The report does not to conduct a comprehensive analysis of the shadow economy or a review of all the strategies being undertaken by FTA members. Its purpose is to provide an overview of recent developments and some examples of strategies deployed by some tax administrations with the intention of recommending areas of further targeted collective work. The aim is to help keep tax administrations “ahead of the game”.

The report is split into four chapters:

• chapter 1 examines the drivers and behaviours observed in the shadow economy and attempts a new definition of shadow economy activity as part of promoting the use of multifaceted strategies, given the complex interlinking of such activities in the modern economy;
• chapter 2 looks at the main new trends in shadow economy activity focusing on: changing patterns in the use of cash; the emergence of new business models and ways of working; areas where technology can be misused; cross-border shadow economy activity, particularly fraud; and the illegal exploitation of workers;
• chapter 3 sets out the range of strategies that tax administrations use to tackle the shadow economy, grouping them under three “pillars”: taxpayer education and simplicity of compliance; reducing the opportunities; and reinforcing social norms; and
• chapter 4 sets out recommendations for possible further work. These are: sharing of intelligence: an effective use of different data sources; and collective action on the sharing and gig economy.