Digital transformation and the expansion of data-driven technologies have made data-driven governance one of the leading approaches in public administration and tax systems. In Iran, Article 169 Repeated of the Direct Tax Act constitutes the principal legal foundation for developing a data-driven tax system and plays a pivotal role in collecting, integrating, and analyzing taxpayers’ economic information. This study aims to explain the role of Article 169 Repeated in advancing data-driven governance and reducing the tax gap in Iran. The research is applied in purpose and qualitative in nature, adopting the systematic grounded theory approach developed by Strauss and Corbin. Data were collected through 20 semi-structured interviews with tax experts, managers, and specialists, complemented by an analysis of relevant documents. Data analysis was conducted using the constant comparative method through the stages of open, axial, and selective coding. A total of 176 initial codes were identified and organized into 13 main categories. The findings revealed that the core category of the study is “Developing data-driven governance in the tax system through the implementation of Article 169 Repeated to reduce the tax gap.” The implementation of this provision contributes to reducing tax evasion and the tax gap by enhancing information transparency, improving taxpayer identification, strengthening risk analysis, promoting the Smartization of the tax system, reinforcing tax fairness, increasing accountability, and improved fiscal policymaking. However, institutional barriers, poor data quality, technological limitations, shortages of skilled human resources, legal constraints, and cultural challenges restrict its effectiveness. Therefore, establishing a comprehensive data governance framework, strengthening interagency collaboration, developing technological infrastructure, and enhancing the analytical capabilities of the Iranian National Tax Administration are essential for fully realizing the potential of Article 169 Repeated in reducing the tax gap.