Launch of the Tax Gap Toolkit by ATI and UNU-WIDER
The Addis Tax Initiative (ATI) and the United Nations University World Institute for Development Economics (UNU-WIDER) launched the Tax Gap Toolkit during a virtual event on 10 December 2024. The event was attended by over 100 participants, including policymakers, tax administrators, researchers, and international development experts, who explored how the toolkit can address compliance gaps and strengthen Domestic Revenue Mobilisation (DRM).
The Tax Gap Toolkit, developed by UNU-WIDER with support from ATI, is designed to provide tax authorities with a replicable and user-friendly resource for estimating tax compliance gaps using data analytics. Its first part focuses on preparing, cleaning, and merging administrative datasets, with an emphasis on the importance of comprehensive data, including both audited and unaudited taxpayer information. It also highlights the use of machine learning to enhance data analysis. The second part uses estimations based on audited data to predict compliance among non-audited taxpayers, analyse taxpayer behaviour, and calculate tax gaps across sectors or regions.
Since the toolkit helps to identify revenue leakages, it enables tax authorities to design targeted interventions that improve compliance and enhance overall tax performance.
The launch
Ms. Stephanie Rauscher, Coordinator of the International Tax Compact, which facilitates the Secretariat of the ATI, opened the event by highlighting ATI's pivotal role in fostering collaboration among member countries and development partners. She explained that the toolkit aligns with Commitment 1 of the ATI Declaration 2025, which seeks to enhance DRM through equitable and transparent tax policies. Ms. Rauscher also gave an overview of the collaborative efforts that led to the toolkit’s development and its connection to the priorities and needs identified by partner countries during the 2023 ATI General Assembly.
The ATI hopes this Toolkit will further advance learning and cooperation for effective DRM worldwide.
Stefanie Rauscher, ITC Coordinator
Dr. Jukka Pirttilä, Non-Resident Senior Research Fellow at UNU-WIDER, discussed how the Toolkit supports UNU-WIDER’s mission to create fiscal space for sustainable development. He emphasised its role in empowering policymakers with evidence-based strategies to make tax administration more efficient and effective. Dr. Pirttilä also highlighted its current use in Uganda and Rwanda, with South Africa conducting a collaborative project with UNU-WIDER to test the toolkit in their local context.
When exploring the toolkit’s practical applications, Dr. Amina Ebrahim, Research Fellow at UNU-WIDER, highlighted the importance of micro-level data to identify gaps and compliance challenges. She emphasised the toolkit's adaptability and its possible use as a framework for institutionalising best practices. She also distinguished between policy gaps (structural issues in tax systems) and compliance gaps (issues with taxpayer adherence), advocating for proactive approaches to address both.
It’s not just a tool for analysis but also a resource for staff learning and development. Our goal is to make it institutionalised over time, enabling tax authorities to embed it in their regular operations.
Dr. Amina Ebrahim, Research Fellow at UNU-WIDER.
Ms. Tina Kaidu, Assistant Commissioner for Strategy and Research at the Uganda Revenue Authority (URA), shared her experiences using the toolkit since 2018. She explained how the toolkit, by leveraging administrative data and using machine learning models, allowed the URA to estimate gaps in Corporate Income Tax (CIT), as well as refine estimations by comparing the results with traditional regression models. She also highlighted the toolkit’s role in informing compliance risk management and sector-specific strategies, and its usefulness in terms of possibility to conduct more frequent estimates.
It has opened up opportunities for Uganda to refine our tax compliance strategies and expand our capacity to compute tax gaps across various tax types annually. Having started with CIT, we now know it’s possible to extend this approach to VAT and other tax types.
Ms. Tina Kaidu, Assistant Commissioner for Strategy and Research at the URA
Closing the expert panel, Mr. Supriyo De, Technical Assistance Advisor at the IMF Fiscal Affairs Department (IMF-FAD), offered a global perspective on the toolkit’s implications. Mr. De advocated for a complementary approach to tax gap analysis, combining IMF’s top-down (macro-level) and UNU-WIDER’s bottom-up (micro-level) methodologies. In this sense, he emphasised the importance of cross-validating results to ensure accuracy and reliability.
He further discussed broader applications of tax gap analysis, including its role as a high-level performance indicator for tax administrations. Mr. De also praised the toolkit’s adaptability to developing country contexts and its potential for future advancements, such as addressing payments and filing gaps.
The event concluded with a Q&A session. The lively discussion reaffirmed the interest and commitment of stakeholders to leveraging the toolkit for enhancing tax compliance and revenue performance.
A call to action
ATI and UNU-WIDER are inviting governments, development partners, and international organisations to join hands in scaling the adoption of the Tax Gap estimation Toolkit.
We encourage representatives from countries providing Official Development Assistance to partner with us to support the Toolkit’s application, facilitate technical support and knowledge exchange, and invest in capacity-building for its effective use.
Stefanie Rauscher, ITC Coordinator
Links of interest:
PRESENTATIONS delivered during the launch of the Tax Gap Toolkit
UNU-WIDER and ATI launch innovative Tax Gap Toolkit
The ATI Tax Gap Community of Interest (CoI): a collaborative effort for enhanced tax collection.