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

_Technical Notes and Manuals, April 7, 2017_

## Source details

**Canonical URL:** [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)

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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

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### 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*

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_Source: 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_