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Building Tax Capacity in Developing Countries

Author

Listed:
  • Juan Carlos Benitez
  • Mario Mansour
  • Miguel Pecho
  • Charles Vellutini

Abstract

Tax capacity—the policy, institutional, and technical capabilities to collect tax revenue—is part of a deeper process of state building that is essential for achieving the sustainable development goals. This Staff Discussion Note shows that developing countries have made some progress in revenue mobilization during the past decades. However, much more is needed. We find that a staggering 9 percentage-point increase in the tax-to-GDP ratio is feasible through a combination of tax system reform and institutional capacity building. Achieving this calls for a holistic and institution-based approach that focuses on improving policy, administration and legal implementation of core taxes. The note offers practical lessons and guidance, based on IMF capacity building experience in this area.

Suggested Citation

  • Juan Carlos Benitez & Mario Mansour & Miguel Pecho & Charles Vellutini, 2023. "Building Tax Capacity in Developing Countries," IMF Staff Discussion Notes 2023/006, International Monetary Fund.
    • Handle: RePEc:imf:imfsdn:2023/006
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    Cited by:

    1. Terzic, Saudin, 2024. "Individual Tax Practitioners Attitudes: How to Increase Tax Capacity," MPRA Paper 122846, University Library of Munich, Germany.
    2. Tommy Chrimes & Bram Gootjes & M. Ayhan Kose & Collette Wheeler, 2024. "The Great Reversal," World Bank Publications - Books, The World Bank Group, number 41403, April.
    3. Rezai,Armon & Franz Ulrich Ruch & Rishabh Choudhary & John Nana Darko Francois, 2024. "Fiscal Policy’s Role in Economic Resilience to Climate Shocks," Policy Research Working Paper Series 10982, The World Bank.
    4. Saudin Terzic & Maja Ploco, 2024. "Individual Tax Practitioners Attitudes: How to Increase Tax Capacity," Research in Applied Economics, Macrothink Institute, vol. 16(2), pages 24-36, December.
    5. Armon Rezai & Franz Ruch & Rishabh Choudhary & John Nana Darko Francois, 2024. "Fiscal Policy’s Role in Economic Resilience to Climate Shocks," CESifo Working Paper Series 11517, CESifo.
    6. Joseph Mawejje, 2024. "Private sector participation in infrastructure in emerging market and developing economies: Evolution, constraints, and policies," Global Policy, London School of Economics and Political Science, vol. 15(2), pages 465-474, May.
    7. António Afonso & Ana Patricia Montes & José M. Domínguez, 2025. "A dynamic efficiency analysis for tax revenues in OECD countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 52(2), pages 377-411, May.
    8. Flores, Tatiana & Cruces,Guillermo & Bermúdez,Jose Carlo & De Gouvea Scot de Arruda, Thiago & Schiavoni, Juan Luis & Tortarolo, Dario, 2025. "Exploring the Gender Divide in Real Estate Ownership and Property Tax Compliance," Policy Research Working Paper Series 11060, The World Bank.
    9. Xiaoning Song & Jiayan Yan & Guilong Cai & Huimin Chen, 2025. "The convention on tax mutual administrative assistance and divestment: Evidence from China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 56(3), pages 336-349, April.
    10. Costinela Fortea, 2025. "Government Revenue Structure and Fiscal Performance in the G7: Evidence from a Panel Data Analysis," World, MDPI, vol. 6(3), pages 1-26, July.

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