In 2023, the average tax-to-GDP ratio in the 37 Asian and Pacific economies covered in this report was 19.6%, below the averages for OECD countries and for Latin America and the Caribbean (LAC), of 33.9% and 21.3%, respectively. Tax-to-GDP ratios in the region ranged from 7.3% in Bangladesh to 35.3% in Niue.
The average tax-to-GDP ratio in the Asia-Pacific region increased by 0.1 percentage points (p.p.) between 2022 and 2023 and was above the level in 2019, prior to the COVID-19 pandemic, of 19.3%. The average tax-to-GDP ratio among OECD countries declined by 0.1 p.p. in 2023 while the average for the LAC region decreased by 0.2 p.p. in the same year and remained below its pre-COVID level.
In 2023, the tax-to-GDP ratio increased in more than two-thirds (23) of the 35 economies in the Asia-Pacific region for which data for 2023 are available. The tax-to-GDP ratio increased by 2.0 p.p. or more in eight economies: Niue (4.5 p.p.), the Cook Islands (3.4 p.p.), Azerbaijan (3.4 p.p.), the Maldives (3.2 p.p.), Vanuatu (2.8 p.p.), Fiji (2.5 p.p.), Tokelau (2.4 p.p.) and Sri Lanka (2.0 p.p.). Increases were driven by a range of factors, including a rebound in tourism, increased business activity and national tax reforms.
Tax-to-GDP ratios fell in twelve economies in 2023, with two economies reporting a fall larger than 10 p.p.: Timor-Leste (10.2 p.p.) and Nauru (10.1 p.p.). The next-largest contractions occurred in Korea (3.1 p.p.) and Viet Nam (2.0 p.p.). In economies where tax revenues fell as a share of GDP, lower revenue either from corporate income taxes (CIT) or taxes on goods and services was the main driver of the decline.
Over a longer timeframe, tax-to-GDP ratios increased in 22 of the 37 Asian and Pacific economies between 2010 and 2023 and declined in 15 economies. The largest increases were observed in the Maldives (14.8 p.p.), Niue (13.1 p.p.), Nauru (9.6 p.p., since 2014), Japan (8.2 p.p., 2010-22), Cambodia (7.1 p.p.) and Korea (6.5 p.p.). In Cambodia, the Maldives, Nauru and Niue, the increases resulted from tax policy reforms while in Japan and Korea tax-to-GDP ratios increased from a particularly low level in 2010 attributable to the Global Financial Crisis.
The largest decreases between 2010 and 2023 occurred in Timor-Leste (15.2 p.p.), Kazakhstan (4.3 p.p.), China (3.5 p.p., excluding social security contributions), the Marshall Islands and Viet Nam (3.1 p.p. in both cases). Falls in global commodity prices partly drove the declines in Kazakhstan and Timor-Leste.
