A World Bank blog on 16 September 2025 looked at how administrative data drawn from tax returns can reveal information about the businesses that are creating employment. The blog, written by V. Wiedemann, T. Scot, L. Zavala and L. Serrano Pajaro, outlines the analysis of micro data by the World Bank DaTax project, which aims to promote the development of equitable and sustainable public finance systems. The project is working alongside tax administrations and Finance Ministries in more than fifteen countries.
Governments need to identify the businesses that are creating employment and how the benefits of trade are passed to workers. It is however difficult to track the relevant data comprehensively over time. Making use of the administrative data from tax filings, information can be obtained on how businesses operate and how supply chains affect workers. The data from value-added tax (VAT) invoices, refund requests or customs declarations can be a source of information on the transactions between firms. The data in an anonymized can be analysed to reveal information about business models, supply chains and employment creation and to design more effective policies on employment.
Employment depends on the strength of a business, how it is connected to other businesses such as suppliers and customers, and on the resilience of the supply chains. The patterns of data become visible from the analysis of micro tax data. For example, tax data from Kenya revealed that formal private sector businesses and their links were situated within the largest cities, while the informal economy provided most of the employment outside those hubs. This information can help governments formulate policies to promote inclusive growth.
VAT and customs data from Ecuador showed that, although agriculture provides jobs for almost a third of the population in that country, farmers were only obtaining 24% of export revenues, while exporters and intermediaries kept the rest. Trade was therefore not reducing poverty to the extent expected. Simulations based on the data revealed that by establishing price floors and improving the bargaining power of the farmers, better outcomes could be achieved. The VAT and customs data was therefore important in revealing where the value was captured in the supply chain.
Delays in making tax refunds are a common problem in developing countries, reducing liquidity in the private sector and creating barriers for investment and employment creation. However, tax data from Honduras revealed that a reform in 2017 to reduce delays or refusals of VAT refunds generally failed to boost investment or employment creation. This highlighted the complexity of the problems in the private sector, which could not be solved just by a reform of the VAT refund process.
The use of tax micro data can show how economic outcomes are affected by geography, business connections, trade and liquidity. Analysis of the data is a useful tool in studying the role of the private sector in development.
