OECD: developing Asian nations must increase tax take

21 Jul 17

Asia’s tax-to-GDP ratios have increased since 2000 but further efforts are needed to increase tax revenues in developing countries, the Organisation for Economic Co-operation and Development has said.

In a study of tax in Indonesia, Japan, Kazakhstan, South Korea, Malaysia, the Philippines and Singapore, the OECD said tax-to-GDP ratios ranged from 11.8% in Indonesia to more than 32% in Japan.

Only Japan and South Korea though managed to exceed an 18% level and its Revenue Statistics in Asian Countries report showed all seven had ratios lower than the OECD average of 34.3% in 2015.

Ratios fell for a third consecutive year in Indonesia, Kazakhstan and Malaysia and also fell in Singapore.

The OECD said these declines were driven by falls in revenues from corporate tax and excises, customs and export duties.

Kazakhstan had the steepest decline, at 5.6 percentage points - compared with less than 0.7 percentage points in the other countries – driven mainly by a fall in oil tax revenues. 

The improved performance since 2000 had been due to tax reforms, modernisation of tax systems and administration and a more favourable economic context, the OECD said.

Kazakhstan and Singapore were the only countries to record a lower tax-to-GDP ratio in 2015 than 2000 as a result of lower corporate tax revenues and in Kazakhstan’s case a decrease in payroll taxes.

The OECD for the first time looked at value added tax revenue ratios, where 100% rating would show all possible tax was being collected.

These varied between 23% in the Philippines and 84% in Singapore.

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