Exploring the Adoption of Selected Digital Technologies in Tax Administration

Abstract

Using cross-country data, we explore the potential impact of selected digital technologies on tax collection and compliance. Our analysis makes use of multidimensional International Survey on Revenue Administration (ISORA), Tax Administration Diagnostic Assessment Tool (TADAT), and Revenue Administration-Gap Analysis Program (RA-GAP) data, with results indicating that digital technologies could enhance tax collection, but effects vary by the type of specific digital service or tools introduced. Although our results demonstrate a strong association between digital tax administration operations and improved performance outcomes, the realization of revenue gains is heavily contingent on accompanying policy, legislative and administrative reforms, and the availability of adequate digital connectivity and capable tax administration staff. The cross-country approach provides reasonable upper-bound estimates on revenue gains, which nonetheless need to be carefully validated with country-specific case studies. The note reviews single-country case studies from selected microeconomic literature that complement our crosscountry results and reveal key enabling factors necessary to reap and sustain the benefits of new digital investments.