Who Pays When Tax Administration Improves? Revenue, Compliance, and Behavioral Responses to Georgia’s Large Taxpayer Office

IMF Working Papers, February 20, 2026

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Canonical URL: Who Pays When Tax Administration Improves? Revenue, Compliance, and Behavioral Responses to Georgia’s Large Taxpayer Office

Authors: Jean-Marc Atsebi, Mikheil Chikviladze, Mitali Das, Elguja Loliashvili, Mona Wang
Published: February 20, 2026
Series: IMF Working Papers
DOI: https://doi.org/10.5089/9798229037747.001

In 2021, the Republic of Georgia established a Large Taxpayer Office (LTO) to strengthen tax administration and improve compliance among firms that contribute a disproportionate share of revenue.
The study uses administrative data from 2017–2024 and exploits both the 2021 introduction of the LTO and the revision of eligibility thresholds in 2024.
Estimation strategy: weighted difference-in-differences design to estimate the causal impact of intensive oversight, with no change in tax rates, on taxpayer behavior and revenue collection.

LTO assignment raised annual tax assessments by about 0.4–0.7 percent of GDP.
Revenue increases were concentrated in:
- Value added tax (VAT)
- Withholding taxes

Compliance improvements resulted from a combination of:
- Targeted enforcement
- Improved taxpayer services
Audit activity changed in composition:
- Audits became fewer but more selective.

Impacts are largest in sectors characterized by:
- Strong third-party reporting
- High transaction traceability

Reforms to tax administration can:
- Deliver significant gains in fiscal capacity
- Generate fiscal space
- Support development
Effective LTO-style interventions appear to work through both enforcement and service-improvement levers rather than rate changes.

IMF Working Paper No. 2026/031.