This technical note describes bottom-up CIT gap estimation techniques applied by revenue administrations in the following highly experienced countries in this approach: Australia, Brazil, Canada, Denmark, Sweden, the United Kingdom, and the United States. The main topics included in the descriptions are techniques applied, CIT gap results, advantages and disadvantages of different available options, and future developments and recommendations for any revenue administration interested in starting bottom-up CIT gap estimation programs having no prior experience.
This paper presents the results of applying the Revenue Administration Gap Analysis Program – Value-Added Tax (RA-GAP VAT) gap estimation methodology to Belgium for the period 2011-2021. The RAGAP methodology employs a top-down approach for estimating the potential VAT base, using statistical data on value-added generated in each sector. VAT collections have, on average, remained relatively stable in real terms over the period 2011 through 2021, the period under review for this report, at around 7 percent of gross domestic product (GDP). Like the VAT revenues, the compliance gap, as a percent of GDP, has appeared to be largely stable over the period 2011 to 2021 at around 2 percent of GDP. The compliance gap appears to be largely concentrated in the Professional and Managerial Services sector. The results on the distribution of the compliance gap by sector are not to be considered definitive, only suggestive, and so further analysis needs to be conducted to corroborate or refute these findings and to find possible causes for the noncompliance in these sectors.
We thank staff for the candid and constructive dialogue with our Albanian authorities during the 2022 Article IV Consultation and for the close coordination with multiple Technical Assistance (TA) missions. Albania has greatly benefited from Fund’s TA and the authorities look forward to the Fund’s continued help for the design of structural reforms, that will be critical to further strengthen Albania’s macroeconomic stability and climate resilience. Furthermore, the recent start of accession negotiations with the EU has reinforced the authorities’ commitment to accelerate convergence to European living standards. The Albanian authorities greatly appreciate staff’s analysis and timely policy advice in this report, which helped inform the preparation of the 2023 budget.