenue administration, Revenue performance assessment, Social security contributions, Tax administration core functions, Tax Administration Diagnostic and Assessment Tool (TADAT), Taxes

Keywords: Central Asia, East Asia, Global, IMF FAD Tax Administration, International Survey on Revenue Administration (ISORA), ISORA, Middle East, North Africa, Revenue yield, Social security contributions, TA reform, TA reform episodes dataset, TA strength, TADAT, Tax Administration, Tax administration core functions, Tax Administration Diagnostic and Assessment Tool (TADAT), Tax Revenues Yields

Publication Details

  • Pages:

    42

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2023/231

  • Stock No:

    WPIEA2023231

  • ISBN:

    9798400258923

  • ISSN:

    1018-5941