Support to the Moldovan State Tax Service - Tax Gap Analysis and Findings

Abstract

This paper explores areas where Moldovan tax authorities can increase tax (revenue) collection. We find that the overall tax gap – for personal income, business, value-added, and tobacco/alcohol excise taxes – likely comes to 20 percent of GDP. We show several methods for estimating Moldova’s various tax gaps – illustrating the methods with numerous “market sizing” estimates. We particularly illustrate the tax gap methodology using company taxes, where we employ both top-down and bottom-up methods in order to illustrate the general approach to tax gap analysis.