OECD: Revenue Statistics in Asian and Pacific economies

On 29 November 2018 the OECD released the fifth edition of Revenue Statistics in Asian and Pacific Economies . This shows that tax-to-GDP ratios have fallen in most of the 16 Asian and Pacific economies included in the report, owing to policy reforms and the decrease in the price of natural resources. Only three out of the 16 economies increased their tax-to-GDP ratios between 2015 and 2016.

The report is published jointly by the OECD Centre for Tax Policy and Administration and the OECD Development Centre with the co-operation of the Asian Development Bank (ADB), the Pacific Island Tax Administrators Association (PITAA) and the South Pacific Community (SPC) and the support of the European Union.

The latest edition of the report includes a special feature looking at the management of taxpayer compliance, which varies widely in these Asian and Pacific economies. This covers compliance risk management; managing compliance of large taxpayers; and international tax avoidance and evasion. The report looks at the optimisation of withholding taxes and the use of third party reporting. It also looks at the use of voluntary disclosure policies and programs.

Tax-to-GDP ratios in 2016 differ greatly across the economies covered by the report. All but two Pacific economies had tax-to-GDP ratios above 24% while Australia and New Zealand had ratios over 27%. However the tax-to-GDP ratios in the Asian countries surveyed ranged from 11.6% in Indonesia to 30.6% in Japan, with all Asian countries other than Japan and Korea having ratios of less than 19%. All countries surveyed had a lower tax-to-GDP ratio than the OECD average of 34.0% in 2016.

These statistics indicate that there is scope for the Asian and Pacific economies to broaden their tax bases and mobilise higher levels of domestic revenues. This can contribute to economic development and reduce their vulnerability to external shocks.

Across all the countries surveyed the revenues from corporate income tax (CIT) were high by international standards. They ranged between 9.4% of total tax revenue in Samoa and 41.1% of total tax revenue in Malaysia in 2016. These rates are higher than the OECD average of 9.0%. In the case of the Asian countries the CIT accounted for higher tax revenues than personal income tax revenues in 2016.

Where they were levied, value-added taxes (VAT) played an important role in the tax revenues of Pacific economies in 2016, accounting for more than 25% of revenues in all countries except Australia and Papua New Guinea. VAT was however less significant in the Asian countries, generating less than 25% of total tax revenue in all Asian countries except Indonesia.

Social security contributions were the principal source of tax revenues for Japan, where they represented 40.4% of total tax revenues. Social security contributions played a smaller role in the tax revenues of the remaining Asian economies, apart from Korea where they were 26.2% of total tax revenues. Social security contributions do not exist in the Pacific economies surveyed.