Revenue Statistics in Latin America and the Caribbean 2025

1. Tax revenue trends, 1990-2023

Introduction

Revenue Statistics in Latin America and the Caribbean 2025 provides comprehensive, detailed and harmonised tax revenues for 27 countries in Latin America and the Caribbean (LAC) up to 2023, a year in which revenues declined as a share of GDP on average across the region following two consecutive years of increases in the wake of the COVID-19 shock in 2020.

After a strong rebound from the initial impact of COVID-19, economic growth has remained weak in many LAC countries. While this trend reflects cyclical factors – such as less favourable external conditions, the rollback of public transfers and tighter monetary policy – it is also driven by structural constraints to economic growth, including low productivity growth (OECD et al, 2024[1]). Meanwhile, persistent social challenges remain: levels of poverty and extreme poverty in the region have remained above pre-pandemic levels, with inflation further eroding purchasing power. In 2023, 27.3% of the population lived in poverty and 10.6% in extreme poverty in the LAC region (OECD et al, 2024[1]). Despite recent consolidation efforts, fiscal space to promote investment and expand social protection programmes remains limited in the LAC region. Debt service as a percentage of tax revenues increased to 12.2% in 2022, up from 9.8% in 2012 and more than double the OECD average of 4.8% (OECD et al, 2024[1]).

To finance their development programmes, governments in the region need to enhance the targeting of public spending and mobilise additional resources. Fairer and more efficient tax systems are required: low tax revenues limit the state’s capacity to respond to citizens’ demands and improve public services. In addition, by rebalancing the tax structure away from a dependence on consumption taxes and corporate income tax and by promoting further progressivity in the personal income tax, the region could reduce inequalities and minimise distortions that constrain entrepreneurship (OECD et al, 2024[1]). Tax reforms will also be needed to encourage a green and just transition (OECD et al., 2022[2]). In many LAC countries, a stronger fiscal pact between government, citizens and the private sector is required to ensure that political support for these reforms is sustained throughout what is likely to be a long-term process (OECD et al., 2021[3]).

Revenue Statistics in Latin America and the Caribbean 2025 provides a unique foundation for such fiscal pacts. serving both as a basis for countries’ in-depth tax policy analysis and as a common starting point for knowledge sharing and capacity development across the region. The report is organised as follows. This chapter (Chapter 1) discusses the evolution of key tax indicators between 1990 and 2023, including the tax-to-GDP ratio, the tax mix and the share of tax revenue generated by different levels of government, as well as the efficiency of value-added tax in the region. It also analyses revenues from environmentally related taxes. This analysis is complemented by special features on non-tax revenues in the LAC region (Chapter 2) and revenues from non-renewable natural resources (Chapter 3). Chapter 4 provides comparative tables for key tax indicators across the region, while Chapters 5 and 6 provide a detailed country-by-country breakdown of tax revenue.

Tax revenue levels and annual changes in 2023

Tax-to-GDP ratios in 2023

The tax-to-GDP ratio reflects the portion of gross domestic product (GDP) that comes from tax revenue, including social security contributions paid to the general government. The LAC average represents an unweighted mean of 26 countries featured in this publication and excludes Venezuela due to a lack of data (see Box 1.1 for a full explanation of the tax-to-GDP ratio).

The average tax-to-GDP ratio in the LAC region was 21.3% in 2023 (Figure 1.1). The highest tax-to-GDP ratios were observed in Brazil (32.0%), Jamaica (29.0%) and Barbados (28.1%), while the countries with the lowest tax-to-GDP ratio were Guyana (11.6%), Panama (11.9%) and Guatemala (14.0%). All countries in the LAC region recorded a tax-to-GDP ratio below the OECD average of 33.9% in 2023.1

Figure 1.1. Tax-to-GDP ratios in the LAC region, 2023

Total tax revenues as percentage of GDP

Note: The classification of countries into different sub-regions follows ECLAC’s classification and is based on the spoken language of countries. The “Caribbean” includes English-speaking countries and Guyana, while “Central America and Mexico” covers Spanish-speaking countries including Dominican Republic and Cuba.

The figures exclude local government revenues for Antigua and Barbuda, Argentina (but include provincial revenues), The Bahamas, Barbados, Cuba, the Dominican Republic, Saint Lucia and Trinidad and Tobago as data are not available.

1. Represents the unweighted average of the 38 OECD member countries. Chile, Colombia, Costa Rica and Mexico are also included in the OECD average.

2. Represents the unweighted average of 26 Latin American and Caribbean countries included in this publication, excluding Venezuela due to data availability issues.

Source: OECD et al. (2025[4]), Table 4.1.

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In 2023, the average tax-to-GDP ratio in the LAC region was 0.2 percentage points (p.p.) lower than in 2022. The changes in tax-to-GDP ratios between 2022 and 2023 varied across the region (Figure 1.2). Fourteen countries experienced a decrease in their tax-to-GDP ratio while ten countries saw an increase and two recorded no change.

The decrease in the tax-to-GDP ratio from 2022 to 2023 exceeded 1.0 p.p. in four countries: Chile (3.2 p.p.), Peru (2.1 p.p.), Argentina (1.7 p.p.) and Cuba (1.3 p.p.). Meanwhile, two countries experienced an increase of more than 1.0 p.p.: Colombia (2.6 p.p.) and Jamaica (1.1 p.p.).

Figure 1.2. Changes in tax-to-GDP ratios in the LAC region, 2022 and 2023

Year-on-year change, p.p.

Note: The LAC average represents the unweighted average of 26 LAC countries included in this publication excluding Venezuela due to data availability issues. The OECD average represents the unweighted average of the 38 OECD member countries. Chile, Colombia, Costa Rica and Mexico are also part of the OECD (38).

Source: Authors’ calculations based on OECD et al. (2025[4]), Table 4.1.

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Box 1.1. The tax-to-GDP ratio methodology

The tax ratios shown in this publication express aggregate tax revenue as a percentage of GDP. The value of this ratio depends on its denominator (GDP) and its numerator (tax revenue). Both the numerator and the denominator may be subject to historical revision. The tax-to-GDP needs to be treated with caution: nominal tax revenue and nominal GDP may change in the same direction (both increasing or both decreasing), but the tax-to-GDP ratio will go in the opposite direction over the same period if the change in nominal tax revenue is lower than the change in nominal GDP.

In 21 LAC countries, the reporting year coincides with the calendar year. The remaining five countries report on a fiscal year basis:

• The fiscal year in Barbados, Belize and Saint Lucia runs from April to March. This means that reporting year 2023 is Q2/2023-Q1/2024.

• The fiscal year in Trinidad and Tobago covers October to September. The reporting year 2023 spans Q4/2022-Q3/2023.

• The fiscal year for The Bahamas ends on 30 June. The reporting year 2023 runs from Q2/2022-Q2/2023.

The numerator (tax revenues)

This publication uses tax revenue figures that are submitted by focal points or published annually by national Ministries of Finance, tax administrations or statistics offices. Historical data are subject to revisions each year, with more important revisions in more recent years. Past figures may also change from one edition to the next when data are improved (for example, new data is obtained, or classification is refined).

The denominator (GDP)

The GDP figures used in this publication are sourced from countries’ national accounts as well as the World Economic Outlook (WEO) published by the IMF (IMF, 2024[5]) The GDP figures for the four LAC countries that are also members of the OECD – Chile, Colombia, Costa Rica and Mexico – are based on the OECD Annual National Accounts. GDP figures are revised and updated to reflect better data sources and improved estimation procedures, or to move towards new internationally agreed guidelines for measuring the value of GDP. Nominal GDP figures in this edition were revised from those shown in last year’s edition for 14 countries. Of these, the 2022 GDP was revised upwards for ten countries and downwards for four countries. The largest upwards revision was for Barbados (7.8%).

Tax-to-GDP ratios

The difference between the tax‑to‑GDP ratio for 2022 shown in the 2024 and 2025 editions of this report ranged from -1.5 p.p. in Barbados to +1.6 p.p. in Saint Lucia and was mainly due to the GDP revisions mentioned above. The average tax-to-GDP ratio for the LAC region in 2022 shown in the 2024 edition of Revenue Statistics in Latin America and the Caribbean was 21.5%. In this year’s edition, it is 0.1 p.p. lower, at 21.4%. The increase in the LAC region’s tax-to-GDP ratio between 2021 and 2022 has also been revised upwards, from 0.3 p.p. in the 2024 edition to 0.4 p.p. in this edition.

Major changes in tax-to-GDP ratios in LAC countries in 2023

Economic growth slowed in the LAC region in 2023, continuing a deceleration that began in 2022. Growth in 2023 was impacted by less favourable external conditions, declining non-renewable resource prices, the rollback of public transfers, tighter monetary policy, as well as structural challenges such as low productivity (ECLAC, 2024[6]; ECLAC, 2024[7]; OECD et al, 2024[1]).

This section examines in greater detail the largest changes in tax-to-GDP ratios in LAC countries in 2023.

• Chile recorded the largest decline in its tax-to-GDP ratio among LAC countries in 2023, at 3.2 p.p. amid a slowdown in economic activity and lower mineral prices (IMF, 2024[8]). The drop was primarily driven by a decrease of 3.2 p.p. in income tax revenue. In the previous year, the level of income tax revenues in Chile reached a peak of 10.4% of GDP; however, in 2023, there was a sharp increase in refunds and in the use of credit balances when the income tax liability was lower than the on-account payments made in 2022 (ECLAC, 2024[6]).

• Peru experienced the second-largest drop in tax revenue as a percentage of GDP (2.1 p.p.) due to falls of 1.2 p.p. in corporate income tax (CIT) revenues and 0.8 p.p. in VAT revenues in 2023. Economic activity was impacted by several shocks during the year, including social unrest, unfavourable climatic conditions and avian flu (Central Reserve Bank of Peru, 2024[9]). Peru was particularly affected by the fall in commodity prices that eroded corporate profits, reducing CIT receipts. The CIT decrease may also be explained by lower on-account receipts in 2023 and the sharp increase in CIT revenues in 2022 that led to an elevated baseline (ECLAC, 2024[6]).

• Argentina’s tax-to-GDP ratio recorded the third-largest decrease in 2023, of 1.7 p.p. Decreases in revenue occurred in income tax and other taxes on goods and services, which fell by 1.1 p.p. and 1.0 p.p. respectively. A drought affected agricultural production and exports, contributing to a fall of 1.2 p.p. in export tax revenue and the overall decline in revenue from other taxes on goods and services (Pérez M. and Ciongo, 2024[10]). The decrease in income tax revenue may be explained by the high baseline in 2022 as an extraordinary advance on unexpected corporate income was levied in that year (ECLAC, 2024[6]).

• In contrast, Colombia experienced the largest increase in tax revenues between 2022 and 2023. Tax revenues increased by 2.6 p.p. driven by an increase of 2.4 p.p. in revenues from income taxes, most notably from CIT (2.2 p.p.). These increases were explained by several factors including the effect of a tax reform (Law 2277), which took effect in January 2023 and included changes to CIT and new surcharges for specific industries (such as financial institutions, crude oil, coal extraction and hydro-electric companies). The increase also reflected the fact that large taxpayers (“Grandes Contribuyentes”) were required to pay the additional points of income tax in advance of the 2024 tax year. This advance mainly covered financial intermediaries.

• Jamaica recorded an increase in tax revenues of 1.1 p.p. in 2023, which was mainly due to an increase of 1.7 p.p. in personal income tax (PIT) revenues. This resulted from a public wage reform as part of the Government’s public sector transformation programme that simplified salary scales and allowances and increased public sector salaries, leading employees to move into higher income tax brackets (Linton, 2023[11]; IMF, 2024[12]).

Figure 1.3. Changes in tax-to-GDP ratios in LAC countries by main tax heading, 2023

Year-on-year change, p.p.

Note: The LAC average represents the unweighted average of 26 LAC countries included in this publication and excludes Venezuela due to data availability issues.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4.

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Changes in the tax-to-GDP ratio are driven by the relative changes in nominal tax revenues and nominal GDP (Box 1.1). From one year to the next, if tax revenues rise by more than GDP (or fall by less than GDP), the tax-to-GDP ratio will increase. Conversely, if tax revenues rise by less than GDP, or fall further, the tax-to-GDP ratio will fall. Therefore, a higher tax-to-GDP ratio does not necessarily mean that the amount of tax revenues has increased in nominal or real terms.

Figure 1.4 shows the percentage change in nominal GDP and nominal tax revenue between 2022 and 2023. In most cases, nominal tax revenue and nominal GDP increased over the period except in Chile and Peru, which recorded falls in nominal tax revenue over the period, and in Trinidad and Tobago, where both nominal GDP and nominal tax revenue declined. Tax revenue increased more than nominal GDP in 10 countries, by less in 11 and by the same magnitude in two countries.

Figure 1.4. Changes in nominal tax revenues and nominal GDP by sub-region, 2022-2023

Note: The diagonal line across the graph represents the point at which the change in tax revenues and in GDP were of the same magnitude and therefore the point at which the tax-to-GDP ratio remained unchanged. Countries above the diagonal line had increases in their tax-to-GDP ratios; countries below it had falls.

Source: LAC figures are authors’ calculations based on OECD et al. (2025[4])

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Changes in tax revenues from different tax types in 2023

Decreases in tax revenue across the LAC region in 2023 were driven by income taxes amid declining commodity prices, notably non-renewable natural resource prices. In contrast, revenues from taxes on goods and services remained stable in 2023.

CIT revenues and unallocable income tax revenues both decreased by 0.1% of GDP on average across the LAC region in 2023 (Table 1.1). CIT revenues increased by 0.6 p.p. in 2022, supported by high oil and gas prices in 2021 that strengthened company profits in 2022, especially in oil-producing countries. In 2023, CIT receipts diminished relative to the elevated base in 2022, and several countries issued income tax refunds (contributing to the decline of unallocable income tax revenues), a trend compounded by the decline in commodity prices.

Table 1.1. Changes in tax revenue by main tax category, 2021 to 2023

Year-on-year change, p.p.

	2021	2022	2023
PIT	-0.1	0.0	0.1
CIT	0.1	0.6	-0.1
Unallocable IT	0.1	0.0	-0.1
SSCs	-0.1	-0.2	0.1
VAT	0.2	0.1	0.0
OCT	0.0	-0.2	0.0
Res.	0.1	0.1	-0.1
Total tax	0.2	0.4	-0.2

Note: The LAC averages represent the unweighted average of 26 LAC countries included in this publication and excludes Cuba (up to 2020) and Venezuela due to data issues. In addition, the PIT and CIT averages exclude Ecuador due to data quality issues.

Source: Authors’ calculations based on OECD et al. (2025[4])

Figure 1.5 shows changes in combined CIT and unallocable income tax revenues in 2022 and 2023. All eleven countries that recorded decreases in these revenues in 2023 observed an increase in 2022, notably several oil producing countries such as Argentina, Bolivia, Brazil, Peru, and Trinidad and Tobago. On average, revenue from CIT and unallocable income tax increased by 1.4 p.p. in these 11 countries in 2022 then declined by 0.9 p.p. in 2023.

In contrast, revenue from PIT increased as a percentage of GDP in 2023, principally driven by the large increase in PIT revenues in Jamaica. Revenue from social security contributions (SSCs) also increased by 0.1 p.p. in 2023 (Table 1.1).

Figure 1.5. Changes in combined CIT and unallocable income tax revenues in LAC countries, 2022 and 2023

Note: Total income tax revenues are shown for Ecuador as the breakdown of income tax revenues is not available. The Bahamas does not levy income taxes.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4.

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Within taxes on goods and services, VAT revenue and revenue from other taxes on goods and services (this category, shortened to ‘’OCT’’ in the table and henceforth in the chapter, includes excises, customs and imports duties, and non-VAT general taxes, such as sales taxes) were unchanged as a share of GDP between 2022 and 2023.

Tax-to-GDP ratios in LAC sub-regions

This report examines trends in tax revenues across three LAC sub-regions: Central America and Mexico; the Caribbean; and South America. Average tax-to-GDP ratios in Central America and Mexico and South America decreased in 2023 after two years of increases, reaching 19.0% and 22.9% respectively while the Caribbean’s tax-to-GDP ratio increased to 21.9%. South America and Central America and Mexico recorded decreases of 0.5 p.p. and 0.2 p.p. respectively between 2022 and 2023, while the Caribbean’s tax-to-GDP ratio increased by 0.3 p.p. over the period.

Table 1.2 presents annual changes in revenues for sub-regions by main tax type in 2023.

• Revenue from CIT decreased in all sub-regions – by 0.1 p.p. in the Caribbean and in Central America and Mexico, and by 0.2 p.p. in South America. Changes in revenue from VAT, OCT, PIT and SSCs varied across the sub-regions.

• In the Caribbean, revenue from the main categories except for CIT and the ‘residual’ category increased as a share of GDP. The largest increase was recorded in PIT (0.2 p.p.) followed by SSCs, VAT and OCT. The growth in tourism-related tax revenues and the withdrawal of 2022 tax relief measures to reduce fuel costs in some countries contributed to increases in revenues from taxes on goods and services (ECLAC, 2024[6]).

Table 1.2. Changes in tax revenue by category as a share of GDP, LAC and sub-regions, 2023

Year-on-year change, p.p.

	LAC	Caribbean	Central America & Mexico	South America
PIT	0.1	0.2	0.0	-0.1
CIT	-0.1	-0.1	-0.1	-0.2
Unallocable IT	-0.1	0.0	0.0	-0.2
SSC	0.1	0.1	0.0	0.1
VAT	0.0	0.1	0.0	-0.1
OCT	0.0	0.1	0.1	-0.1
Res.	-0.1	-0.1	-0.3	0.1
Total tax	-0.2	0.3	-0.2	-0.5

Note: The averages exclude Venezuela due to data availability issues. Additionally, the PIT and CIT averages for LAC and the South America sub-region exclude Ecuador due to data quality issues.

Source: Authors’ calculations based on OECD et al. (2025[4]).

• In Central America and Mexico, CIT revenues and the ‘residual’ category decreased by 0.1 p.p. and 0.3 p.p. respectively while the other tax categories remained stable. The decrease in the ‘residual’ category is mainly explained by the significant fall in “other taxes and fees’’ by 1.8 p.p. in Cuba, taxes for which the main tax bases are not identified or cut across different bases.

• South America was the region that showed the largest and most widespread declines in revenues across the main tax categories. Income tax revenues fell by 0.5 p.p. and revenues from taxes of goods and services fell by 0.2 p.p. All main sub-categories within these two revenue categories fell by 0.1 p.p. or 0.2 p.p. South America was the sub-region most affected by the fall in non-renewable resource prices in 2023, which affected economic activity and tax revenues in the sub-region.

Long-term trends in tax-to-GDP ratios

Evolution of tax-to-GDP ratios since 1990

Tax-to-GDP ratios in LAC countries increased in the early 1990s after a decade of macroeconomic instability. During the 1980s, many countries ran large fiscal imbalances and some resorted to alternative ways of financing expenditure (borrowing or printing money). This caused rapid inflation across the region, which eroded the value of tax revenue in real terms. Reforms in the 1990s focused on price stability, trade liberalisation and fiscal discipline. Most governments reduced spending and implemented policies to increase tax revenues; budget management and fiscal balances improved considerably. Policy makers implemented reforms to tax policy and administration to reinforce tax systems against inflationary episodes by shortening collection lags and indexing tax liabilities (ECLAC, 2018[13]).

The introduction of VAT has been the most significant tax reform across the LAC region of the past three decades. By the early 1990s, almost all countries were implementing a VAT system and reforms aimed to increase its rate, to widen its base and to improve collections. Several countries have moved towards single-rate VAT schemes (ECLAC, 2018[13]).

Countries in the LAC region have made significant efforts to modernise tax administration over the last two decades. New information technology systems have been implemented, tax collection systems became more efficient, and staff have gained expertise (IDB, 2013[14]). Tax reforms have included the introduction or development of simplified regimes for small taxpayers, the taxation of property based on presumed incomes and the expansion of taxation to labour and capital income, including dividends. Reforms have also included the establishment of minimum taxes, taxes on financial transactions and gradual reductions in the real income level taxed at the top marginal rate (ECLAC, 2013[15]; ECLAC, 2018[13]).

Figure 1.6 shows the evolution of the LAC and OECD averages tax-to-GDP ratios between 1990 and 2023. The average tax-to-GDP ratio for the LAC region has increased significantly over the past three decades, rising from 14.6% in 1990 to 21.3% in 2023. This upward trajectory was, however, interrupted by the global financial crisis in 2009, the commodity price shock in 2016 and COVID-19 in 2020 (which led to declines of 0.8 p.p., 0.1 p.p. and 0.6 p.p., respectively). The OECD tax-to-GDP ratio has also followed an upward trend since 1990 (albeit less pronounced and starting from a higher level than the LAC average), despite notable declines during the global financial crisis (of 0.6 p.p. and 0.8 p.p. in 2008 and 2009 respectively). The OECD tax-to-GDP ratio reached 33.9% in 2023, 3.1 p.p. above its level in 1990. The difference between the LAC and OECD average tax-to-GDP ratio has thus reduced considerably over time, to 12.7% of GDP in 2023.

Figure 1.6. Tax-to-GDP ratios, LAC and OECD averages, 1990-2023

Percentage of GDP

Note: The LAC average represents the unweighted average of 26 LAC countries included in this publication and excludes Cuba (up to 2020) and Venezuela due to data availability issues. The OECD average represents the unweighted average of the 38 OECD member countries. Chile, Colombia, Costa Rica and Mexico are also included in the OECD average.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4.

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Figure 1.7 shows the three-year average tax-to-GDP ratios for the periods 2011-13 and 2021-23 in LAC and OECD countries and the differences with the three-year average tax-to-GDP ratios a decade before (respectively the periods 2001-03 and 2011-03). The use of three-year averages helps to smooth out short-term fluctuations in tax-to-GDP ratios and thus provides greater insights into the convergence of LAC countries towards OECD countries. LAC countries principally converged to OECD countries in the first decade of the 21^st Century (between 2001-03 and 2011-13) but not in the second decade (between 2011-13 and 2021-23).

All LAC countries but two had a higher tax-to-GDP ratio in 2011-13 than in 2001-03, whereas only half of OECD countries increased their tax-to-GDP ratio over the period. In addition, the magnitude of the increases in the three-year average between 2001-03 and 2011-23 was greater in the LAC region than among OECD countries. On average, the change in the three-year average tax-to-GDP ratios between the two periods amounted to 3.0 p.p. for LAC countries and was null for OECD countries, indicating that countries with lower tax-to-GDP ratios, such as those in the LAC region, tended to experience stronger increases in their tax-to-GDP ratio on average than countries with higher tax-to-GDP ratios, such as many OECD countries.

However, this tendency is no longer visible in the second decade: while three-year average tax-to-GDP ratios increased in most LAC and OECD countries between 2011-13 and 2021-23, the increases were of a lower magnitude and occurred in fewer LAC countries than in the OECD. On average, the difference in the three-year average tax-to-GDP ratios between the two periods amounted to 1.1 p.p. for LAC countries and 1.7 p.p. for OECD countries.

Figure 1.7. Three-year average tax-to-GDP ratios levels and difference with three-year average tax-to-GDP ratios in the previous decade, OECD and LAC countries

Note: The figure excludes Cuba and Venezuela due to data availability issues. 2022 data were used in Japan and Australia as tax-to-GDP ratios in 2023 are not available for these countries.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4 and (OECD, 2024[16])

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Figure 1.8 shows the distribution of the three-year average tax-to-GDP ratios in the periods 2001-03 and 2021-23 in LAC and OECD countries. In both regions and periods, there is a great heterogeneity in tax-to-GDP ratios. In 2001-03, the three-year average tax-to-GDP ratios of LAC countries ranged from 10.1% to 30.8%, with a median of 16.5%. In 2021-23, there was a noticeable shift in the distribution in LAC countries: all 2021-23 quartiles were higher relative to 2001-03 by more than 4 p.p., while the lower quartile exceeded the 2001-03 median (18.3% vs 16.5% of GDP). There was also an upward movement across OECD countries between both periods but to a lower extent. Despite these trends, the upper quartile in the LAC region remained lower than the lower quartile in the OECD (respectively 25.0% and 30.4% of GDP). All LAC countries except Brazil are below the OECD lower quartile.

Figure 1.8. 2001-03 and 2021-23 average tax-to-GDP ratios, OECD and LAC countries

Note: The figure excludes Cuba and Venezuela due to data availability issues. 2022 data were used in Japan and Australia as 2023 tax-to-GDP ratios are not available in these countries.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4 and (OECD, 2024[16])

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Box 1.2. Factors influencing tax levels

Tax-to-GDP ratios are influenced by a range of economic and structural factors. Differences between the LAC and OECD average tax-to-GDP ratios are consistent with the tendency for countries at higher income levels to have higher tax-to-GDP ratios (Figure 1.9). Argentina, Barbados, Brazil and Uruguay show similar tax-to-GDP ratios and levels of income to some OECD countries.

The economic and structural factors that influence tax-to-GDP ratios include GDP per capita (a measure of a country’s income level), openness to trade, natural resource endowments and the importance of agriculture in the economy. The capacity of tax administrations, levels of corruption and tax morale (the willingness of people to pay taxes) are also strongly linked to the level of tax revenue (OECD, 2014[17]; OECD, 2019[18]).

Figure 1.9. GDP per capita in PPP (USD) and tax-to-GDP ratios for countries in the LAC region, the OECD, and a group of African, Asian and Pacific economies, 2022

Note: The year of comparison is 2022 as tax-to-GDP ratios in 2023 are not available for the selected African, Asian and Pacific economies. Cuba and Venezuela are not included in this figure due to data issues. The purchasing-power-parity (PPP) between two countries is the rate at which the currency of one country needs to be converted into that of a second country to ensure that a given amount of the first country’s currency will purchase the same volume of goods and services in the second country as it does in the first. The implied PPP conversion rate is expressed as national currency per current international dollar. An international dollar has the same purchasing power as the US dollar has in the United States. An international dollar is a hypothetical currency that is used as a means of translating and comparing costs from one country to the other using a common reference point, the US dollar (USD).

Source: (IMF, 2024[5]) for figures of GDP per capita. Tax-to-GDP ratios are sourced from the Global Revenue Statistics Database (https://www.oecd.org/tax/tax-policy/global-revenue-statistics-database.htm).

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The tax-to-GDP ratio also reflects political choices regarding the role and size of the government. For example, the extent of state participation in financing social security is an important factor behind disparate tax ratios in the LAC region. From the 1980s onwards, many LAC countries, such as Chile, El Salvador and Mexico, privatised healthcare and pensions to greater or lesser degrees: these contributions to private institutions are not considered SSCs. In Colombia and Peru, private and public programmes compete, and employees opt between them (OECD et al., 2015[19]; OECD/IDB/The World Bank, 2014[20]). On the other hand, Argentina, Brazil and Uruguay follow a model where public and private systems are complementary. In these countries, substantial reforms were undertaken to extend coverage of social security systems to those previously excluded. This has also been instrumental in the increase of tax revenues (ECLAC, 2014[21]).

Informality is another factor that constrains tax collection in the LAC region by significantly reducing the tax base. Informal employment accounts for over half of workers in Latin America and the Caribbean and has grown over the last decade (ECLAC, 2024[7]).

The LAC region loses significant amounts of tax revenue to tax evasion and aggressive tax planning. (ECLAC, 2024[7]) estimated tax evasion and avoidance in Latin America cost USD 433 billion in 2023, equivalent to 6.7% of GDP, of which PIT and CIT accounted for 4.6% of GDP. Revenue losses in VAT amounted to 2.1% of GDP.

In addition, geographic location and historical factors can influence tax-to-GDP ratios. For example, landlocked countries are less able to impose taxes on goods and services at a port of entry than coastal countries. Socio-demographic determinants, such as the level of education or female participation in the labour force are also important. Finally, international factors, including the tax policies of other countries, can impact tax-to-GDP ratios.

Figure 1.10 shows the evolution of the average tax-to-GDP ratio in the three LAC sub-regions since 1990. While tax levels in all three sub-regions have shown an upward trend during the last three decades, their trajectory shows notable differences:

• On average, South America recorded the strongest growth between 1990 and 2023, of 9.5 p.p. The sub-region’s tax-to-GDP ratio rose fastest during the 1990s. Since 2015, its tax-to-GDP ratio has declined towards the LAC average, and from 2019 it has followed the LAC average trend. South America’ tax-to-GDP ratio grew significantly in 2021 and 2022 with increases of 0.9 p.p. in both years and stood at 22.9% in 2023, 1.6 p.p. higher than the LAC average and 0.4 p.p. above its pre-pandemic level in 2019.

• The increase in the average tax-to-GDP ratio for Central America and Mexico over the period has followed a similar trend to the LAC average, amounting to 6.1 p.p. Between 1990 and 2023, the average tax-to-GDP ratio of this sub-region remained below the average for the LAC region; in 2023, it stood at 19.0%, 2.2 p.p. lower than the LAC average but 0.7 p.p. higher than its pre-pandemic level (18.3% in 2019).

• The average tax-to-GDP ratio of the Caribbean increased by 3.7 p.p. between 1990 and 2023, and it has been consistently higher than the LAC average. After a sharp increase between 2017 and 2019, the Caribbean’s tax revenues declined strongly as a share of GDP. The Caribbean is the only sub-region where the tax-to-GDP ratio has not recovered to its pre-pandemic level: the average tax-to-GDP ratio stood at 21.9% in 2023, 1.5 p.p. lower than in 2019. Guyana drove the overall decline in tax revenues as a share of GDP in the Caribbean sub-region between 2019 and 2023. In 2021 and 2022, Guyana recorded strong falls in its tax-to-GDP ratio (of 4.5 p.p. and 6.3 p.p. respectively) that were a consequence of its strong GDP growth due to increased oil production. In contrast, non-tax revenues increased strongly in Guyana between 2019 and 2023, partially offsetting the decrease in tax revenues over the period (see Chapter 2).

Figure 1.10. Average tax-to-GDP ratios, LAC and sub-regions, 1990-2023

Percentage of GDP

Note: The LAC average represents the unweighted average of 26 LAC countries included in this publication and excludes Cuba (up to 2020) and Venezuela due to data issues. The Caribbean includes eight countries (Antigua and Barbuda, The Bahamas, Barbados, Belize, Guyana, Jamaica, Saint Lucia and Trinidad and Tobago), Central America and Mexico nine countries (Costa Rica, Cuba from 2021, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua and Panama) and South America nine countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru and Uruguay). The classification of countries into the different sub-regions follows ECLAC’s classification and is based on the spoken language of countries. The Caribbean includes the English-speaking countries and Guyana while Central America and Mexico covers Spanish-speaking countries including Dominican Republic.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4.

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Evolution of revenues by tax type since 1990

The increase in the average tax-to-GDP ratio in the LAC region since 1990 has largely been driven by increases in revenue from VAT and from income taxes, which increased by 3.8 p.p. and 2.9 p.p. respectively between 1990 and 2023. In 2023, revenue from VAT amounted to 6.0% of GDP while revenue from taxes on income and profits amounted to 6.2% of GDP (Figure 1.11).

Between 1990 and 2023, revenue from other taxes on goods and services decreased as a percentage of GDP in the LAC region. This decline is associated with trade liberalisation, as a result of which LAC countries changed the way they tax imported and exported goods as well as specific goods and services. These changes included a reduction of import tariffs, narrowing the base of products and services subject to excises, and the elimination of taxes on exports. One exception is Argentina, where taxes on exports were re-established in 2002, partly abolished in 2015, then reintroduced in 2018.

Figure 1.11. Revenue from selected taxes in the LAC region, 1990-2023

Percentage of GDP

Note: The LAC average represents the unweighted average of 26 LAC countries included in this publication and excludes Cuba (up to 2020) and Venezuela due to data issues.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4.

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Five distinct phases in the evolution of tax revenues in the LAC region can be distinguished:

• Between 1990 and 2002, VAT contributed more to the increase in tax revenues than taxes on income and profits (1.9% of GDP versus 0.8%). Over that period, five countries introduced VAT (Barbados, Belize, El Salvador, Jamaica and Paraguay). Several other countries increased standard VAT rates and undertook reforms to widen the tax base and improve revenue collection.

• Between 2002 and 2008, taxes on income and profits contributed more than VAT to the increase in the average tax-to-GDP ratio (the increases amounted to 1.7% and 1.2% of GDP respectively). The increase in revenue from income taxes was partly explained by the commodity price boom after 2003, which drove up CIT revenues from the natural resource sector (ECLAC, 2014[21]; Barreix, Benítez and Pecho, 2017[22]). In several countries, it was also a result of policies that reduced tax incentives in free-trade zones, the introduction of minimum taxes for corporations, reforms in international taxation and agreements between countries to fight tax evasion.

• Revenue from VAT and income taxes declined during the global financial crisis. During the subsequent recovery, VAT revenues grew faster than income tax revenues on average across the region, exceeding them as a percentage of GDP in 2013. Falling commodity prices contributed to a stagnation of income tax revenue between 2011 and 2015 and a decrease between 2015 and 2016. During this period, two more Caribbean countries introduced a VAT (Saint Lucia in 2012 and The Bahamas in 2015).

• Between 2016 and the start of the COVID-19 crisis in 2020, commodity prices recovered and income tax revenues rebounded. Between 2017 and 2018, revenues from income taxes recorded their largest yearly increase since 2011, at 0.3 p.p. on average, due to strong profits in the mining and oil and gas extraction sectors.

• In 2020, all main tax categories except for SSCs declined as a percentage of GDP due to the COVID-19 pandemic. With the exception of PIT, they then recovered in 2021. In 2022, CIT drove a strong increase in income tax revenues while revenues from taxes on goods and services declined, partly due to the introduction of tax measures to mitigate the impact of high energy prices.

Figure 1.12 shows the evolution of revenue from PIT, CIT and total taxes on income since 2005. Over this period, CIT has remained the main share of income tax revenue in the LAC region, at around 60% on average.

Although CIT revenue as a percentage of GDP has been more volatile than revenue from PIT, it has been the larger driver of growth in total revenue from income tax over time. Nonetheless, PIT revenue has steadily increased on average across the region and was more resilient than CIT revenue during the global financial crisis and the COVID-19 pandemic. In 2023, the LAC averages for CIT and PIT revenue stood at 3.8% and 2.0% of GDP, respectively.

There are notable differences between the three LAC sub-regions in the evolution of the main tax categories over the last two decades:

• In the Caribbean, VAT revenue as a percentage of GDP increased significantly on average as seven of the eight Caribbean countries included in this report2 introduced a VAT system over the period, later than most countries in Central America and Mexico and in South America. VAT was the main driver behind the overall increase in the Caribbean’s tax-to-GDP ratio over the period.

• In Central America and Mexico and in South America, taxes on income and profits contributed most to the increase in the overall tax-to-GDP ratio, followed by VAT. Revenues from taxes on income and profits were influenced by increases in mineral and oil prices between 2003 and 2010.

Figure 1.12. Revenue from taxes on income and profits, CIT and PIT in the LAC region, 2005-23

Percentage of GDP

Note: The LAC averages exclude Cuba (up to 2020) and Venezuela due to data issues.; Ecuador is included in the LAC average for total income tax revenues but excluded from the LAC averages for PIT and CIT revenues as a percentage of GDP.

Source: OECD et al. (2025[4]), “Comparative tables of Revenue Statistics in Latin America and the Caribbean’’, OECD Data Explorer,

http://data-explorer.oecd.org/s/e1.

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Tax structures in the LAC region

The tax structure (defined as the share of major tax types in total tax revenue) depicts the composition of tax revenues by different tax types. It is an important indicator for understanding the economic and social effects of tax systems in the LAC region.

Evolution of tax structures, 1990-2023

Taxes on goods and services generated the largest share of total tax revenue in the LAC region in 2023, representing about half of total taxation on average.

• The share of VAT in total tax revenues was 28.5% in 2023, corresponding to an increase of 12.3 p.p. since 1990. The revenue share of other taxes on goods and services (including excises, customs and import duties) declined by 21.6 p.p. over the same period.

• The share of revenues from taxes on incomes and profits grew by 9.3 p.p. (from 20.3% to 29.6% of total tax revenues) between 1990 and 2023.

• The share of SSCs in total tax revenues increased by 2.5 p.p. to 16.6% in 2023. Two (opposing) factors have influenced the trajectory of SSCs. While rising personal incomes have led to higher collections, this was counter-balanced by the full or partial privatisation of social security systems that occurred in many countries, mainly between the mid-1990s and 2010 (OECD et al., 2015[19]).

The share of PIT grew from 8.0% of total tax revenues in 2005 to 9.5% in 2023, in part due to increases in personal incomes across the region in the two decades before the COVID-19 pandemic. However, in comparison to OECD countries, the average share of PIT revenue remains low in LAC countries despite some countries implementing reforms to expand the tax base. After the global financial crisis, several countries established flat rates on capital income that had previously been exempt and implemented progressive rates on labour income (ECLAC, 2014[21]). There are relatively few PIT payers in the LAC region, largely due to high levels of informality and the concentration of income earners at low-income levels: in 2013, only 10% of the population in Latin America were registered taxpayers (IDB, 2013[14]).

Several other factors continue to limit PIT revenue, including a small tax base that is comprised primarily of wages (since tax privileges are often granted to returns on capital), high tax reliefs (such as personal deductions and income exemptions), large tax allowances, and high levels of evasion (ECLAC, 2023[23]). (ECLAC, 2020[24]) finds that the evasion rates for PIT are high in several LAC countries. Evasion is more common among the self-employed than employees. A study for Mexico concluded that tax revenue losses as a percentage of GDP are nearly five times higher for individuals with business activities and almost seven times higher for persons with rental income than for wage earners. Similarly, in Costa Rica, the evasion rate for wage-earners and pensioners was only 3.5% in 2018, while the non-compliance rate for profit-making activities was 82.7% in 2018 and has been trending upwards since 2015 (ECLAC, 2023[23]).

The redistributive impact of PIT in Latin America is weak, achieving a reduction of just 2% in income inequality, which contrasts markedly with the countries of the European Union, where income taxes reduced inequality by 12% in 2014 (OECD et al., 2018[25]). The reduction in the Gini coefficient attributable to PIT in the LAC region ranged from 0.3% (Paraguay) to 5.9% (Mexico) in 2014 (OECD et al., 2018[25]). Many LAC countries often implement tax deferrals, reduced rates and exemptions, which typically have less redistributive impact than targeted tax reliefs. Deferrals postpone the deadline for filing and paying taxes but do not adjust tax calculations based on household income. PIT exemptions, on the other hand, might reduce revenue and decrease redistributive effectiveness. However, it is important to consider the region's heterogeneity, as removing many of these tax privileges or lowering their thresholds may enhance redistributive effectiveness at the expense of exacerbating distortions in allocative efficiency, which may influence taxpayers' decisions and behaviour (ECLAC, 2023[23]).

Figure 1.13. Average tax structure in the LAC region, 2005-23

Note: The LAC average excludes Cuba (up to 2020) and Venezuela due to data issues. Ecuador is excluded from the LAC average for PIT and CIT revenues due to data quality issues.

Source: Authors’ calculations based on OECD et al. (2025[4]), “Comparative tables of Revenue Statistics in Latin America and the Caribbean’’, OECD Data Explorer, http://data-explorer.oecd.org/s/e1.

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Enhancing the design of PIT has the potential to increase the progressivity of tax systems in the LAC region and to generate higher revenue. More progressive tax regimes in the region require more efficient tax administrations. It is essential that the design of PIT in each country, as well as potential reforms to enhance its effectiveness, achieve a balance between the principles of administrative simplicity, distributive equity and revenue sufficiency (ECLAC, 2023[23]).

The share of CIT in total tax revenue increased by 3.6 p.p. between 2005 and 2023, reaching 18.7%, mainly due to the significant increase in CIT revenues in 2022.

Average tax structures in the LAC region and OECD countries

Relative to OECD countries, the average tax mix for the LAC region is characterised by low revenues from PIT and SSCs and a greater reliance on taxes on goods and services (Figure 1.14). On average across the LAC region, taxes on goods and services account for half of tax revenue on average, compared with around one-third in OECD economies on average. As a percentage of GDP, revenue from taxes on goods and services in the LAC region and in the OECD were similar in 2022, at 10.0% and 10.6% respectively.3

By contrast, the combined share of taxes on income and profits and SSCs as a proportion of total tax revenue was much lower in the LAC region than in the OECD in 2022 (46.0% versus 61.3%, on average). As a percentage of GDP, these two categories amounted to 9.8% in the LAC region, less than half the OECD average (21.0%). The tendency towards private provision of social security in many LAC countries explains some of this difference.

On average, CIT generated 18.8% of total tax revenues in the LAC region, compared with 12.0% in the OECD (both 3.9% of GDP). The most striking difference relates to revenue from PIT, which contributed 23.6% of total tax revenues in the OECD on average in 2022 versus 9.2% of total tax revenue in the LAC region. PIT revenue amounted to 2.0% of GDP in the LAC region on average, compared with 8.2% for the OECD.

Taxes on immovable property and payroll (contained within the category “other taxes”) are a less important source of revenue for the LAC region on average than in the OECD, although there are challenges with data availability for property taxes.

Figure 1.14. Average tax structure in the LAC and the OECD, 2022

Note: The year of comparison is 2022 as the average tax structure for the OECD is not available for 2023. The LAC average excludes Venezuela due to data issues. Ecuador is excluded from the LAC average for PIT and CIT revenues due to data quality issues. The OECD average represents the unweighted average of the 38 OECD member countries. Chile, Colombia, Costa Rica and Mexico are included in the OECD average.

Source: Authors’ calculations based on OECD et al. (2025[4]), “Comparative tables of Revenue Statistics in Latin America and the Caribbean’’, OECD Data Explorer, http://data-explorer.oecd.org/s/e1.

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Tax structures in LAC countries

Taxes on goods and services were the main source of revenue for all LAC countries except Costa Rica, Cuba, Guyana, Mexico, Panama, and Trinidad and Tobago in 2023 (Figure 1.15). For Cuba, Guyana, Mexico, and Trinidad and Tobago, taxes on income and profits accounted for the largest share, whereas SSCs were the most important source of tax revenues for Costa Rica and Panama.

In most of the countries where taxes on goods and services were the main source of revenues, VAT contributed a larger share than OCT. Seventeen countries recorded higher tax revenue from VAT, ranging from 21.2% of total tax revenues in Brazil to 44.9% in The Bahamas. The share of VAT in total tax revenue in Brazil is likely to change from 2026 onwards due to a significant reform (see Box 1.3).

Box 1.3. Brazil’s VAT reform

Brazil is undertaking an historic reform of its indirect tax system. The foundation of this reform was laid with the enactment of Constitutional Amendment No. 132 in December 2023. This amendment was recently complemented by the enactment of Supplementary Law (Lei Complementar) No. 214 in January 2025. Full implementation of the reform is set for 2033, following a transition period that will begin in 2026.

The Brazilian tax system currently imposes five main taxes on the consumption of goods and services at various levels of government, often with overlapping tax bases. These include three taxes levied at federal level: Program of Social Integration (Programa de Integração Social, PIS), Contribution for the Financing of Social Security (Contribuição para Financiamento da Seguridade Social, COFINS) and a Tax on Industrial Products (Imposto sobre Produtos Industrializados, IPI); one tax levied at state level, the Tax on the Movement of Goods and Services (Imposto sobre Circulação de Mercadorias e Serviços, ICMS), and one tax levied at municipal level, the Tax on Services (Imposto sobre Serviços, ISS). The structure and different regulations of these taxes give rise to inefficiencies, create incentives for fiscal competition among states and generate important challenges to neutrality and business compliance.

At the core of the reform is the consolidation of the five main indirect taxes into a “dual VAT” with two separate but harmonised taxes to be applied concurrently: a Social Contribution on Goods and Services (Contribuição Social sobre Bens e Serviços, CBS), levied by the Federal government; and a Tax on Goods and Services (Imposto sobre Bens e Serviços, IBS), levied by the states, municipalities and the Federal District. The system is complemented by the Selective Tax (Imposto Seletivo), a federal excise tax designed to discourage the consumption of certain goods and services.

The main features of the new dual VAT system include:

• The CBS and IBS will be levied at destination, applied to a common broad tax base, and governed by uniform rules nationwide.

• Businesses will have the right to recover the IBS and CBS incurred on their business inputs, subject to certain exceptions and limitations.

• The federal government will set the rate for the CBS while states, municipalities and the Federal District will set the rate for their respective IBS components.

• In addition to a standard rate, three reduced-rate regimes will apply, providing reductions from the standard rate of 30% (e.g. services provided by certain professionals and qualified technicians), 60% (e.g. certain supplies related to education, healthcare and culture), or 100% (e.g. certain medical devices, medicines, female hygiene products, fresh produce, among others). The supplies benefiting from these reduced rates are determined by Supplementary Law No. 214/2025 and will apply to both CBS and IBS. The sub-federal levels will not be authorised to grant additional reductions.

• An IBS Steering Committee (Comitê Gestor do IBS) will be established to organise the joint management and administration of the sub-federal IBS, including representatives of the states, municipalities and the Federal District.

• The reform considers the implementation of a targeted refund mechanism for lower-income taxpayers to reduce the regressivity of the IBS and CBS (“cashback”).

The reform aims to reduce distortions, improve productivity and support economic growth while also addressing revenue distribution. It closely follows international best practices and OECD recommendations, while introducing a number of unique and innovative elements accounting for the structure of Brazil’s federal system.

Figure 1.15. Tax structures in LAC countries, 2023

Percentage of total tax revenue

Note: Countries are grouped by the main share of tax revenues among 1000 taxes on income and profits, 2000 social security contributions, 5111 value added taxes and other taxes on goods and services. The Bahamas does not tax income. There is no VAT system in Cuba. The LAC average represents the unweighted average of 26 LAC countries included in this publication and excludes Venezuela due to data availability issues.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4.

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In 2023, SSCs ranged from 0.4% of total tax revenue in the Dominican Republic to 35.0% in Panama. The level of this revenue reflects choices about how to finance social security (see Box 1.2): in countries with public or mixed social security schemes (including Argentina, Bolivia, Brazil, Costa Rica, Panama, Paraguay and Uruguay), SSCs accounted for over 15% of total tax revenues.

Figure 1.16 presents the tax-to-GDP ratio in LAC and OECD countries against labour taxes (PIT and SSCs), CIT, VAT and non-VAT taxes on goods and services as a percentage of total tax revenues. Figure 1.16 reflects the fact that countries that collect larger shares of their tax revenue from labour taxes usually have higher tax-to-GDP ratios (although this share also depends on how countries finance their social protection systems). In 2023, three-quarters of OECD countries had a share of labour taxes above 46.1% of tax revenues (25^th percentile); in contrast, three-quarters of LAC countries had a share of labour taxes lower than 28.7% of total tax revenues (75^th percentile). One outlier is Panama, where labour taxes form the largest component of total tax revenues, at more than 50%, even though Panama has a relatively low tax-to-GDP ratio (11.9% in 2023).

On the other hand, countries that rely more heavily on revenues from CIT, VAT and non-VAT taxes on goods and services tend to have lower tax-to-GDP ratios. With respect to CIT, three-quarters of LAC countries collected more than 11% of their total tax revenues from CIT, while two-thirds of OECD countries collected less.

With respect to taxes on goods and services, revenues from VAT and non-VAT taxes on goods and services exceeded 24.9% and 12.5% of total tax revenues respectively (25th percentiles) in three-quarters of LAC countries,. In contrast, in more than three-quarters of OECD countries, the shares of revenues from VAT and non-VAT taxes on goods and services fell below those thresholds.

Figure 1.16. Tax-to-GDP ratios and tax types as a percentage of total taxation in LAC and OECD countries, 2023

Note: The figure excludes Cuba and Venezuela due to data availability issues. Japan and Australia are excluded as 2023 data are not available.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 4 and (OECD, 2024[16])

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VAT revenue ratio

This section examines the VAT revenue ratio (VRR) in LAC countries in 2023. The VRR “measures the difference between the VAT revenue collected and what would theoretically be raised if VAT was applied at the standard rate to the entire potential tax base in a “pure” VAT regime and all revenue was collected” (OECD, 2024[26]). The VRR is the ratio of the actual VAT revenues to the product of final consumption (net of VAT revenues) and the standard VAT rate. The calculation is shown below.

$\frac{\mathrm{V}\mathrm{A}\mathrm{T}\mathrm{ }\mathrm{r}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{n}\mathrm{u}\mathrm{e}\mathrm{s}\mathrm{ }\mathrm{ }}{\left(\mathrm{f}\mathrm{i}\mathrm{n}\mathrm{a}\mathrm{l}\mathrm{ }\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{s}\mathrm{u}\mathrm{m}\mathrm{p}\mathrm{t}\mathrm{i}\mathrm{o}\mathrm{n}\mathrm{ }\mathrm{e}\mathrm{x}\mathrm{p}\mathrm{e}\mathrm{n}\mathrm{d}\mathrm{i}\mathrm{t}\mathrm{u}\mathrm{r}\mathrm{e}-\mathrm{V}\mathrm{A}\mathrm{T}\mathrm{ }\mathrm{r}\mathrm{e}\mathrm{v}\mathrm{e}\mathrm{n}\mathrm{u}\mathrm{e}\mathrm{s}\right).\mathrm{s}\mathrm{t}\mathrm{a}\mathrm{n}\mathrm{d}\mathrm{a}\mathrm{r}\mathrm{d}\mathrm{ }\mathrm{V}\mathrm{A}\mathrm{T}\mathrm{ }\mathrm{r}\mathrm{a}\mathrm{t}\mathrm{e}}$

This indicator provides a sense of VAT revenue loss related to exemptions and reduced rates, fraud, evasion and tax planning as well as weaknesses in tax administrations. However, this indicator needs to be interpreted with reference to the underlying characteristics of the VAT system in each country, as a higher VRR could result from cascading effects (for example when exemption occurs early in the supply chain) or from a failure to refund VAT input credits. Other factors may also influence the ratio upwards or downwards, for example when the place of taxation rules for international trade diverge from the destination principle or when the tax on inbound digital supplies is not collected. It is also important to note that the interpretation of the VRR is also more difficult for countries relying significantly on tourism. These countries may record a high VRR due to methodological reasons: purchases by non-residents may not be included in final consumption expenditure (the denominator) whereas the VAT on these purchases is included in the overall VAT revenues (the numerator) (Keen, 2013[27]).

Table 1.3. VRR and VAT rates in LAC countries by sub-region, 2023

	VRR	VAT rate (%)
Central America and Mexico	0.51	13.6
Costa Rica	0.50	13.0
Dominican Republic	0.39	18.0
El Salvador	0.77	13.0
Guatemala	0.50	12.0
Honduras	0.54	15.0
Mexico	0.35	16.0
Nicaragua	0.56	15.0
Panama	0.44	7.0
South America	0.59	16.8
Argentina	0.49	21.0
Bolivia	0.71	13.0
Chile	0.67	19.0
Colombia	0.38	19.0
Ecuador	0.79	12.0
Paraguay	0.75	10.0
Peru	0.50	18.0
Uruguay	0.43	22.0
Caribbean	0.66	13.6
Antigua and Barbuda	0.64	15.0
The Bahamas	1.29	10.0
Barbados	0.57	17.5
Belize	0.73	12.5
Guyana	0.20	14.0
Jamaica	0.74	15.0
Saint Lucia	0.72	12.5
Trinidad and Tobago	0.38	12.5
LAC average	0.59	14.7
OECD average (2022)	0.58	19.3

Note: Brazil, Cuba and Venezuela are excluded. Brazil operates a multiple-rate system with tax levied at different rates for each sub-national level. Cuba did not operate a VAT system in 2023. Venezuela’s tax revenue data are not available.

Source: VAT rates are sourced from (OECD, 2024[26]), the final expenditure consumption figures from the WEO (IMF, 2024[5]) and VAT revenues from the country tables in OECD et al. (2025[4]), and Chapter 5 in (OECD, 2024[26]) for the OECD countries.

Table 1.3 presents the VRR for LAC countries and for the three sub-regions. The highest VRR is seen in The Bahamas and stands well above 1. This is a notable example of the impact of the methodology on the interpretation of the VRR as explained above: the high VRR in The Bahamas is partly because VAT revenues that the country receives from tourism are included in the numerator but tourism receipts are not included in final consumption expenditure (the denominator). Despite this caveat, it is important to note that The Bahamas introduced a VAT in 2015 following international good practice, including a broad-based VAT with a low standard rate (at 7.5%, increased to 12.0% in 2018, reduced to 10% in 2022), a limited number of exemptions and no reduced rates. These also contribute to the country’s high VRR.

By contrast, the lowest VRRs (below 0.4) were seen in Guyana and Trinidad and Tobago in the Caribbean, in the Dominican Republic and Mexico in Central America and Colombia in South America. Several factors contribute to the low VRR in Mexico, including the scope of VAT exemptions, the application of a domestic zero rate to numerous goods and services, as well as low compliance (OECD, 2024[26]); (OECD, 2018[28]). However, Mexico implemented a VAT reform in January 2014 including the replacement of some reduced and zero rates with the standard rate and the introduction of improved processes. The VRR increased to 0.35 in 2020 as a result of the broadening of the VAT base for digital services in line with OECD recommendations (KPMG, 2019[29]).

Several factors may contribute to the low VRR in the Dominican Republic. The design of VAT in the country is one factor: the Dominican Republic has numerous VAT exemptions (Schlotterbeck, 2017[30]). Tax-exempt goods include educational materials, medicines, health services, financial services, utilities, renewable energy equipment and inland transportation services, while exempted services include education, cultural services and electricity (OECD, 2022[31]). VAT evasion is another factor behind the low VRR. ECLAC (2020[24]) calculates that VAT evasion in the Dominican Republic is among the highest in the LAC region at 43.8% (2017 figure), against an average of 30% in a sample of 12 countries.

Environmentally related tax revenues

Through the Paris Agreement of 2016, countries have committed to decarbonise their economies by the middle of the 21^st Century, implying a shift away from fossil fuels as a source of energy. To reduce emissions and drive decarbonisation, an increasing number of countries are deploying environmentally related taxes and price-based policy instruments. By incorporating a price signal into consumer decisions, environmental taxation gives effect to the polluter-pays principle to favour greener over more polluting economic activities. Well-designed systems of environmental taxation can encourage businesses and households to consider the environmental costs of their behaviour.

An environmentally related tax is a tax whose base is a physical unit (or a proxy of a physical unit) of something that has a proven, specific negative impact on the environment regardless of whether the tax is intended to change behaviours or is levied for another purpose (OECD, 2008[32]).

Countries in the LAC region have generally been slow to implement environmentally related taxes. Although they have introduced fuel taxes (mainly for revenue collection rather than environmental purposes), many countries also provide subsidies for energy products (Lorenzo, 2016[33]) despite the strain these can put on national budgets to mitigate the impact of high and volatile fuel prices, control inflation, boost competitiveness and protect the poorest sections of the population. While energy support decreased between 2012 and 2019 by around 30%, it more than doubled in 2021 (OECD, 2023[34]).

Beyond taxes on fuel and the registration or use of vehicles, environmental taxes are still underdeveloped across the LAC region. However, a few LAC countries have introduced green tax reforms in recent years. Argentina, Chile, Colombia, Mexico and Uruguay introduced carbon pricing policies through carbon taxes, primarily in the transport sector, although these remain limited and the effective carbon rates are not at a level that can reduce carbon emissions effectively (OECD, 2023[34]).

A detailed examination of country-specific taxes4 reveals that environmentally related tax revenue (ERTR) in the LAC region in 2023 ranged from 0.1% of GDP in Belize to 2.0% in Costa Rica (Figure 1.17). On average across 23 LAC countries for which data is available, ERTR amounted to 0.9%5 of GDP in 2023, below the OECD average of 1.8% of GDP (estimated 2023 figure) (OECD, 2024[35]).

Figure 1.17. Environmentally related tax revenue in LAC countries by main tax base, 2023

Percentage of GDP

Note: The LAC average represents the unweighted average of 23 LAC countries included in this publication and excludes Cuba and Venezuela due to data issues. The figure does not include Jamaica’s revenues from the special consumption tax on petroleum products (estimated to be more than 2.0% of GDP in 2018) (OECD, 2021[36]) as data are not available. The OECD average represents the unweighted average of 38 OECD member countries.

Source: PINE database for Chile, Colombia, Costa Rica and Mexico, and author’s calculations for other countries based on OECD et al. (2025[4]), Chapter 5.

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In 2023, revenue from energy taxes (most commonly excises on diesel and petrol) generated the highest share of ERTR in the LAC region. Revenue from energy taxes amounted to 0.5% of GDP on average, while revenue from motor vehicle and transport services amounted to 0.4% of GDP and represented most of the remainder. Revenue from taxes levied on other environmentally related bases was negligible (i.e. < 1.5% of total ERTR). ERTR was higher in the OECD than in the LAC region in 2023 across the different bases, notably for energy-related taxes, which amounted to 1.2% of GDP in the OECD (OECD, 2024[35]).

There were notable differences in the composition of ERTR across the LAC sub-regions in 2023, on average (Figure 1.18). Energy-related taxes accounted for the highest share of ERTR in Central America and Mexico (0.8% of GDP out of a total of 1.1%); energy- and transport-related taxes were similar in South America at 0.5% and 0.4% of GDP respectively in 2023, and transport-related taxes represented the highest share of ERTR in the Caribbean, at around 0.5% of GDP. Transport-related tax revenue for most Caribbean countries was mainly sourced from travel or departure taxes, an important source of revenue for tourism-reliant countries.

Figure 1.18. Environmentally related tax revenue in the OECD, LAC and sub-regional averages by main tax base, 2023

Percentage of GDP

Note: The LAC average represents the unweighted average of 23 LAC countries included in this publication and excludes Cuba and Venezuela due to data issues. The OECD average represents the unweighted average of 38 OECD member countries. Costa Rica, Chile, Colombia and Mexico are also member countries of the OECD and thus are incorporated in both averages.

Source: PINE database for Chile, Colombia and Mexico, and authors’ calculations for other countries based on OECD et al. (2025[4]), Chapter 5.

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Taxes by level of government

In LAC countries, tax revenue is collected predominantly by central or federal entities. Sub-national public spending is financed through transfers from upper to lower levels of government to a greater extent than in OECD countries. Countries covered in this report exhibit varied structural configurations: Argentina, Brazil, Mexico and Venezuela have federal systems whereas the others are unitary states.

Where sub-national data for LAC countries is available, tax revenue collected by central government accounted for more than two-thirds of the total collections, whereas the corresponding figure for OECD countries was about 60% (2022 figure). Brazil is a notable exception: central government tax revenue amounted to 45.4% of tax collected in 2023 (Table 1.4).

There are two statistical issues to consider when comparing the attribution of revenue for LAC countries with that of OECD members. First, revenue of both groups has been attributed to different levels of government according to guidelines set out in the 2008 System of National Accounts (SNA).6 The second issue is that some LAC countries lack tax revenue statistics at sub-national level.

For the 19 LAC countries in this report for which sub-national data is available, the share of sub-national tax revenue in total tax revenue was below 8.5% in 2023 except in Argentina, Brazil and Colombia. Federal systems tend to raise more substantial own revenue than under unitary states. In Brazil, states and municipalities collect about a third of total tax revenue, indicating a significant degree of decentralisation of tax collection. A large part of the VAT (ICMS – imposto sobre operações relativas à circulação de mercadorias e prestação de serviços de transporte interestadual e intermunicipal e de comunicação) is collected at the state level. The VAT reform currently undertaken by Brazil will have a significant impact on the collection of VAT receipts in the future (see Box 1.3).

Sub-national tax revenue in Argentina and Colombia accounts for more than 15% of total tax revenue. Argentina has a significant collection at state level, due in part to the provincial sales tax (impuesto sobre los ingresos brutos). As a percentage of GDP, sub-national tax revenue ranged from less than 0.1% in Guyana and Guatemala to 9.9% in Brazil in 2023 and the median value was 0.4% of GDP. Low sub-national tax revenue across the LAC region reflects the fact that sub-national governments in LAC countries tend to have a relatively narrow range of taxes under their jurisdiction. The taxes most frequently assigned to sub-national entities are property taxes, motor-vehicle licenses, taxes on specific services and municipal fees. The revenue-generation potential of these instruments is limited relative to the tax bases under central jurisdiction, such as VAT and income taxes.

In 2023, all subnational tax revenue in Belize, Guatemala and Jamaica, and more than half of tax revenue collected at the sub-national level in Peru, Uruguay, Ecuador and Paraguay, was sourced from property taxes (Figure 1.19). All other countries in the region rely principally on taxes on goods and services. Mexico is the only country that also collected revenue from different tax bases. In 2023, nearly half of sub-national tax revenue in Mexico came from payroll taxes. In OECD countries, sub-national entities tend to have much broader potential tax bases. A substantial proportion of revenue collection by sub-national governments in OECD countries is generated by taxes on income and profits (representing more than a third of the total collected at sub-national level on average).

Figure 1.19. Tax mix of sub-national tax revenue in LAC countries, 2023

Note: Figures for Antigua and Barbuda, The Bahamas, Barbados, Bolivia, Cuba, Dominican Republic, El Salvador, Guyana, Honduras, Saint Lucia, Trinidad and Tobago and Venezuela are excluded as either the sub‑national tax revenue data or the breakdown of sub‑national tax revenue data by the main type of tax category is not available. Figures exclude local government revenues for Argentina but include provincial revenues. Data for Nicaragua, Panama and Uruguay are estimated for 2023.

Source: Authors’ calculations based on OECD et al. (2025[4]), Chapter 6.

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The COVID-19 crisis highlighted the need for structural reforms to improve the collection and enhance the sources of revenue at sub-national level. Options for doing so include improvements in information and statistics regarding the revenue from these taxes, the administrative capacity to collect at the local level, effective co-ordination with national authorities, and promotion of sustainable sources of tax revenue at this level (Nieto-Parra and Orozco, 2020[37]).

Low tax revenue at the sub-national level in LAC countries may result from a lack of administrative and technical capacity. Property taxes require sophisticated systems and information, and collecting this revenue is expensive. Appropriate property registers are lacking in many countries; where they exist, they are rarely updated (Canavire-Bacarreza, Martínez-Vázquez and Sepúlveda, 2012[38]); (OECD et al., 2023[39]). As a result, tax authorities lack access to accurate valuations of lands and buildings; real estate registries are often reluctant to share this information. Property tax also suffers from a high level of informality: buildings are constructed without permits, properties are not registered and reported prices of some real estate transactions are falsified. As property tax is one of the most controversial taxes with citizens and has high political costs, politicians are often unwilling to invest sufficient resources to raise revenue via this instrument.

Table 1.4. Attribution of tax revenue to sub-sectors of general government in LAC countries

Percentage of total tax revenue

	Central government			State or regional government			Local government1			Social Security funds
	1995	2000	2023	1995	2000	2023	1995	2000	2023	1995	2000	2023
Federal countries
Argentina	59.0	64.6	63.6	17.5	14.2	18.2	..	..	..	23.4	21.2	18.2
Brazil	44.8	45.8	45.4	26.5	23.8	23.0	3.7	4.8	6.4	25.0	25.6	25.2
Mexico	73.9	78.7	80.4	2.8	3.4	4.5	1.5	1.7	1.6	21.8	16.2	13.5
Venezuela³	94.6	91.9	..	..	..	..	..	..	..	5.4	8.1	..
Regional countries
Colombia4	63.2	72.4	76.9	5.5	4.9	4.3	8.6	11.1	11.5	22.7	11.7	7.3
Unitary countries
Antigua and Barbuda²	100.0	87.4	81.9				..	..	..	..	12.6	18.1
The Bahamas²	89.1	86.9	88.7				..	..	..	10.9	13.1	11.3
Barbados	85.6	79.4	83.2				..	..	..	14.4	20.6	16.8
Belize	93.2	91.0	88.6				0.5	0.9	0.5	6.3	8.2	10.9
Bolivia	94.3	78.9	71.4				5.7	4.4	4.5	..	16.7	24.1
Chile³	89.9	88.1	86.9				6.5	6.8	8.5	3.6	5.1	4.6
Costa Rica³	65.5	59.7	60.3				1.6	2.6	2.8	33.0	37.7	36.9
Cuba5	..	35.4	..				..	52.2	..	11.3	12.4	19.8
Dominican Republic	99.3	99.2	99.6				..	..	..	0.7	0.8	0.4
Ecuador²	70.5	76.3	72.5				4.0	2.0	2.8	25.5	21.7	24.7
El Salvador	80.9	84.2	86.9				..	2.1	1.8	19.1	13.6	11.4
Guatemala	83.6	83.3	84.5				0.6	1.5	0.1	15.8	15.2	15.4
Guyana	92.6	90.9	91.2				..	0.1	0.0	7.4	9.0	8.8
Honduras	86.1	80.0	82.1				4.4	4.1	3.2	9.5	15.9	14.6
Jamaica	100.0	96.2	92.7				..	0.9	1.1	..	2.9	6.2
Nicaragua²	80.4	70.2	72.5				4.6	7.4	6.0	15.0	22.4	21.5
Panama²	67.2	64.7	63.3				..	1.6	1.7	32.8	33.7	35.0
Paraguay	92.0	73.1	69.1				..	4.2	2.5	8.0	22.7	28.4
Peru	88.0	87.1	86.4				..	2.2	2.4	12.0	10.7	11.1
Saint Lucia²	100.0	88.9	88.5				..	..	..	..	11.1	11.5
Trinidad and Tobago	96.8	93.3	89.7				..	..	..	3.2	6.7	10.3
Uruguay²	61.7	71.1	67.4				8.8	5.6	6.0	29.5	23.4	26.6

1. The data exclude local government revenues for Antigua and Barbuda, Argentina (but include provincial revenues), The Bahamas, Barbados, Cuba, the Dominican Republic, Saint Lucia, Trinidad and Tobago and Venezuela as the data are not available. Local government revenue data have been available since 1991 for Nicaragua, since 1994 for Bolivia, since 1995 for Guatemala, since 1998 for Jamaica, since 1999 for Panama, since 2000 for Peru, since 2002 for El Salvador and Guyana, since 2006 for Paraguay and since 1990 for all other countries.

2. The data include the following estimations: Antigua and Barbuda (social security contributions for 2019-2023), The Bahamas (social security contributions for 2022 and 2023), Ecuador (local tax revenues for 2021-2023), Nicaragua (local tax revenues for 2022 and 2023), Panama (local tax revenues) and Saint Lucia (social security contributions for 2021-2023). See the corresponding country tables for more information.

3. Income tax revenue breakdown, social security contributions and oil tax revenues data between 2014 and 2017 and all data from 2018 are not available. The breakdown by sub-sectors of general government is not available for those years.

4. Colombia is constitutionally a unitary country with high autonomy of its territorial entities.

5. Data for sub-sectors of general government in Cuba are only available between 2002 and 2012.

Source: OECD et al. (2025[4]), Table 4.11.

References

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[3] OECD et al. (2021), Latin American Economic Outlook 2021: Working Together for a Better Recovery, OECD Publishing, Paris, https://doi.org/10.1787/5fedabe5-en.

[25] OECD et al. (2018), Revenue Statistics in Latin America and the Caribbean, OECD Publishing, Paris, https://doi.org/10.1787/rev_lat_car-2018-en-fr.

[19] OECD et al. (2015), Revenue Statistics in Latin America and the Caribbean 2015, OECD Publishing, Paris, https://doi.org/10.1787/rev_lat-2015-en-fr.

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Notes

← 1.  The OECD figure for 2023 is provisional and is based on preliminary data provided for (OECD, 2024[16]).

← 2.  VAT was introduced in 1991 in Jamaica, 1997 in Barbados, 2006 in Belize (the General Sales Tax), 2007 in Guyana and Antigua and Barbuda, 2012 in Saint Lucia and in 2014 in The Bahamas.

← 3.  The year of comparison is 2022 as the average tax structure for OECD countries in 2023 is not available at the time of writing.

← 4.  Although environmentally related tax revenues are not separately identified in the standard OECD classification of tax revenues, they can be identified through the detailed list of specific taxes included for most countries within this overarching classification. It is on this basis that they are included in the OECD Policy Instruments for the Environment (PINE) database (OECD, 2024[35]). In 2020, the OECD started the collection of Environmentally Related Tax Revenue (ERTR) accounts in line with the System of Environmental and Economic Accounting and ERTR accounts are disaggregated by industries and households (OECD, 2021[40]).

← 5.  Both LAC and OECD figures refer to unweighted averages comprising 26 countries for the LAC region and 38 countries for the OECD.

← 6.  This means that revenues are generally attributed to the level of government that exercises the authority to impose the tax or has the final discretion to set and vary the tax rate. This has implications for situations where one level of government collects tax revenues and transfers them in whole or in part to other levels. Regional examples of this type of mechanism are the Co-participation Law in Argentina, federal participations in Mexico (mandated in the Fiscal Co-ordination Law) and participation funds in Brazil (defined in Article 159 of the Constitution).