are part of the Benchmark as memo items, such as limitation to interest deductions and the higher tax rate on banks.
ii) building TEs models : The mission delivered (i) a BPT model based on business-level taxreturndata in 2019; and (ii) a GST model based on the Supply and Use Tables (SUT) from the national accounts (using the latest available SUT data from 2014). Both TE models build on static microsimulation techniques and hence (beyond computing TEs) can help in simulating the direct revenue effects of hypothetical tax policy changes. Concrete examples are
national accounts and taxreturndata (D101) is shown in Table 2 . The data used in each step and relevant technical issues are described in the following paragraphs.
Table 2. Steps for Estimating Potential CIT Base and Liability, % of GDP
Gross operating surplus (S11)
[-] Gross operating surplus for Regímenes Especiales
Gross operating surplus for Régimen Definitivo
[+] Net receipts of property incomes
The IMF Fiscal Affairs Department's Revenue Administration Gap Analysis Program (RA-GAP) aims to provide a quantitative analysis of the tax gap between potential revenues and actual collections, and this technical note explains the concept of the tax gap for corporate income tax (CIT), and the methodology to estimate CIT gaps. It includes detailed steps to derive the potential CIT base and liability with careful consideration for the theoretical differences between the coverage of statistical macroeconomic data and the actual tax base of CIT, and then compare the estimated results with actual declarations and revenues. Although the estimated gaps following the approach will have margins of errors, it has the advantage of using available data without additional costs of collection and suits initial evaluations of overall CIT noncompliance in a country.
The Maldives has identified the estimation and regular reporting of tax expenditures (TEs) as one of the top priority areas in continuing its tax modernization process. TEs are alternative policy tools (e.g., to direct transfers and other spending measures) in the form of provisions in the tax legislation that modify the tax liability of individuals or companies. The cost of TEs should be identified, measured, and publicly reported to improve transparency in fiscal management.