Have you ever seen a tax data lab? That is, a room (or virtual room) with high-performance computers analyzing datasets with millions of tax declarations—worker’s income tax returns, firms’ corporate tax returns, or firm-to-firm transaction records.
Sounds complex, right? But within those piles of tax returns are valuable insights that can inform economic policy, address inequality, and even impact global trade. Consider all the important real-life questions and challenges that can be explored using this data.
To harness this potential, we created DaTax—the World Bank’s new tax data lab, to tap into detailed government tax data and address critical policy issues that affect not only tax authorities but also businesses, employers, and workers.
Here’s a few practical examples of the questions DaTax is helping answer:
How much tax do the largest firms actually pay?
The very largest firms have an effective tax rate (ETR) that is significantly lower than the ETR among other large and mid-size firms. In simple terms, this means these large firms often contribute proportionally less in taxes compared to their smaller counterparts.
We realized this when analyzing corporate tax records from 16 different countries. We are now using the insights and methodology from this study to estimate the potential revenue gains from implementing the global minimum tax (OECD pillar 2), which aims to ensure large firms contribute more fairly.
