revenue<sup>61</sup> –– and the majority of VAT revenue continues to be collected at the border in many countries.<sup>62</sup> Weak enforcement has reflected the limited implementation of IT systems, an inability in lower income countries to fully exploit the paper trails created by VAT invoices, and weak audit capacity. More broadly, new investments in IT systems have frequently failed to deliver promised benefits, and the introduction of risk-based audits has been slow in many countries, while audit capacity overall has often remained weak. Meanwhile the creation of autonomous revenue authorities has not always produced significant revenue gains, with corruption and politicization returning over time.<sup>63</sup> As a result, tax agencies remain among the least trusted government organizations in many countries (Figure 3, above).

Third-party information, relevant in particular for strengthening income tax receipts and VAT administration, has not been a panacea. Research by Carrillo et al. reveals that greater reliance on third-party information in Ecuador led businesses to declare significantly greater revenues, but to simultaneously declare larger deductions, thus limiting actual increases in tax payments.<sup>64</sup> As they explain, third-party information about only one margin of tax declarations may be insufficient, as taxpayers may then manipulate other margins of their declaration to reduce liabilities. Ultimately, information is needed from multiple sources, and most importantly there is a need for effective follow-up audit capacity and capacity to pursue arrears where evasion and avoidance are detected.<sup>65</sup> There is also the challenge of translating information into enforcement effort. In Uganda, for example, the domestic tax department expanded internal and external data sharing in order to identify High Net Worth Taxpayers but has only been able to scale up enforcement slowly due to political sensitivities.<sup>66</sup> In response to persistent challenges, including capacity constraints in lower income countries, some researchers and practitioners have advocated experimenting with simplified approaches to enforcement. In the global dialogue, there have been calls to increase transparency around the financial operations of MNCs through country-level reports and calls for simplifying access for developing countries to information on wealth held abroad by their nationals. At the national level, there have been calls for simplifying approaches to taxing income, in order to reduce the scope for abuse. Based on research in Pakistan, Best et al. present evidence that shifting corporate income taxation away from profits – which are more easily manipulated – in favor of turnover taxes may reduce evasion by 70 percent or more, while creating relatively little economic distortion.<sup>67</sup> Durst has argued for shifting tax regimes in the extractive industries toward greater reliance on revenue-

> 61 Baunsgaard, T., & Keen, M. (2009). Tax revenue (or?) trade liberalizations. _IMF Working Paper 05/112_ . Washington: International Monetary Fund.

> 62 World Customs Organization (2017). _Annual Report 2016–2017_ . Brussels, Belgium: WCO.

> 63 Dom, R. (2019). Semi-autonomous revenue authorities in Sub-Saharan Africa: Silver bullet or white elephant. _The Journal of Development Studies_ , _55_ (7), 1418-1435; Fjeldstad, O-H. (2005). Corruption in tax administration: Lessons from institutional reforms in Uganda. _CMI Working Paper 2005:_ 10. Bergen: Chr. Michelsen Institute.

> 64 Carillo, P., Pomeranz, D., & Singhal, M. (2017). Dodging the taxman: Firm misreporting and limits to tax enforcement. _American Economic Journal: Applied Economics_ , 9(2): 144-64 _._

> 65 Ibid; Slemrod, J., Collins, B., Hoopes, J. L., Reck, D., & Sebastiani, M. (2017). Does credit-card information reporting improve small-business tax compliance? _Journal of Public Economics_ , 149, 1-19.

> 66 Kangave, J., Nakato, S., Waiswa, R., Nalukwago, M., & Lumala Zzimbe, P. (2018). What can we learn from the Uganda Revenue Authority's approach to taxing high net worth individuals? _ICTD Working Paper 72_ . Brighton: International Centre for Tax and Development.

> 67 Best, M., Brockmeyer, A., Jacobsen Kleven, H., Spinnewijn, J., & Waseem, Mazhar. (2015). Production versus revenue efficiency with limited tax capacity: Theory and evidence from Pakistan. _Journal of Political Economy_ , 123 (6):1311-1355.

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