World Bank2025-03-172025-03-172025-03-17https://hdl.handle.net/10986/42959This note presents the results of the analysis of Value Added Tax (VAT) and Corporate Income Tax (CIT) compliance and policy gap estimates in Indonesia between 2016 and 2021. The study's objective is to quantify the magnitude of the tax gaps and to identify drivers behind the low efficiency of collecting the two primary sources of tax revenue. Top-down approaches based on national accounts were used to estimate the tax gaps. To derive the VAT gap using the top-down consumption-side approach, the VAT Total Tax Liability (VTTL) was calculated as the sum of the liability from five main components: final consumption by households, government and nonprofit institutions serving households, intermediate consumption, and gross fixed capital formation using primarily national accounts’ use table. The International Monetary Fund’s (IMF) Revenue Administration Gap Analysis Program framework estimated the CIT gap. This top-down approach uses national accounts’ gross operating surplus (GOS) data and makes appropriate adjustments to reflect conceptual differences between the GOS and CIT base.en-USCC BY-NC 3.0 IGOVALUE ADDED TAX (VAT)CORPORATE INCOME TAX (CIT)TAX GAPSWorking PaperWorld Bank10.1596/42959