IMF Working Papers

Leveraging Digital Technologies in Boosting Tax Collection

By Manabu Nose, Nicola Pierri, Jiro Honda

May 9, 2025

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Format: Chicago

Manabu Nose, Nicola Pierri, and Jiro Honda. "Leveraging Digital Technologies in Boosting Tax Collection", IMF Working Papers 2025, 089 (2025), accessed May 12, 2025, https://doi.org/10.5089/9798229008402.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper explores how digitalization in the corporate sector can boost tax revenue collection,. finding that stronger firm digitalization is associated with higher tax revenues across countries and also higher tax paid across firms. The cross-country estimates illustrate that a one-standard-deviation increase in firm digitalization is associated with an increase in tax revenues-to-GDP by up to 3 percentage points, conditional upon the level of digitalization of tax administration (GovTech). A firm-level analsis reveals that firm digitalization significantly improves tax compliance among high-risk taxpayers, such as small and informal enterprises, particularly in the service sector. This indicates that digitalization not only broadens the corporate tax base but also plays a crucial role in improving tax compliance. Moreover, both country and firm-level analyses reveal a significant synergy between firm digitalization and GovTech, undescoring the importance of promoting both to enhance tax collection. These analyses also suggest that, in developing countries, it is essential to create enabling environments for firm digitalization and GovTech and address any constraints to achieve their synergy effects.

Subject: Digitalization, Revenue administration, Tax collection, Technology

Keywords: Digitalization, GovTech, Public-Private digitalization, Tax collection, Tax compliance

Publication Details

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