On 20 February 2026 an IMF working paper was published with the title Who Pays When Tax Administration Improves? Revenue, Compliance, and Behavioural Responses to Georgia’s Large Taxpayer Office. The authors, J. Atsebi, M. Chikviladze, M. Das, E. Loliashvili and M. Wang, carried out a study based on a Large Taxpayer Office (LTO) set up by the Republic of Georgia in 2021. The LTO was established to strengthen the tax compliance and administration in relation to large companies, which contribute a sizeable proportion of tax revenue collected. By using data from 2017 to 2024, the study covered data from years before and after the LTO was set up and also looked at a change in the eligibility thresholds for LTO coverage in 2024.
In the emerging economies, the average tax-to-GDP ratio has been averaging around 15%, only around half that of advanced economies, restricting government spending and reducing the ability to withstand economic shocks. Emerging economies need to strengthen their tax collection to support growth, and increasing revenue collection depends on the capacity of the tax administration to identify and monitor compliance by taxpayers. Large taxpayers contribute the most tax revenue, as statistics indicate that in both developing and developed economies around 5% of entities contribute between 40% and 50% of total tax revenue.
The study found that assignment of taxpayers to the LTO increased annual tax collections by around 0.4% to 0.7% of GDP, most of this relating to VAT and withholding taxes. The LTO raised compliance by combining targeted enforcement with improved taxpayer services. Tax audits were fewer but better targeted. The largest impact was seen in sectors with strong third-party reporting and traceability of transactions.
These findings indicate that reforms to the tax administration can generate more tax revenue and support economic development. For this reason, many tax administrations have set up LTOs which are labour intensive, often tripling the number of tax staff per taxpayer firm within the LTO. However, countries need to be sure that the costs of stronger enforcement and improved taxpayer services do not outweigh the additional tax revenue collected.
The study concluded that enhanced supervision of large taxpayers generated significant gains in tax revenue, with a strengthening impact as the institution increased in experience. The revenue gains resulted from improved compliance, more targeted enforcement, and earlier reporting by the large taxpayers. The compliance improvements were also seen when the intensive oversight was extended to new firms as they were brought under LTO oversight.
The establishment of an LTO is therefore an investment in state fiscal capacity and not just an administrative change. The combination of strong enforcement with tailored taxpayer services brings the objectives of tax administrators and large firms into line. Targeted institutional reforms can therefore deliver significant revenue gains even in countries with fewer resources. This type of reform can contribute to domestic revenue mobilization and can be pursued alongside risk-based compliance management, further segmentation of taxpayer groups and better use of data. Well-designed LTOS are a cost-effective policy that can deliver lasting improvements in compliance and revenue.
