Over the last two decades, many governments have sought to take stock of the burden generally imposed by their regulations, especially in relation to taxes imposed on businesses, and to identify and adopt measures to reduce the costs of complying with such regulations. In many countries, the VAT has been found, or is perceived, to be among the most burdensome of all taxes on business. This article sets out the design features of a proposed diagnostic tool for gauging the likely incidence and significance of VAT compliance costs at the country level and its use in comparative cross-country assessments as a means of driving thinking about reform.