In 2022, the average tax-to-GDP ratio in the 36 Asian and Pacific economies covered in this report was 19.3%, below the averages for the OECD and for Latin America and the Caribbean (LAC), of 34.0% and 21.5%, respectively. Tax-to-GDP ratios in the region ranged from 7.4% in Sri Lanka to 34.1% in Japan (2021 figure).
The average tax-to-GDP ratio in the Asia-Pacific region increased by 0.6 percentage points (p.p.) between 2021 and 2022 to reach the same level as in 2019, prior to the COVID-19 pandemic. The average tax-to-GDP ratio in the LAC region increased by 0.3 p.p. in 2022 while the average tax-to-GDP ratio among OECD countries declined by 0.1 p.p.
In 2022, the tax-to-GDP ratio increased in just under two-thirds (21) of the 34 economies in the Asia-Pacific region for which data for that year are available. The tax-to-GDP ratio increased by 2.0 p.p. or more in eight economies in 2022: Korea (2.2 p.p.), the Maldives (2.4 p.p.), Papua New Guinea (2.6 p.p.), Fiji (2.8 p.p.), Kyrgyzstan (3.1 p.p.), Kazakhstan (4.2 p.p.), Vanuatu (5.0 p.p.) and Timor-Leste (5.3 p.p.). Increases were driven by a range of factors, including the economic recovery from the COVID-19 pandemic, a rebound in tourism and higher commodity prices.
The tax-to-GDP ratio fell in eleven economies in 2022, with four economies reporting a fall larger than 1 p.p.: Kiribati (1.3 p.p.), Tokelau (2.4 p.p.), the Cook Islands (4.7 p.p.) and Nauru (6.7 p.p.). In most of the 11 economies, lower revenue from taxes on goods and services was the main driver of the decline.
Over a longer timeframe, tax-to-GDP ratios increased in half of the 36 Asian and Pacific economies between 2010 and 2022 and declined in the other half. The largest increases were observed in Cambodia (8.8 p.p.), Korea (9.6 p.p.), the Maldives (11.7 p.p.) and Nauru (19.8 p.p., since 2014). In Nauru, Cambodia and the Maldives, the increase was the result of tax policy reforms while in Korea the tax-to-GDP ratio increased from a particularly low level in 2010 attributable to the Global Financial Crisis.
The largest decreases between 2010 and 2022 were observed in Papua New Guinea and the Marshall Islands (of 2.2 p.p. in both cases), Bhutan (2.3 p.p.), the Cook Islands (3.6 p.p.), Sri Lanka (3.7p.p.), Fiji (3.8 p.p.), China (3.9 p.p., excluding social security contributions), Kazakhstan (4.0 p.p.) and Timor-Leste (5.0 p.p.). While the tax-to-GDP ratios of Kazakhstan, Papua New Guinea and Bhutan were affected by falls in commodity prices (and lower production in the case of Timor-Leste), the decrease in Fiji was due to the COVID-19 pandemic: between 2010 and 2019, Fiji’s tax-to-GDP ratio increased by 0.8 p.p. The decrease in Sri Lanka’s tax-to-GDP ratio was a consequence of tax policy reforms and the economic impact of COVID-19.
