Using Top-Down Compliance Gap Techniques to Supplement the Compliance Risk Management Framework

Author: Ms. Elena D'Agosto, Michael A Hardy, Stefano Pisani, and Anthony Siouclis

This technical note describes how top-down tax gap methods and compliance risk management can be used together to provide an even more powerful tool for tax administrations to improve and measure tax compliance.

Volume/Issue: Volume 2025 Issue 003

Publication date: January 2025

ISBN: 9798400291555

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Topics covered in this book

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Public Finance , Taxation - General , tax administration , tax compliance , tax gap , compliance gap , Compliance Risk Management , CRM , direct revenue effect , indirect revenue effect , taxpayer behavioral component , compliance risk-management framework , compliance gap technique , IMF Library , taxpayer compliance , compliance index , Auditing , Tax return filing compliance , Value-added tax

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Summary

Traditional top-down tax gap assessments identify the size of a tax gap, but not its origins. By extracting more granular information from top-down tax gap assessments, and combining this information with compliance risk management (CRM) techniques, it is possible to: improve the accuracy of CRM techniques; improve the consistency of the likelihood and consequence dimensions of compliance risk assessments; identify emerging areas of tax compliance risk and; better disaggregate the direct and indirect revenue effects of compliance interventions, including the “behavioral component” within the indirect effects. Finally, it is also possible to determine the optimal revenue recovery from each segment of the taxpayer population.