The ATI Tax Gap Community of Interest (CoI): a collaborative effort for enhanced tax collection

The ATI Tax Gap Community of Interest (CoI) is aimed at supporting tax authorities worldwide in improving tax gap estimates. By fostering expert collaboration and knowledge sharing, it seeks to help members overcome challenges and refine estimation processes.

 The ATI Tax Gap Community of Interest (CoI) is a global initiative aimed at helping tax authorities improve their estimation of tax gaps — i.e., the difference between the potential tax revenue a country could collect, and the actual amount collected. Through knowledge sharing and collaboration among experts, the CoI seeks to address common challenges faced by its member countries in establishing the right processes and capabilities for precise estimation of tax gaps in different areas.

 

Background

The ATI Tax Gap CoI was established following the ATI Tax Gap workshop held in March 2024 in Dar es Salaam, Tanzania. The workshop brought together experts from international organisations such as the World Bank, the International Monetary Fund (IMF), and UNU-WIDER, along with representatives from various tax authorities. During the workshop, participants discussed methodologies for estimating tax gaps and identified a need for continued collaboration to address shared challenges.

The CoI was formally conceptualised in June 2024, following a meeting where a draft concept for the structure and modus operandi of the community was adopted. Zambia Revenue Authority was chosen to chair the CoI, with the intention of rotating leadership among participating countries — Kenya is expected to take over in January 2025.

ati tax gap workshop tanzania
Pictures taken during the ATI Tax Gap Workshop in Tanzania, March 2024.

 

A collaborative solution to reduce tax gaps

The core goal of the CoI is to support the improvement of tax authorities’ performance by refining their methods for estimating and closing tax gaps. This initiative aligns directly with ATI Commitment 1, which is focused on increasing domestic revenue collection on the basis of equitable tax policies as well as efficient, effective, and transparent revenue administrations.

The primary objective of the CoI is to enable tax authorities to exchange methodologies, share challenges, and identify ways to improve tax gap estimations, ultimately leading to increased tax revenue collection.

By identifying areas where tax collection is falling short, member countries can target resources more effectively, improving their overall performance.

One of the most significant challenges in tax gap estimation is the quality of data available to tax authorities. In many cases, countries rely on limited data samples, which may not fully represent the scope of tax non-compliance. The CoI addresses this challenge by prioritising conversations on how to improve their data collection methods and adopt more sophisticated statistical tools to work with large datasets.

In addition, member countries face challenges related to human resource capacity, particularly in understanding and applying advanced tax gap estimation models. Through its network of experts, the CoI helps countries build capacity in these areas, ensuring that tax authorities can apply the latest methodologies to their tax gap analyses. In this sense, through the CoI, tax authorities can compare their experiences, learn from each other’s successes and challenges, and adopt best practices in tax gap estimation.

 

Quarterly meetings and tailored expert support

The CoI meets quarterly, and in these meetings members from tax authorities, international organisations, and experts present their work and discuss future plans. These meetings also serve as a platform for countries to exchange with peers on specific tax gap-related issues.

One of the unique features of the CoI is its Tax Gap clinics, where experts provide tailored consultations to member countries facing specific tax challenges. These clinics offer hands-on support, helping countries refine their tax gap estimation methods or tackle unique issues in tax collection. Recent Tax Gap clinic was hosted by the IMF team, on the topic of VAT gap estimation methodology.

first tax gap clinic

Screenshot during the first ATI Tax Gap Clinic, 30 July 2024. 

 

In addition, the CoI has developed an online depository where members can access research, case studies, and other resources. This allows for ongoing knowledge sharing between countries and experts and serves as a collective learning space.

The CoI’s primary participants are technical personnel from tax authorities in ATI member countries, particularly those working in research or tax policy departments. These individuals are responsible for estimating tax gaps and developing strategies to improve tax collection. Experts from international organisations such as the IMF, World Bank, and UNU-WIDER also play a key role in providing guidance and technical support.

 

Unique positioning in the tax gap landscape

The ATI Tax Gap CoI distinguishes itself from other initiatives, such as the OECD’s Tax Gap Community, by focusing on developing countries. This cross-continental collaboration makes it one of the only initiatives tailored to the unique challenges faced by developing economies in addressing tax gaps.

The CoI integrates both research and practice by bringing together economists and tax professionals from international organisations and member countries. This combination of theoretical expertise and practical experience ensures that the CoI is well-positioned to offer actionable insights to its members.

 

Key milestones: first meetings and clinics

The CoI held its first quarterly meeting on 25 September 2024, during which participants discussed different approaches in VAT and CIT gap estimation, with presentations from the Tanzania Revenue Authority (TRA) and the Kenya Revenue Authority (KRA), as well as experts from UNU-WIDER.

The first Tax Gap clinic, held on July 30, 2024, focused on providing hands-on support to member countries. These clinics will continue to serve as an important feature of the CoI, helping countries improve their tax administration practices through targeted consultations.

ati tax gap first quarterly meeting

Screenshot during the first quarterly meeting of the ATI Tax Gap CoI, 25 September 2024.