Unlocking the Potential of Administrative Data in Africa: Tax Compliance and Progressivity in Rwanda

This paper looks at tax compliance using administrative data from Rwanda. It discusses the use of administrative data for tax research – specifically anonymized taxpayers records, which have become increasingly available on the African continent. The paper critically summarizes the key advantages and disadvantages of using this data for tax research in Africa. It further proceeds to illustrate these opportunities and challenges in practice, using the case of Rwanda for application of the data to analyze tax compliance and progressivity. Some stylized facts are shown by doing this – for example that tax systems designed to be progressive can still be regressive in practice, that a great share of tax revenue is generated by a few very large taxpayers, and that some taxpayers face a negligible probability of being audited. Although these results are specific to Rwanda, they are in line with the situation in other low-income countries in Africa.