About
Tax research for development – lessons from Zambia

This project analyses administrative tax data in Zambia to provide knowledge for better policymaking to mobilize public revenue for inclusive economic development.

The project conducts new, policy-relevant research based on the empirical analysis of administrative tax data in partnership with the Zambia Revenue Authority (ZRA) and the Zambia Institute for Policy Analysis and Research (ZIPAR). The research outputs of the programme are intended to assist policymakers as they develop and implement policy tools to improve development prospects in their country. An important additional goal of the project is to develop institutional and individual capacity to use administrative data for ongoing economic research and policy calibration. The project also seeks to expand public, secure access to tax data in Zambia through a physical data lab facility where researchers and policymakers can use available data for their analysis and decision-making purposes.

Research areas under the collaboration include tax compliance gap estimates, profit shifting and corporate tax avoidance, examining value-added tax (VAT) chains, efficiency and effectiveness of tax policies and taxing of different sectors, such as extractive industries. The studies primarily use administrative data of ZRA. The data includes information on, for example, corporate income tax and VAT returns and is anonymized and cleaned for research purposes. By these engagements and subsequent research output, the project in Zambia aims to guide policy debates based on actual data while building local research capacity in the country.

This phase of the programme includes the development of secure access to tax data in Lusaka through a physical data lab facility. The lab is expected to be operational from 2025 onwards. 

This work is part of the UNU-WIDER project Tax research for development. In Zambia, the co-operation with ZIPAR also covers tax-benefit microsimulation work MicroZAMOD done under the SOUTHMOD project. Both projects are part of UNU-WIDER's programme on Domestic Revenue Mobilization (DRM), which is financed by the Norwegian development co-operation agency Norad.

Key questions

• What is the size and extent of tax compliance in Zambia as measured by the tax gap?
• How large and how frequent are tax refunds paid in Zambia? How do such credit payments to firms boost their productivity and subsequent compliance?
• How have some recent enforcement interventions, such as the withholding of VAT and the advance income tax, contributed to tax compliance?
• What is the effect of climate shocks on firm productivity and domestic revenue?