The Revenue Administration–Gap Analysis Program: Model and Methodology for Value-Added Tax Gap Estimation
Technical Notes and Manuals, April 7, 2017
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- The Revenue Administration–Gap Analysis Program: Model and Methodology for Value-Added Tax Gap Estimation
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Bibliographic details
- Authors: Eric Hutton
- Published: April 7, 2017
- Series: Technical Notes and Manuals
- DOI: https://doi.org/10.5089/9781475583618.005
Summary
- 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 Technical Note presents a RA-GAP methodology for estimating the VAT gap that has distinct advantages over commonly used methodologies.
- Publication date: April 7, 2017.
Methodology advantages
- Uses a value-added approach to estimating potential VAT revenues rather than the more traditional final consumption approach.
- By using a value-added approach, the methodology can provide VAT compliance gap estimates on a sector-by-sector basis.
- Sector-by-sector gap estimates assist revenue administrations to better target compliance efforts to close the gap.
Measurement specifics
- The RA-GAP methodology uses a unique measurement for actual VAT revenues.
- This measurement 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.
Policy implications and operational recommendations
- Target compliance efforts using sector-by-sector VAT compliance gap estimates produced by the value-added approach.
- Use the RA-GAP actual-VAT measurement to distinguish revenue changes caused by cash management issues from changes in taxpayer compliance, improving the accuracy of compliance monitoring and the effectiveness of interventions.
Key descriptors
- Subject: Consumption, National accounts, Revenue administration, Tax gap, Value-added tax
- Keywords: RA-gap VAT gap estimation methodology, TNM
Source: The Revenue Administration–Gap Analysis Program: Model and Methodology for Value-Added Tax Gap Estimation — https://www.imf.org/en/publications/tnm/issues/2017/04/07/the-revenue-administrationgap-analysis-program-model-and-methodology-for-value-added-tax-gap-44715