Tax-to-GDP ratios continue to vary widely across Asian countries. While some countries have experienced a decline in tax revenues in recent years, tax-to-GDP ratios have increased in most countries since 2000. In spite of these increases, further efforts are needed to increase tax revenues in developing countries in the region to support domestic resource mobilisation.
In 2015, tax-to-GDP ratios in Asian countries ranged from 11.8% in Indonesia to over 32% in Japan, with all countries other than Japan and Korea below 18%, according to new data released by the OECD.
The fourth annual edition of Revenue Statistics in Asian Countries covers seven countries, including Kazakhstan for the first time. It shows that the tax-to-GDP ratio in all these countries are lower than the OECD average of 34.3% in 2015, which highlights that scope remains for increasing tax mobilisation, especially in Indonesia, Kazakhstan, Malaysia and the Philippines to achieve sustainable growth.
In 2015, the tax-to-GDP ratio continued to decrease in Indonesia, Kazakhstan and Malaysia for the third consecutive year. The ratio also decreased in Singapore, although it remained higher than its 2013 level. These declines were driven by falls in corporate tax revenues and in revenues from specific goods and services (primarily excises, customs and export duties). The decrease was particularly significant in Kazakhstan, where revenues fell by 5.6 percentage points, compared with less than 0.7 percentage points in the other countries. This is mainly due to a fall in oil tax revenues. By contrast, averages in the OECD and in Latin America and the Caribbean (LAC) increased by 0.1 and 0.6 percentage points respectively over the same period.
Despite falling in recent years due to a significant decline in global commodity prices, China's economic slowdown, and slow growth in advanced economies, the tax-to-GDP ratio has increased in most countries since 2000. This is due to tax reforms and the modernisation of tax systems and administration, as well as a more favourable economic context. The tax categories driving the increases between 2000 and 2015 differ across countries, from social security contributions (SSCs) in Korea and Japan, corporate income tax revenue in the Philippines and Malaysia, and revenues from taxes on income and profits as well as from taxes on goods and services in Indonesia. Kazakhstan and Singapore were the only two of the countries studied that recorded a lower tax-to-GDP ratio in 2015 than 2000 as a result of lower corporate tax revenues (partially due to changes in corporate income tax rates) in both countries and a decrease in payroll taxes in Kazakhstan.
The structure of taxes in these countries differ, both across countries, and relative to the LAC and OECD average tax structure. With the exception of Japan and Korea, the countries covered by the report rely more heavily on corporate taxes and less heavily on SSCs and – with the exception of Indonesia - value added tax (VAT), compared with the LAC and OECD averages.
For the first time, the VAT revenue ratio (VRR) was compiled for each country in this edition. A VRR of 100% would suggest that all VAT is collected on its entire potential base and there is no loss of VAT revenue as a consequence of exemptions, reduced rates, fraud, evasion or tax planning. In 2014, the Philippines and Kazakhstan had the lowest VAT revenue ratios (VRRs), at below 50% in both cases, whereas Singapore had the highest at 84%. Since 2000, the VRR has increased significantly in Indonesia and Kazakhstan, by 23 percentage points and 14 percentage points respectively.
This edition contains a special feature that discusses developments in information and communications technology (ICT), both for electronic filing and for payment of taxes. ICT development can improve the quality of tax services, reduce taxpayer compliance burden and government administration costs, and strengthen enforcement. The leveraging of ICT for the modernisation of public administration and service delivery is receiving increased attention from Asian countries such as Indonesia with the recently launched MPN-G2 (Second Generation State Revenue Module) electronic tax payment system, the Philippines with stricter regulation for the use of Electronic Filing and Payment System and Kazakhstan with 95% electronic tax reporting rate.
Revenue Statistics in Asian countries contributes to the Regional Policy Network on tax of the OECD's Southeast Asia Regional Programme (SEARP) launched in 2014 that aims to strengthen the relations between OECD and Southeast Asian countries.
Revenue Statistics in Asian Countries is part of the OECD's Global Revenue Statistics publications, which include databases of comparable statistics on tax revenue across the economies of Africa, Latin America and the Caribbean and the OECD countries to facilitate transparent policy dialogue and help policy makers assess alternative tax reform options.
The report is a joint publication by the Organisation for Economic Co-operation and Development (OECD) Centre for Tax Policy and Administration and the OECD Development Centre, in co-operation with the Asian Development Bank.
Bron: OECD
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