Revenue Statistics in Asia and the Pacific 2024

Tax Revenue Buoyancy in Asia

Report

Revenue Statistics in Asia and the Pacific

25 June 2024

1. Tax revenue trends in Asia and the Pacific

Abstract

Chapter 1 provides information on tax and non-tax revenue in 36 Asian and Pacific economies, including tax-to-GDP ratios for individual economies, selected sub-regions and the region as a whole. It also contains information on tax structures, tax revenue by level of government and environmentally related tax revenue, as well as on the level and structure of non-tax revenue for selected economies in the region. The chapter includes data up to 2022 and tracks trends in tax and non-tax revenue since 2010.

This edition of Revenue Statistics in Asia and the Pacific provides comprehensive data on public revenues from 2010 until 2022, a year marked by the recovery from the COVID-19 pandemic for most economies covered in this report.

This report presents detailed and internationally comparable data on tax revenue in 36 Asian and Pacific economies: Armenia, Australia, Azerbaijan, Bangladesh, Bhutan, Cambodia, People’s Republic of China (hereafter “China”), the Cook Islands, Fiji, Georgia, Hong Kong (China)1, Indonesia, Japan, Kazakhstan, Kiribati, Korea, Kyrgyzstan2, Lao People’s Democratic Republic (hereafter Lao PDR), Malaysia, the Maldives, the Marshall Islands, Mongolia, Nauru, New Zealand, Pakistan, Papua New Guinea, the Philippines, Samoa, Singapore, the Solomon Islands, Sri Lanka, Thailand, Timor-Leste, Tokelau, Vanuatu and Viet Nam.

It also provides information on non-tax revenue for Bhutan, Cambodia, the Cook Islands, Fiji, Hong Kong (China), Kazakhstan, Kyrgyzstan, Lao PDR, the Maldives, the Marshall Islands, Mongolia, Nauru, Pakistan, Papua New Guinea, the Philippines, Samoa, Singapore, Sri Lanka, Thailand, Tokelau, Vanuatu and Viet Nam.

Chapter 1 examines key tax indicators: the tax-to-GDP ratio, the tax structure and the share of tax revenue by level of government. It also analyses non-tax revenue for selected economies. This discussion is supplemented by the comparative tables in Chapter 3 and detailed information for each economy in Chapters 4 and 5. A Special Feature in Chapter 2 discusses the buoyancy of tax revenue in Asian economies.

Tax-to-GDP ratios in 2022

The tax-to-GDP ratio measures tax revenue (including social security contributions [SSCs] paid to the general government) as a proportion of gross domestic product (GDP). The Asia-Pacific (36) average tax-to-GDP ratio, which represents the unweighted average of the 36 economies included in this publication, was 19.3% in 2022.

In 2022, tax-to-GDP ratios in Asia and the Pacific ranged from 7.4% in Sri Lanka to 34.1% in Japan (2021 figure) (Figure ‎1.1). Eighteen of the 36 economies had tax-to-GDP ratios above the Asia-Pacific (36) average, and all economies in the publication had lower ratios than the OECD average of 34.0% with the exception of Japan.

Ten of the 23 Asian economies covered in this report had a tax-to-GDP ratio above the regional average: Japan (34.1%, 2021 figure), Korea (32.0%), Mongolia (24.6%), Georgia (24.1%), Armenia (22.7%), Kyrgyzstan (22.0%), the Maldives (20.4%), China (20.1%), Kazakhstan (19.8%) and Azerbaijan (19.6%). Meanwhile, six of the eleven Pacific Islands3 included in this report (the Cook Islands, Kiribati, the Marshall Islands, Nauru, Samoa and Timor-Leste) recorded tax-to-GDP ratios above the regional average and five were below (Fiji, Papua New Guinea, the Solomon Islands, Tokelau and Vanuatu).

Figure ‎1.1 distinguishes between tax-to-GDP ratios inclusive and exclusive of SSCs. Among Asian economies, tax-to-GDP ratios exclusive of SSCs ranged from 7.3% in Sri Lanka to 23.8% in Korea in 2022 (excluding Cambodia, Lao PDR and Kyrgyzstan, for which SSC data is not available). The Marshall Islands, which is the only Pacific economy that levies SSCs, had a tax-to-GDP ratio without SSCs of 13.8%.

Exclusive of SSCs, eight economies in Asia had tax-to-GDP ratios between 15% and 25% of GDP: Azerbaijan (15.5%), the Philippines (15.6%), Thailand (16.0%), Kazakhstan (18.7%), Mongolia (19.2%), Japan (20.7%, 2021 figure), Armenia (21.9%) and Korea (23.8%). Six economies observed tax-to-GDP ratios exclusive of SSCs below 15%: Sri Lanka (7.3%), Indonesia (11.5%), Malaysia (11.8%), Viet Nam (13.5%), China and the Marshall Islands (both 13.8%).

Figure ‎1.1. Tax-to-GDP ratios in Asian and Pacific economies and regional averages, including and excluding social security contributions, 2022

Percentage of GDP

Changes in tax revenue in 2022 and over time

This section analyses the impact of the economic recovery following the COVID-19 pandemic on nominal tax revenue and nominal GDP in the Asia-Pacific region between 2021 and 2022 as well as changes in the tax-to-GDP ratio over this period. The value of the tax-to-GDP ratio depends on two components: the numerator (tax revenue) and the denominator (GDP) (Box ‎1.1). Changes in tax-to-GDP ratios between 2021 and 2022 reflect changes in both components.

Changes in nominal tax revenue and GDP

Between 2021 and 2022, nominal tax revenue increased in 29 of the 34 economies covered in this report for which data for 2022 are available and decreased in China, Tokelau, Kiribati, Hong Kong (China) and Nauru, while nominal GDP decreased only in Hong Kong (China) and Timor-Leste. In 22 of 34 economies for which data for 2022 are available, nominal tax revenue increased by more than nominal GDP, resulting in a higher tax-to-GDP ratio. Timor-Leste is the only economy in which tax revenue increased while GDP decreased, while Hong Kong (China) is the only economy where tax revenue and GDP both declined. Nominal tax revenue decreased in China, Tokelau, Kiribati and Nauru while nominal GDP increased between 2021 and 2022, leading to a decline in the tax-to-GDP ratio.

Figure ‎1.2. Changes in nominal tax revenue and nominal GDP, 2021-22

Year-on-year, percentage change

Changes in tax-to-GDP ratios between 2021 and 2022

On average, the tax-to-GDP ratio for the Asia-Pacific region increased by 0.6 percentage points (p.p.) between 2021 and 2022, returning to its pre-COVID level of 2019 of 19.3%. This was the largest change among the regional averages: the tax-to-GDP ratio declined by 0.1 p.p. on average in OECD countries (OECD, 2023[1]) and increased by 0.3 p.p. in Latin America and the Caribbean (LAC) between 2021 and 2022 (OECD et al., 2024[3])

Between 2021 and 2022, the tax-to-GDP ratio increased in 21 of the 34 economies in this publication for which data for 2022 is available (Figure ‎1.3). For fifteen economies, the increase in 2022 meant that their tax-to-GDP ratio had recovered to a level equal to or higher than in 2019, prior to the pandemic. While 13 economies reported a decrease or no change in their tax-to-GDP ratio between 2021 and 2022, five of them had a tax-to-GDP ratio equal to or higher than the level in 2019.

Fifteen economies reported an increase in their tax-to-GDP ratio larger than 1 p.p. between 2021 and 2022: Japan and Australia (both 1.1 p.p., 2020-21 change), Indonesia and Azerbaijan (both 1.2 p.p.), Bhutan (1.4 p.p.), Georgia (1.5 p.p.), Cambodia (1.6 p.p.), 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.).

By contrast, five economies reported a decrease equal to or larger than 1 p.p.: China (1.0 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.). Decreases in Singapore, Sri Lanka, Pakistan, Hong Kong (China), the Solomon Islands and New Zealand were smaller than 1 p.p. while the tax-to-GDP ratios of Armenia and Bangladesh were unchanged.

Figure ‎1.3. Annual changes in tax-to-GDP ratios, 2021-22

Percentage point (p.p.)

Changes in tax-to-GDP ratios between 2021 and 2022 by tax category

The rise of 0.6 p.p. in the Asia-Pacific (36) average tax-to-GDP ratio between 2021 and 2022 was driven by increases in revenue from taxes on income (0.4 p.p.) and value added taxes (VAT, 0.2 p.p.). These increases were slightly offset by a decline in revenue from other tax revenue (0.1 p.p.) on average.

While the majority of Asian economies (18 out of 23) covered in this publication reported changes in their tax-to-GDP ratio of between -1.0 p.p. and 1.5 p.p., seven of the eleven Pacific Islands reported changes larger than 1.5 p.p. between 2021 and 2022.

Increases in tax-to-GDP ratios were the result of an economic recovery from the COVID-19 pandemic, a rebound in tourism and higher commodity prices:

In Timor-Leste, the increase in the tax-in-GDP ratio (5.3 p.p.) was mostly due to higher revenue from income taxes (up 4.0 p.p.) as a result of the additional profit tax levied on contractors on petroleum projects (Democratic Republic of Timor-Leste, 2003[4]) (EITI, 2019[5]). Other taxes on goods and services rose by 1.3 p.p. due to an increase in excise revenue.
The second-largest increase in the tax-to-GDP ratio occurred in Vanuatu (up 5.0 p.p. to 16.1%), reflecting a recovery in tourism following the re-opening in July 2022 of borders that had been closed since March 2020 as a COVID-19 prevention measure (ADB, 2022[6]) (The Guardian, 2022[7]). Revenue increases were driven by VAT (2.9 p.p.) and a 2.0 p.p. increase in other taxes on goods and services (mostly from customs and import duties). Despite the large increase in 2022, Vanuatu’s tax-to-GDP ratio remained below its pre-COVID-19 level (17.0% in 2019).
In Kazakhstan, the increase in the tax-to-GDP ratio of 4.2 p.p. was driven by higher revenue from corporate income taxes (CIT) (1.5 p.p.), other taxes on goods and services (1.7 p.p.) and VAT (0.7 p.p.). These were the result of a sharp increase in oil prices in 2022, generating higher oil-related tax revenue (IMF, 2024[8]), (Reuters, 2023[9]).
In Kyrgyzstan, the increase of 3.1 p.p. in the tax-to-GDP ratio was driven by higher VAT revenue (2.4 p.p.), in particular from VAT on imports, and higher income tax revenue (0.9 p.p.) because of a one-off income tax payment by the Kumtor Gold Company. A general improvement in tax administration also contributed to the increase (IMF, 2023[10]). The increase in VAT and income tax revenue was slightly offset by a decline of 0.5 p.p. in other tax revenue.
The increase of the tax-to-GDP ratio of 2.8 p.p. in Fiji was driven by higher revenue from VAT, which increased by 2.6 p.p. between 2021 and 2022. The increase reflected the recovery of the tourism sector, positively impacting other sectors such as wholesale and retail trade, which profited from higher incomes and consumption (Ministry of Finance, Strategic Planning, National Development and Statistics, 2023[11]), (FRCS, 2022[12]).
In Papua New Guinea (2.6 p.p.), the increase was entirely driven by higher CIT revenue (3.7 p.p.), which was offset by decreases in revenue from personal income taxes (PIT) (0.6 p.p.) and from VAT (0.5 p.p.). Higher revenue from the mineral and petroleum tax due to high commodity prices as well as the general recovery of the domestic economy drove the increase in CIT revenue. Declines in PIT and VAT revenue were the result of measures to ease the burden of inflation, including a temporary increase in the tax-free threshold for PIT and an exemption from the Goods and Services Tax on diesel, petrol and zoom products in 2022 (Department of Treasury Papua New Guinea, 2022[13]), (Department of Treasury Papua New Guinea, 2022[14]) (IMF, 2022[15]) (Internal Revenue Commission Papua New Guinea, 2023[16]).
The increase in the Maldives’ tax-to-GDP ratio (2.4 p.p.) was the result of higher revenue from CIT (1.2 p.p.), VAT (0.7 p.p.) and other taxes on goods and services (0.5 p.p.). The increase in all tax categories reflected a rebound in tourism, which led to higher consumption and increases in revenue from the departure tax, the tourist goods and services tax, and the green tax paid by tourists (MIRA, 2022[17]).

Factors leading to decreases in tax-to-GDP ratios between 2021 and 2022 varied across economies:

Decreases in China (1.0 p.p.), Kiribati (1.3 p.p.) and Tokelau (2.4 p.p.) were driven by lower revenue from taxes on goods and services. In China, VAT revenue declined by 1.2 p.p. due to COVID-19 prevention measures and subdued domestic demand (OECD, 2022[18]). This decline was offset by increases in revenue from SSCs and from other taxes on goods and services. Revenue from VAT (0.5 p.p.) and from other taxes on goods and services (0.8 p.p.) declined in Kiribati. In Tokelau, revenue declined due to lower revenue from the excise duty on tobacco.
In the Cook Islands, nominal tax revenue grew by 6.6% while nominal GDP grew by 29.4%, leading to a 4.7 p.p. decrease in the tax-to-GDP ratio. Nominal revenue from income taxes declined due to a decrease in the estimated collectible tax owed to the government and an increase in tax refunds. Meanwhile, revenue from taxes on goods and services increased in nominal terms as the number of tourists increased (The Government of the Cook Islands, 2023[19]).
The decline in Nauru’s tax-to-GDP ratio (6.7 p.p.) was driven by a fall in revenue from income taxes (4.6 p.p.) and from other taxes on goods and services (2.1 p.p.) due to lower customs and excise duties. Revenue from both categories declined due to lower activity in the Regional Processing Centre, which accounts for more than 80% of tax revenue (Republic of Nauru, 2022[20]; 2023[21]).

Figure ‎1.4. Net changes in tax-to-GDP ratios between 2021 and 2022 by main type of tax

Percentage point (p.p.)

Box ‎1.1. The tax-to-GDP ratio methodology

The tax-to-GDP ratios shown in Revenue Statistics in Asia and the Pacific 2024 express aggregate tax revenue as a percentage of GDP. The ratio depends on its denominator (GDP) and its numerator (tax revenue). Both the numerator and the denominator may be subject to historical revision.

Taxes are defined as compulsory, unrequited payments to general government. In the OECD classification, taxes are classified by the base of the tax and include taxes on incomes and profits, compulsory social security contributions (SSCs) paid to the general government, taxes on payroll and workforce, taxes on property, taxes on goods and services and other taxes.

The numerator (tax revenue)

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

In 21 Asian and Pacific economies, the reporting year coincides with the calendar year. The remaining 15 economies report on a fiscal year basis:

The fiscal year in Australia, Bangladesh, Bhutan, the Cook Islands, Nauru, New Zealand, Pakistan, Samoa and Tokelau runs from July to June. This means that reporting year 2022 corresponds to Q3/2022-Q2/2023.
The fiscal year in Hong Kong (China), Singapore, Sri Lanka and Japan covers April to March while in Thailand and the Marshall Islands, it covers October to September. The reporting year 2022 spans Q2/2022-Q1/2023 and Q4/2021-Q3/2022, respectively.

The denominator (GDP)

The GDP figures used in this publication are sourced from OECD National Accounts data for Australia, China, Indonesia, Japan, Korea and New Zealand; national sources for Armenia, the Cook Islands, Fiji, Kazakhstan, Kyrgyzstan, Maldives, Mongolia, Philippines, Tokelau and Viet Nam; the Asian Development Bank's Key Indicators Database for the Solomon Islands; World Economic Outlook data published by the IMF for Bangladesh, Bhutan, Cambodia, Hong Kong (China), Lao PDR, Nauru, Pakistan, Samoa, Singapore, Thailand and Vanuatu; Pacific Community (SPC) data for the Marshall Islands; a combination of national sources and IMF data for Malaysia, Timor-Leste, Kiribati and Papua New Guinea; and a combination of OECD National Accounts data and IMF data for Georgia.

Using these GDP figures ensures maximum consistency across countries, as well as international comparability. GDP figures are also 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.

Types of taxes levied and data availability

There is a large variation in the types of tax levied by the economies included in the report. The majority of the 36 economies collect revenue from taxes on income, with two exceptions: Tokelau does not levy CIT and Vanuatu levies neither PIT nor CIT. For Nauru and Pakistan, it is not possible to distinguish between revenue from PIT and CIT, so revenue from income taxes is categorised under “1300 Unallocable between 1100 and 1200”. While VAT plays an increasingly important role in many economies, Bhutan, Hong Kong (China), Malaysia, the Marshall Islands, Nauru, the Solomon Islands and Tokelau do not levy VAT. The OECD Interpretative Guide (see Annex A) defines SSCs as compulsory payments that confer entitlement to receive a future social benefit. While most economies in Asia levy SSCs, none of the Pacific economies do except the Marshall Islands.

Data for 2022 was not available for Australia and Japan when this report was written. When 2021 data for these countries is mentioned, this refers to the fiscal year 2020-21 (starting in April 2020 for Japan and in July 2020 for Australia) instead of fiscal year 2021-22, and changes between 2021 and 2022 refer to changes between FY2020 and FY2021 for both countries.

Evolution of tax-to-GDP ratios since 2010

Between 2010 and 2022, the tax-to-GDP ratio increased in half of the 36 economies in this publication and declined in the other half (Figure ‎1.5).4 The largest increases were observed in Samoa (7.2 p.p.), Japan (7.8 p.p., 2010-21), Cambodia (8.8 p.p.), Korea (9.6 p.p.), Maldives (11.7 p.p.), and Nauru (19.8 p.p., since 2014). Of the 18 economies whose tax-to-GDP ratios increased since 2010, only Georgia, Hong Kong (China), Bangladesh, Indonesia and Pakistan (since 2011) reported changes smaller than 2 p.p. Eight of the economies whose tax-to-GDP ratio has decreased since 2010 reported changes larger than 2 p.p. between 2010 and 2022.

The largest decreases between 2010 and 2022 were observed in Papua New Guinea and the Marshall Islands (2.2 p.p. in both cases), Bhutan (2.3 p.p.), the Cook Islands (3.6 p.p.), Sri Lanka (3.7 p.p.), Fiji (3.8 p.p.), China (3.9 p.p., excluding SSCs), 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), decreases in Fiji were attributable to the COVID-19 pandemic: between 2010 and 2019, Fiji’s tax-to-GDP ratio increased by 0.8 p.p. (Figure ‎1.5). In Sri Lanka, the decrease in the tax-to-GDP ratio of 3.7 p.p. resulted from a combination of tax policy reforms (which included tax cuts in 2019) and lower revenue due to the impact of COVID-19 on the economy (IMF, 2022[22]).

Figure ‎1.5. Changes in the tax-to-GDP ratio (2010-22 and 2021-22)

Percentage point (p.p.)

Box ‎1.2. Tax revenue trends in the ASEAN (8) and in Pacific Island economies since 2010

Among the 36 economies included in this publication, two distinct sub-groups can be identified: one subgroup of eleven Pacific Island economies and another comprising eight members of the Association of Southeast Asian Nations (ASEAN).

The eleven Pacific Island economies included in this publication are the Cook Islands, Fiji, Kiribati, the Marshall Islands, Nauru, Papua New Guinea, Samoa, the Solomon Islands, Timor-Leste, Tokelau and Vanuatu, which together comprise the Pacific Islands (11) average. Despite their diversity, the Pacific Island economies share common characteristics such as remoteness, small populations, limited economic diversification and exposure to natural disasters and climate change (ADB, 2016[23]).

The second sub-regional group includes the eight ASEAN member states in this publication. Founded in 1967, ASEAN is a regional organisation that promotes economic, political and social collaboration amongst its ten member states and within the region (ASEAN, 2021[24]). The eight ASEAN members included in this publication are Cambodia, Indonesia, Lao PDR, Malaysia, the Philippines, Singapore, Thailand and Viet Nam; they comprise the ASEAN (8) average.1

The Pacific Islands generally had higher tax-to-GDP ratios than the ASEAN (8) countries in 2022 (Figure ‎1.6). Tax-to-GDP ratios in the former grouping ranged from 14.8% in Papua New Guinea to 29.2% in Nauru, with an average of 20.7%. Across the ASEAN (8) economies, tax-to-GDP ratios ranged from 10.3% in Lao PDR to 19.0% in Viet Nam in 2022, with an average of 14.4%.

Tax-to-GDP ratios in both groups have increased since 2010, with a more moderate growth for the ASEAN (8) economies (Figure ‎1.6). Changes in tax-to-GDP ratios between 2010 and 2022 ranged from a fall of 5.0 p.p. in Timor-Leste to an increase of 19.8 p.p. in Nauru (since 2014) among the Pacific Island economies, while changes in the tax-to-GDP ratio in ASEAN countries ranged from a fall of 1.7 p.p. in Malaysia to an increase of 8.8 p.p. in Cambodia.

The majority of the ASEAN (8) economies registered an increase in their tax-to-GDP ratio between 2021 and 2022, with the exception of Singapore (which fell by 0.1 p.p.). Three of the Pacific Islands experienced relatively large decreases in their tax-to-GDP ratios over the same period: Tokelau (2.4 p.p.), the Cook Islands (4.7 p.p.) and Nauru (6.7 p.p.).

Figure ‎1.6. Tax-to-GDP ratios in ASEAN and Pacific Island economies, 2010-22

Regional differences are also reflected in average tax structures (Figure ‎1.7). While revenue from taxes on goods and services plays an important role in both regions (46.9% of total taxes in the ASEAN (8) economies and 53.9% in the Pacific Island economies), the composition of taxes on goods and services differs. Revenue from VAT contributed a similar share of total taxation in both sub-groups in 2022 at 22.0% in the ASEAN (8) economies and 22.6% in the Pacific Islands on average, which is lower than the Asia-Pacific (36) average (24.9%).

Revenue from other taxes on goods and services accounted for the largest share of total taxes in both the ASEAN (8) and the Pacific Islands. However, the share of these taxes was 31.3% in the Pacific Island economies, 6.4 p.p. larger than the average share in the ASEAN (8) countries in 2022 (of 24.9%). Revenue from excises accounted for 14.5% of total taxes in the ASEAN (8) countries and for 11.5% of total taxes in the Pacific Islands, while the share of revenue from customs and import duties was on average much higher across the Pacific Island economies (10.4%) than the ASEAN (8) countries (3.8%).

Another difference is the relative importance of PIT and CIT. In the Pacific Islands, PIT and CIT accounted for a similar share of revenue (17.7% and 16.8% of total taxation, respectively), while ASEAN economies relied more on CIT than PIT. On average, CIT accounted for 26.2% of total tax revenue for the ASEAN (8) average while PIT accounted for an average of 12.7% in 2022.

Figure ‎1.7. Tax structures in Asia-Pacific, ASEAN (8) and Pacific Island economies in 2022

1. The ASEAN members not included in this publication are Brunei Darussalam and Myanmar.

Structural factors impacting the tax-to-GDP ratio

Structural factors are a key determinant of economies’ tax-to-GDP ratio. These include the importance of agriculture, openness to trade and the size of the informal economy. For example, in many economies with a large agricultural sector, taxation can be challenging as it is associated with informality, low incomes and low productivity (Mawejje and Sebudde, 2019[25]). In addition, agriculture benefits from numerous tax exemptions. For example, Malaysia grants an Investment Tax Allowance on capital expenditure and income tax to companies producing certain agricultural products or engaged in certain agricultural activities (Malaysian Investment Development Authority, 2019[26]). The common challenges that Small Island Developing States (SIDS) confront, such as remoteness, exposure to natural disasters and low economic diversification, also influence tax-to-GDP ratios and tax structures in these islands (Box ‎1.3).

In addition to structural factors, tax policy and tax administration settings also strongly influence the level of tax revenue. These include the size of the tax base, governance and administrative capacity within tax authorities, the level of satisfaction with public services and tax morale (i.e., the willingness of people to pay taxes) (OECD, 2019[27]). For example, Aizenman et al. (2019[28]) found that tax-to-GDP ratios in Asia are positively correlated with government effectiveness and institutional quality. Finally, tax-to-GDP ratios tend to be higher in high-income economies, although the relationship is not direct and is less pronounced at lower levels of income due to the influence of other factors (Figure ‎1.8).

The relationship between GDP per capita and tax levels across Asian and Pacific economies in this publication is less direct than that observed across the LAC region or in OECD countries. Thirteen Asian and Pacific economies (Armenia, Azerbaijan, China, Fiji, Georgia, Kazakhstan, the Maldives, the Marshall Islands, Mongolia, the Philippines, Samoa, Thailand and Viet Nam) have broadly similar GDP per capita and tax-to-GDP ratios as the majority of LAC countries (Figure ‎1.8).

Five economies (Kiribati, Papua New Guinea, Vanuatu, Samoa and the Solomon Islands) have similar per capita levels of income but their tax-to-GDP ratios differ markedly. In contrast, the four OECD countries included in this publication, Australia, Japan, Korea and New Zealand, have higher per capita income and tax-to-GDP ratios than the other economies. Finally, Singapore and Hong Kong (China) have the highest GDP per capita of the 33 economies considered here and a relatively low tax-to-GDP ratio.

The high GDP per capita in Singapore results from significant inward flows of foreign direct investment (UNCTAD, 2012[29]), while the relatively low tax-to-GDP ratio is explained by lower income tax rates (particularly on corporate income) and VAT rates relative to other Asian and Pacific economies (UN.ESCAP, 2014[30]). Similar factors contribute to Hong Kong (China)’s relatively high GDP per capita paired with a low tax-to-GDP ratio (Lanzafame and Timbang, 2023[31]).

Figure ‎1.8. Tax-to-GDP ratios and GDP per capita (in PPP) in Asian and Pacific economies, Latin America and the Caribbean, OECD and African countries (2022)

Box ‎1.3. Enhancing domestic resource mobilisation in Small Island Developing States through revenue statistics

Small Island Developing States (SIDS) comprise a diverse group of the smallest and most remote economies in the world located across Africa, Asia and the Pacific, and Latin America and the Caribbean. They share a common and unique set of development challenges owing to their small populations and landmasses, spatial dispersion and remoteness from major markets, and exposure to severe climate-related events and natural disasters. With small and undiversified economies, SIDS are highly vulnerable to external shocks, as they rely strongly on the global economy for financial services, tourism, remittances and concessional finance.

Two common challenges faced by SIDS are the achievement of adequate domestic resource mobilisation and debt sustainability. Domestic revenues are often erratic due to narrow economic productive bases that tend to be concentrated in sectors exposed to external fluctuations, such as natural resources or tourism. At the same time, SIDS typically have large current expenditures as the high unit cost of providing services to small and scattered populations increases public sector spending above the average levels of other developing countries (31.7% of GDP in SIDS, compared to 21.3% in other developing countries) (World Bank, 2020[35]). Severe climate events and natural disasters also tend to have heavy fiscal and economic impacts. These factors lead to high levels of public debt for many SIDS [59.5% of GDP on average, compared to 44.6% for other developing countries in 2015 (World Bank, 2020[36])] and reduce the fiscal space to invest in development.

Taxes are an important and relatively stable source of revenues in many SIDS, although economies’ ability to raise domestic revenues varies significantly. The Global Revenue Statistics publications and database (OECD, 2024[37]) show that Pacific Islands had the biggest variation of tax-to-GDP ratios among SIDS, from 14.8% in Papua New Guinea to 29.2% in Nauru in 2022. Among African SIDS, Cabo Verde had a tax-to-GDP ratio of 16.8%, Mauritius of 20.0% and Seychelles of 27.9% in 2021 (OECD/AUC/ATAF, 2023[38]). Finally, for SIDS in Latin America and the Caribbean, ratios ranged from 10.6% in Guyana to 30.5% in Barbados in 2022 (OECD et al., 2023[39])

For several years the COVID-19 pandemic hampered SIDS’ ability to mobilise and improve the stability of domestic revenues. Public revenues in SIDS were affected by the crisis via a variety of channels, most notably the sharp fall in tourism, the decline in overall economic activity, and fluctuations in commodity and natural resource prices. To ensure a sustainable recovery from the COVID-19 crisis, enhanced management of key sectors, including fisheries, tourism and natural resource extraction, may provide opportunities to enhance domestic revenue mobilisation in SIDS. Policies to reduce “leakages” from these sectors – especially tourism – and to support backward and forward linkages with other domestic sectors (e.g., food and agriculture, consumer goods and construction) could expand the taxable production base.

Improving the efficiency of revenue collection, enlarging the tax base and employing efficient tax policies are also essential to increase the resources required to sustain development. The Global Revenue Statistics project supports 25 SIDS in these efforts by providing accurate, comparable and detailed data on their tax revenues. This information is essential for tax policymaking and administrative reforms, and forms a common evidence base for mutual learning across SIDS on how to scale up domestic resource mobilisation.

Source: Piera Tortora and Talita Yamashiro Fordelone, based on OECD (OECD, 2018[40]), (World Bank, 2020[36]), (World Bank, 2020[35]) and on the Global Revenue Statistics database (OECD, 2024[37]).

Tax structures in Asia and the Pacific and their evolution since 2010

The second key indicator analysed in the Revenue Statistics publications is the tax structure, measured as the proportion of revenue from different tax types in total tax revenue. The tax structure (sometimes known as the tax mix) is useful for policy analysis as different taxes have different economic and social effects and distributional impacts. The composition of tax revenue varies widely across Asia and the Pacific, reflecting different policy choices, economic structures and levels of development, tax administration capabilities and historical factors.

Tax categories as a percentage of total tax revenue

Within the Asia-Pacific region, tax structures varied greatly in 2022. In 24 of the 36 economies, the main source of tax revenue was taxes on goods and services, while eleven economies obtained the largest share of tax revenue from income taxes. Japan is the only country where the greatest share of revenue was derived from SSCs. There were also notable differences between the ASEAN countries and the Pacific Islands in the publication, discussed in Box ‎1.2.

In 2022, income taxes were the largest source of revenue for Australia (2021 figure), Bhutan, Hong Kong (China), Korea, Malaysia, Nauru, New Zealand, Papua New Guinea, Singapore, Timor-Leste and Tokelau. Among these 11 economies, the share of income tax in total tax revenue ranged from 37.4% in Korea to 82.2% in Timor-Leste. PIT revenue exceeded CIT revenues in four economies of the eleven (Australia, Korea, New Zealand and Tokelau) while CIT revenue accounted for a larger share of total revenue in the remaining economies, with the exception of Nauru where PIT and CIT cannot be separated.

SSCs generated a relatively small proportion of revenue for most Asian and Pacific economies, with a few exceptions. Japan derives the largest share of total tax revenue from SSCs (39.2% in 2021) while these also generated a significant proportion of revenue in the Philippines (15.2%), Azerbaijan (21.2%), Mongolia (21.8%), Korea (25.6%), Viet Nam (28.7%), China (31.0%) and the Marshall Islands (47.3%), the only Pacific economy that levies SSCs.

Taxes on goods and services were the main source of tax revenue in Armenia, Azerbaijan, Bangladesh, Cambodia, China, the Cook Islands, Fiji, Georgia, Indonesia, Kazakhstan, Kiribati, Kyrgyzstan, Lao PDR, the Maldives, the Marshall Islands, Mongolia, Pakistan, the Philippines, Samoa, the Solomon Islands, Sri Lanka, Thailand, Vanuatu and Viet Nam in 2022, contributing between 26.8% (the Marshall Islands) and 97.6% (Vanuatu) of total tax revenue.

In seven of these economies, taxes on goods and services other than VAT, such as excises and import duties, accounted for a larger share of total tax revenue than VAT. Revenue from other taxes on goods and services in these seven economies ranged from 26.8% of total tax revenue in the Marshall Islands to 69.3% in the Solomon Islands. Seventeen economies received a larger share of revenue from VAT, ranging from 23.4% in China to 52.0% in the Cook Islands.

Figure ‎1.9. Tax structures across Asian and Pacific economies, 2022

Percentage of total tax revenue

In 2022, revenue from other taxes on goods and services played a more prominent role in the Pacific economies than in the Asian economies covered in this publication. Six of the thirteen Pacific economies generated more revenue from other taxes on goods and services than from VAT (four of these economies do not apply VAT: the Marshall Islands, Nauru, the Solomon Islands and Tokelau), whereas 14 of the 23 Asian economies received a higher share of revenue from VAT. For the Africa, LAC and OECD averages, revenue from VAT contributed a larger share of total tax revenue than other taxes on goods and services while contributions from both tax categories were similar for the Asia-Pacific (36) average.

VAT is nevertheless an increasingly important source of revenue for most economies in this publication, particularly in the Pacific. Excluding Bhutan, Hong Kong (China), Malaysia, the Marshall Islands, Nauru, the Solomon Islands and Tokelau, which do not have value added taxes, VAT revenues in 2022 ranged from 11.1% of total tax revenue in Australia (2021 figure) to 52.0% in the Cook Islands.

In fourteen of the 20 Asian economies that levy a VAT, it generated more than 25% of total taxes (Armenia, Azerbaijan, Bangladesh, Georgia, Indonesia, Kyrgyzstan, the Maldives, Mongolia, Pakistan, the Philippines, Cambodia, Lao PDR, Sri Lanka and Thailand). In six economies, the share of revenue from VAT was below 25%, ranging from 14.9% in Japan to 24.6% in Viet Nam. Box ‎1.4 discusses the VAT revenue ratio (a measure of the efficiency of VAT systems) for selected economies in Asia and the Pacific.

The share of revenue from VAT in total taxes was generally higher across Pacific economies, with only three economies (Timor-Leste at 0.9%, Australia at 11.1% of total taxes [2021 figure] and Papua New Guinea at 15.0%) reporting shares below 25%, while the share in the rest of the Pacific economies ranged from 29.7% in New Zealand to 52.0% in the Cook Islands in 2022. On average, the share of VAT in total tax revenue in Asia-Pacific (36) in 2022 (24.9%) was lower than the Africa (33) average (27.8%, 2021 figure) and the LAC average (28.3%) but higher than the OECD average of 20.7% (2021 figure).

In 2022, revenue from other goods and services contributed between 5.5% of total tax revenue in New Zealand and 69.3% in the Solomon Islands (Figure ‎1.9). The high share in the Solomon Islands (which does not apply a VAT) was derived from general taxes on goods and services, such as the goods tax, the sales tax and export duties on various products, particularly logging. The share of other taxes on goods and services in total revenue was also comparatively high in Bhutan, Lao PDR, Samoa, the Solomon Islands, Sri Lanka, Tokelau and Vanuatu, where they exceeded 35% of total tax revenue in 2022 (Bhutan and Tokelau do not apply a VAT).

Box ‎1.4. VAT revenue ratios in selected Asian and Pacific economies

The VAT revenue ratio (VRR) measures the difference between the VAT revenue that countries collect and what would they would theoretically raise if VAT were applied at the standard rate to the entire potential tax base in a “pure” VAT regime and all revenue was collected. A VRR of 1 suggests no loss of VAT revenue as a consequence of exemptions, reduced rates, fraud, evasion or tax planning. This box describes the VRR levels in selected Asian and Pacific economies in this publication.

There was a wide disparity of VRRs in the Asia-Pacific region in 20211. Timor-Leste had the lowest VRR (at 0.129) while New Zealand had the highest (at 1.005). Of the economies with available data in this publication, 13 economies (Cambodia, China, Fiji, Georgia, Japan, Korea, Kyrgyzstan, Lao PDR, New Zealand, Samoa, Singapore, Thailand and Viet Nam) had relatively high VRRs in 2021, above the OECD average of 0.56 (2020 figure). This is partly because of the relatively broad-based VAT in some economies: for example, New Zealand did not have any reduced rates in 2021, while Singapore only exempts sales and leases of residential properties, the import and local supply of investment precious metals, and some financial services (IRAS, 2024[41]). Korea has a reduced rate on a limited number of products. In comparison, many other OECD countries have one or more reduced rates (OECD, 2022[42]), which partly explains the lower average VRR in the OECD region as a whole.

The VRR needs to be interpreted with caution and can be inflated by several factors. One reason can be exemptions on products and services relating to intermediate consumption, which can lead to a cascading effect that increases VAT revenue (IMF, 2017[43]). For example, in Thailand, a large number of exemptions on a variety of products may cause “cascading”, which artificially increases the VRR. Another reason the VRR may be inflated is if refund processes do not work correctly, which may discourage taxpayers from claiming their VAT refunds, resulting in artificially higher VAT revenue and VRR (OECD, 2022[42]). Regarding New Zealand, in addition to the limited number of reduced rates and exemptions, the VRR is inflated by the treatment of public services as GST taxable (OECD, 2022[42])

In addition, the interpretation of the VRR is also more difficult for economies relying on tourism, such as many Pacific Islands. These economies may record a high VRR for methodological reasons: purchases by non-residents may not be included in final consumption expenditure (the denominator) whereas VAT on these purchases is included in total VAT revenue (the numerator) (Keen, 2013[44]).

The VRR may also be deflated by the absence of rules and mechanisms for collecting VAT on inbound business-to-consumer (B2C) supplies resulting from increases in digital trade. To date, over 90 countries have adopted rules for the application of VAT to inbound supplies of services and intangibles according to the OECD standards and in over 30 of them to imports of low-value goods. In the Asia-Pacific region, Australia, Bangladesh, Indonesia, Japan, Korea, New Zealand and Singapore already collected VAT on inbound digital supplies in 2020. Since then, they have been followed by Azerbaijan, Georgia, Thailand, Armenia, Cambodia, Kazakhstan, Vietnam and Kyrgyzstan. Regimes for the taxation of imports of low-value goods were also introduced in Australia (2018), New Zealand (2019), Kazakhstan (2022) and Singapore (2023).

Figure ‎1.10. VAT revenue ratios (VRRs) in selected Asian and Pacific economies, 2021

1. Due to data availability, data for 2021 is used for the calculation of the VRR.

Figure ‎1.11. Tax structures for the Africa (33), Asia-Pacific (36), LAC and OECD averages, 2022

Percentage of total tax revenue and as a percentage of GDP

Average tax structures across Asia-Pacific, Africa and the LAC region shared some similarities in 2022. Revenue from goods and services accounted for a similar share of total tax revenue in Africa, Asia-Pacific and the LAC region, at 51.9% (2021 figure), 48.8% and 46.5% respectively – much higher than the OECD average of 31.9% (2021 figure). Taxes from other goods and services generated a similar share of total tax revenue (23.8%) in Asia-Pacific and in Africa (24.1%, 2021 figure) in 2022 (Figure ‎1.11), which was higher than the LAC average (18.2%) and more than twice the OECD average (11.2%, 2021 figure).

On average, revenue from VAT amounted to 4.8% of GDP in Asia-Pacific; at 24.9% of total taxation, this was between the OECD average of 20.7% (2021 figure) and the average share in Africa (27.8%, 2021 figure) and the LAC region (28.3%).

On average, income tax revenue in Asia-Pacific (39.9%) accounted for a similar share of total taxation as in Africa (37.9%). In Asia-Pacific, revenue from PIT accounted for 15.9% of total taxes, similar to the Africa average of 17.4% (2021 figure), above the LAC average (9.2%) and below the OECD average (23.7%, 2021 figure). CIT revenue accounted for a larger share of total tax revenue in Asia-Pacific, on average, at 21.3%, which was the highest among the regional averages: CIT revenue accounted for 18.7% in Africa (2021 figure), 18.8% in the LAC region and 10.2% in OECD countries (2021 figure).

In contrast, the Asia-Pacific region had the lowest share of SSCs among the four regional averages: they contributed 7.6% of total taxes in Asia Pacific, 7.8% in Africa (2021 figure), 16.7% in the LAC region and 25.6% of total taxes in the OECD (2021 figure).

Revenue by tax category in 2022

Tax structures expressed as a percentage of GDP also varied across the economies in this publication in 2022. Revenue from income taxes ranged from none in Vanuatu to 21.5% of GDP in Nauru. Two Pacific economies reported revenue from PIT above 10% of GDP (Australia and New Zealand). In the majority of the economies, revenue from CIT was higher than revenues from PIT. While most economies included in the report levy both PIT and CIT, Vanuatu is the only economy which does not levy any form of income tax, while the Marshall Islands and Tokelau do not levy CIT. For Nauru and Pakistan, it is not possible to distinguish between PIT and CIT revenue.

SSCs play a limited role in Asia and the Pacific, generating revenue amounting to 1.9% of GDP on average. While revenue from taxes on goods and services played an important role in all economies included in the report, it exceeded 10% of GDP in seven Pacific economies but stayed below this level for most of the Asian economies.

Australia, New Zealand and Tokelau recorded the highest levels of PIT revenue as a share of GDP in 2022 (Figure ‎1.12). Revenue from PIT amounted to 14.0% of GDP in New Zealand, 11.5% of GDP in Australia (2021 figure) and 9.7% of GDP in Tokelau. In the other Pacific economies covered in this publication, revenue from PIT was above 3.0% of GDP and closer to the Asia-Pacific (36) average of 3.3%, except in Timor-Leste (0.9%), Fiji (1.7%) and Vanuatu (which does not have a PIT). Nauru has the highest level of revenue from income taxes in the publication, at 21.5% of GDP. In Asia, three economies reported revenue from PIT larger than 6%: Japan at 6.4% (2021 figure), Korea at 6.6% and Georgia at 7.0%. In the remaining economies, PIT revenue in 2022 ranged from 0.2% in Sri Lanka to 5.6% of GDP in Armenia.

Figure ‎1.12. Tax structures in Asian and Pacific economies, 2022

Percentage of GDP

Revenue from CIT was equivalent to 3.8% of GDP on average across the Asia-Pacific region in 2022 and was higher than revenue from PIT in 19 economies. Revenue from CIT ranged from 0.9% of GDP in the Cook Islands to 14.9% in Timor-Leste.

SSCs account for a relatively small proportion of tax revenue in Asian and Pacific economies. Fifteen economies in this publication, including all the Pacific economies except the Marshall Islands, do not levy SSCs. In most of the other economies, revenue from SSCs as a share of GDP was relatively low in 2022, including Sri Lanka (0.2%), Malaysia (0.3%), Indonesia (0.5%), Thailand (0.7%), Armenia (0.8%) and Kazakhstan (1.0%). These were significantly below the LAC average (3.6% of GDP) and the OECD average (9.0% of GDP in 2021). Five Asian economies reported relatively high revenue from SSCs as a share of GDP: Azerbaijan (4.2%), Mongolia (5.3%), Viet Nam (5.4%), China (6.2% of GDP), Korea (8.2%) and Japan (13.3%, 2021 figure).5 SSCs in the Marshall Islands amounted to 12.4% of GDP in 2022.

Revenue from taxes on goods and services amounted to 9.0% of GDP on average across the 36 Asian and Pacific economies. In most Asian economies, revenue from taxes on goods and services amounted to less than 10% of GDP in 2022, with the exceptions of Mongolia (11.6%), Armenia (13.0%), Georgia (13.3%), the Maldives (15.9%) and Kyrgyzstan (17.1%). Seven of the 13 Pacific economies in this publication generated revenues from taxes on goods and services that exceeded 10% of GDP, ranging from 11.8 % of GDP in Kiribati to 20.9% in Samoa in 2022.

Changes in tax-to-GDP ratios between 2010 and 2022 by tax category

Between 2010 and 2022, declines in revenue from CIT and from other taxes on goods and services were the major driver of the decrease in tax-to-GDP ratios observed in many economies where this occurred, whereas a range of tax types accounted for increases observed elsewhere. These changes reflect diversity in terms of policy measures and economic development in Asian and Pacific economies over this period.

Of the eighteen economies where the tax-to-GDP ratios declined between 2010 and 2022, lower CIT revenue contributed to the declines in ten (Figure ‎1.13). The largest declines in the tax-to-GDP ratio over this period were in Timor-Leste (5.0 p.p.) and Kazakhstan (4.0 p.p.), which were affected by declines in natural resource prices (and production, in the case of Timor-Leste).

Eighteen economies recorded increases in their tax-to-GDP ratio between 2010 and 2022. The largest increases were observed in the Maldives, Cambodia, Korea and Nauru (since 2014), which all saw increases of larger than 8.0 p.p. Reforms to tax policy and administration were the main driver of the increases in three of the four economies:

Since 2014, Nauru has introduced an employment and services tax and a business tax, and it has improved revenue collection (IMF, 2020[46]).
The Maldives has undertaken major tax reforms since 2011 to increase tax revenue. Key policy changes have included the introduction of a goods and services tax in 2011, a business tax, and a corporate profit tax (ADB, 2017[47]). The tax-to-GDP ratio increased by 2 p.p. between 2010 and 2011, mainly due to the introduction of the VAT. Subsequent rate increases in these three taxes have contributed to higher tax revenue (ADB, 2017[47]). The Maldives also introduced a personal income tax in 2020 (Maldives Inland Revenue Authority, 2020[48]).
Cambodia has implemented various administrative and regulatory reforms under the long-term Public Financial Management Reform Programme to improve the government’s finance system (Royal Government of Cambodia, 2019[49]). Reforms aimed at making tax administration more efficient have included the digitalisation of taxpayer services, simplification of procedures, improvements of audits and training for staff, as well as the revision of some tax rates to ease compliance (Royal Government of Cambodia, 2018[50]), (OECD, 2018[51]), (World Bank, 2019[52]).
In Korea, the tax-to-GDP ratio was particularly low in 2010 as a result of the Global Financial Crisis and recovered in the following years.

Figure ‎1.13. Net changes in tax-to-GDP ratios between 2010 and 2022, by main tax type

Percentage point (p.p.)

Revenue from taxes on goods and services account for a large share of total tax revenue across the economies in this report but the source of these revenues varies (Figure ‎1.14). In 21 economies, the share of VAT revenue was larger than the share of revenue from other taxes on goods and services, while seven economies (Bhutan, Hong Kong (China), Malaysia, the Marshall Islands, Nauru, the Solomon Islands and Tokelau) do not levy a VAT.

Between 2010 and 2022, the share of revenue from VAT increased the most in the Maldives (by 50.4 p.p.), Kiribati (43.8 p.p.), China (23.4 p.p.) and Lao PDR (20.6 p.p.). Kiribati, the Maldives and Lao PDR introduced a VAT within this timeframe (in 2014, 2011 and 2010, respectively). While Lao PDR replaced its turnover tax with a VAT (Keomixay, 2010[53]),Kiribati and the Maldives introduced VAT tax for the first time (ADB, 2017[47]) (IMF, 2015[54]) while China replaced a business tax with VAT in 2016 (OECD, 2017[55]).

The relative importance of CIT and PIT within income tax revenue also varied between Asian and Pacific economies (Figure ‎1.14). In most Asian economies included in this publication, the share of revenue from CIT as a percentage of total taxation was higher than the share of revenues from PIT in 2022, except for Armenia, Georgia, Japan, Kyrgyzstan and Korea. In contrast, all Pacific economies with the exception of Fiji reported higher shares of revenue from PIT than CIT (see Box ‎1.2).

Figure ‎1.14. Revenue from VAT and other taxes on goods and services and revenues from PIT and CIT, 2022

Percentage of total taxation

In 2022, revenue from CIT contributed between 4.2% of total tax revenue in the Cook Islands and 75.1% in Timor-Leste. In seven economies, the share of CIT in total tax revenue exceeded 30% (Azerbaijan, Bhutan, Hong Kong (China), Kazakhstan, Malaysia, Papua New Guinea and Timor-Leste). PIT revenue ranged from 1.6 in Maldives to 60.6% in Tokelau (which does not have a CIT).

The share of CIT revenue was lower in 2022 than in 2010 in thirteen economies, by between 0.1 p.p. of total tax revenue in Fiji and 14.3 p.p. in Mongolia. Revenue from PIT increased as a share of total taxation between 2010 and 2022 or 24 economies (excluding Pakistan, Nauru and Vanuatu which has no PIT data), with the increases ranging from 0.2 p.p. in Bangladesh to 14.1 p.p. in Armenia. The share of revenue from PIT decreased in eight Asian and Pacific economies, with the size of the decrease ranging from 0.2 p.p. in Malaysia to 8.7 p.p. in the Cook Islands.

Environmental taxes in Asia and the Pacific

Environmentally related taxes,6 and price-based policy instruments more generally, play an increasingly significant role in many countries to support a transition to sustainable and low-carbon economic growth. By incorporating a price signal into consumer and producer decisions, these taxes give effect to the polluter-pays principle and encourage businesses and households to consider the environmental costs of their behaviour. Although environmentally related tax revenue7 (ERTR) is not separately identified in the standard OECD tax classification, it can be identified through the detailed list of specific taxes included for most countries within this overarching classification. It is on this basis that this revenue is included in the OECD Policy Instruments for the Environment (PINE) database (OECD, 2024[56]).8

Examination of taxes for the 22 Asian and Pacific economies for which information is available demonstrates that revenue from environmentally related taxes as a share of GDP ranged from 0.04% in Bangladesh to 2.5% in the Solomon Islands in 2022.9 ERTR in the Solomon Islands is particularly high relative to other Asian and Pacific economies and the OECD average, due in large part to its export duties, particularly on timber. The next highest levels of ERTR as a share of GDP in the region were observed in Japan (1.2%), Georgia and Armenia (both 1.1%), Kazakhstan, the Philippines, the Maldives and Pakistan (all 1.0%). On average, ERTR amounted to 1.3% of GDP in the Asia-Pacific region in 2022.

Figure ‎1.15. Environmentally related tax revenue in Asian and Pacific economies, by main tax base, 2022

Percentage of GDP

Asian and Pacific economies relied on a range of bases for their ERTR in 2022:

In Australia, Azerbaijan, Bangladesh, Kyrgyzstan, the Maldives and Nauru, all ERTR came from transport taxes (registration or road use of motor vehicles or departure taxes). These also account for the majority of ERTR in Malaysia, Mongolia and New Zealand (89.1%, 75.2% and 61.8%, respectively).
In other Asian and Pacific economies, ERTR was principally raised via taxes on energy (most commonly from diesel and petrol excises). They represent over 60% of ERTR in Bhutan, Georgia, Japan, Sri Lanka, Pakistan, the Philippines and Singapore and represent the full sum of ERTR in the Marshall Islands and Viet Nam.
The remaining economies mainly levied ERTR from resource taxes. The Solomon Islands and Armenia relied entirely on resource taxes while they contributed 51.9% of Kazakhstan’s ERTR in 2022.
There are notable differences in the composition of ERTR in Asian and Pacific economies compared with African, LAC and OECD countries. In 2022, revenue from energy taxes, resource taxes and transport taxes generated almost equal shares of total ERTR in the Asia-Pacific region (35.3%, 29.3% and 32.1% respectively), whereas energy taxes accounted for the majority of ERTR in other regions (70.2% in the OECD, 66.0% in Africa [2021 figures] and 56.0% in the LAC region).

In general, the use of taxation to address environmental issues is low in the region compared to the OECD and there is scope to increase use of such instruments. The under-utilisation of environmental taxes in the Asia-Pacific region needs to be understood in the context of the extensive use of fossil fuels subsidies. Reforming energy subsidies is considered by ADB (2016[57]) as ‘one of the most important policy challenges for developing Asian economies’. UN.ESCAP (2016[58]) recommends that governments gradually phase out energy subsidies while implementing measures to compensate vulnerable groups and to ensure international competitiveness in a sustainable way. Reforming energy subsidies while at the same time implementing environmental taxation has the potential to mobilise significant government revenues and help to meet the Sustainable Development Goals.

Taxes by level of government

This section discusses the relative share of tax revenue attributed to different levels of government in 2022: federal or central government, sub-national government (including regional or provincial government, state government and local government) and social security funds. For the majority of Asian and Pacific economies for which data on revenue by level of government is available, tax revenue is collected primarily by federal or central government. Sub-national tax revenue as a share of total tax revenues is low and highly variable across the region (Table ‎1.1).

In 2022, the share of sub-national government tax revenue ranged from 0.6% of total tax revenue in Bhutan to 31.7% in China, averaging 12.9% across the region (excluding Australia, Japan and Malaysia).10 In comparison, central government tax revenue accounted for only 53.3% of total tax revenue in OECD countries in 2021. Although at a relatively low level, the share of sub-national government revenue has increased for most regional economies over time. The largest increase has been observed in Indonesia, where the sub-national share rose from 3.2% in 2000 to 9.6% in 2022, driven in part by policy reforms such as the shift of property taxation to the local level in 2014. Japan and Kazakhstan were the only countries whose sub-national government shares have decreased since 2000, although their shares remained among the highest.

As a share of GDP, sub-national tax revenue was higher in Japan (7.5%, 2021 figure), China (6.4%), Australia (5.3%) and Korea (5.5%) in 2022, while it was relatively low in Bhutan (0.1%), Pakistan (0.8%) and the Philippines (0.9%). The amount of tax revenue collected by sub-national governments is affected by multiple factors. For example, the type of taxes levied by local governments vary between economies, as discussed in the Special Feature of Revenue Statistics in Asia and the Pacific 2023 (OECD, 2023[59]). Local governments in the Philippines, for instance, have a narrow range of taxes under their jurisdiction, relying mainly on property taxes and taxes on income and profits.

Sub-national governments in Japan and Korea, however, raise revenue from taxes on income and profits, property taxes, taxes on goods and services, payroll (Korea only) and other taxes. The share of sub-national government tax revenue also depends on the range of services that local governments provide. For example, in Japan, where sub-national tax revenue was often the highest, prefectures and municipalities have a wide range of responsibilities, such as economic development, education, urban planning, public health and other social spending (OECD/UCLG, 2019[60]).

The share of revenue attributed to social security funds was also low in Asia and the Pacific. Australia, New Zealand and Singapore do not collect SSCs and the proportion of total tax revenue from social security funds was zero, while it was under 6% of total tax revenue in Indonesia, Kazakhstan, Malaysia and Thailand in 2022. Revenue from social security funds was above the average in six economies: 39.2% in Japan (2021 figure), 31.0% in China, 26.7% in Azerbaijan, 25.6% in Korea, 21.8% in Mongolia and 15.2% in the Philippines in 2022. In the long run, the share of tax revenue attributed to social security funds has increased the most in Korea (by 8.9 p.p.) since 2000 and in Mongolia since 2010 (by 8.7 p.p.).

	Federal or Central government				Sub-national government				Social Security Funds
	2000	2010	2020	2022	2000	2010	2020	2022	2000	2010	2020	2022
Australia	81.8	80.2	80.8	80.4	18.2	19.8	19.2	19.6	0.0	0.0	0.0	0.0
Azerbaijan	..	..	75.0	73.3	..	..	..	..	0.0	0.0	25.0	26.7
Bhutan	99.8	99.9	99.2	99.4	0.2	0.1	0.8	0.6	..	..	..	..
Cambodia	..	..	90.7	91.7	..	..	9.3	8.3	..	..	..	..
China	..	..	39.1	37.2	..	..	36.7	31.7	..	..	24.2	31.0
Indonesia	96.8	92.8	82.6	86.1	3.2	7.2	11.5	9.6	..	..	5.9	4.3
Japan	38.7	33.0	36.6	38.3	26.1	25.9	23.0	22.6	35.2	41.1	40.4	39.2
Kazakhstan	50.3	81.3	65.0	71.4	49.7	16.2	29.7	23.3	..	2.5	5.3	5.3
Korea	68.2	60.0	53.0	57.3	15.1	16.6	19.0	17.2	16.7	23.3	28.0	25.6
Malaysia	98.0	98.2	96.9	97.2	..	..	..	..	2.0	1.8	3.1	2.7
Mongolia	..	75.5	65.6	63.4	..	11.4	15.6	14.2	..	13.1	18.9	21.8
New Zealand	94.3	92.8	93.9	93.8	5.7	7.2	6.1	6.2	0.0	0.0	0.0	0.0
Pakistan	..	..	91.1	92.3	..	..	8.9	7.7	..	..	..	..
Singapore	100.0	100.0	100.0	100.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Sri Lanka	..	98.5	97.4	97.9	0.0	0.0	0.0	0.0	..	1.5	2.6	2.1
Thailand	88.9	86.3	86.6	87.3	7.5	6.6	7.6	8.5	3.7	7.1	5.8	4.2
The Philippines	81.5	82.0	78.3	79.7	5.3	5.4	5.9	5.1	13.1	12.6	15.7	15.2

Note: Australia, Japan, Korea and New Zealand are part of the OECD (38) group. Data for Australia, Japan, Korea and New Zealand are taken from (OECD, 2023[1]). Sub-national figures for Australia include data of state and local government.

Source: (OECD, 2024[2]), “Revenue Statistics - Asian and Pacific Economies: Comparative tables”, OECD Tax Statistics (database).

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Non-tax revenue in selected economies

This publication includes information on non-tax revenue for twenty-two economies for which data are available. Non-tax revenue is defined as all revenue received by general government that does not meet the OECD definition of tax revenue, as set out in the Interpretative Guide (Annex A). They are further divided into five categories according to the definitions set out in Annex B: grants; property income; sales of goods and services; fines, penalties and forfeits; and miscellaneous and unidentified revenues.

Non-tax revenue as a percentage of GDP

Non-tax revenue was equivalent to a significant share of GDP in 2022 for seven of the 22 economies (Vanuatu, the Maldives, Bhutan, the Cook Islands, the Marshall Islands, Nauru and Tokelau). By contrast, non-tax revenue was below 9.0% of GDP in the remaining economies. Compared with the previous year, non-tax revenue decreased slightly on average in 2022, with 16 out of 22 economies experiencing declines.

In 2022, non-tax revenue amounted to 9.0% of GDP in Vanuatu and the Maldives, 13.8% in Bhutan and 17.6% in the Cook Islands, and they amounted to 52.6% in the Marshall Islands, 58.4% in Nauru and 141.1% in Tokelau. The high level of non-tax revenue in Tokelau as a share of GDP is due to the fact that non-tax revenue is derived primarily from payments by foreign vessels for access to fishing waters under the Exclusive Economic Zone (EEZ) of Tokelau. In the 2008 System of National Accounts, these revenues are recorded as part of gross national income (GNI) but they do not add to GDP. Similarly, fishing activities represent a significant source of revenue in the Marshall Islands and Nauru and accounted for more than 18% and 30% of total non-tax revenue, respectively, in 2022.

Between 2021 and 2022, non-tax revenue declined in 16 economies as a percentage of GDP while they increased in six. The declines exceeded 1 p.p. in four economies: the Cook Islands (-3.1 p.p.), the Marshall Islands (-6.0 p.p.), Nauru (-13.1 p.p.), Tokelau (-25.4 p.p.). In the Marshall Islands, lower grant revenue accounted almost entirely for the decrease in non-tax revenue in 2022. In Nauru, lower non-tax revenue was the result of a decline in grants and lower revenue from services fees and fishing fees. The decline in non-tax revenue in Tokelau was almost entirely attributable to lower revenue from the EEZ, which was heavily affected by the COVID-19 crisis.

Non-tax revenue has been increasing since 2010 (or earliest available year) as a share of GDP in ten of the 22 economies for which data on non-tax revenue is available. The largest increases occurred in Nauru (6.8 p.p. since 2014), the Marshall Islands (5.6 p.p.) and the Cook Islands (4.6 p.p.). The largest declines have been observed in Cambodia (2.4 p.p.), Papua New Guinea (2.8 p.p.), Lao PDR (5.2 p.p.), Bhutan (6.0 p.p.) and Tokelau (13.5 p.p.).

The upward trend for the Marshall Islands and Nauru has been driven by higher revenue from property income, which is mostly sourced from fishing activities. Fisheries income also increased for the Marshall Islands and Nauru after they became partners to the Parties to the Nauru Agreement (PNA), which administers the fishing vessel-day scheme (VDS). The VDS is the system to sustainably manage the world’s largest tuna fishery in the Western and Central Pacific Ocean, and has increased revenue to the PNA by over 700% in the past seven years (Parties to the Nauru Agreement, 2016[61]).

The increase in the Cook Islands was due to higher grant revenue and miscellaneous non-tax revenue, which includes gains from the sale of assets. Official Development Assistance from New Zealand to support education, health and tourism initiatives in the Cook Islands accounts for the largest source of grant revenue (Ministry of Finance and Economic Management, 2020[62]). Non-tax revenue has been more volatile than tax revenue in many economies. In all economies that reported decreases in non-tax revenue larger than 2 p.p., the decline was mostly due to grants.

	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Bhutan	19.8	19.1	14.5	18.2	12.9	15.8	13.3	14.8	11.3	17.7	18.1	14.5	13.8
Cambodia	5.2	3.7	3.5	4.3	3.4	3.0	3.8	3.5	3.8	3.8	3.1	2.6	2.8
Cook Islands	13.0	7.9	8.3	14.3	16.1	14.0	16.7	13.7	12.3	14.9	35.0	20.6	17.6
Fiji	2.9	3.6	3.0	2.9	3.0	2.9	3.2	3.5	3.6	3.5	4.2	7.9	3.7
Hong Kong (China)	7.4	8.3	7.9	7.7	5.4	4.4	8.9	8.8	7.2	8.2	6.9	9.1	7.6
Kazakhstan	1.0	1.4	1.9	1.0	1.5	1.4	1.2	1.1	1.7	1.5	1.2	1.5	2.3
Kyrgyzstan	8.3	8.7	7.6	8.4	9.4	10.7	7.9	8.5	6.3	7.2	7.4	7.9	7.4
Lao PDR	9.5	6.7	10.2	7.3	9.6	7.7	4.5	5.3	5.4	5.1	3.8	5.4	4.3
Maldives	10.4	9.2	6.5	5.2	7.1	6.8	7.3	6.8	6.8	6.4	5.9	7.1	9.0
Marshall Islands	47.1	43.3	38.3	40.8	39.9	44.8	46.3	54.0	48.0	47.3	57.9	58.6	52.6
Mongolia	6.5	7.4	6.9	7.2	7.8	6.4	5.1	4.3	4.6	4.3	3.9	4.3	6.5
Nauru	0.0	0.0	0.0	0.0	51.6	74.6	81.7	80.6	96.8	93.2	82.6	71.5	58.4
Pakistan	0.0	2.5	3.0	4.2	3.0	2.5	2.8	2.0	1.0	3.3	2.1	1.7	1.5
Papua New Guinea	4.7	3.3	3.1	2.4	3.1	3.2	3.2	3.3	4.5	3.3	2.8	3.0	1.9
Samoa	8.8	5.9	4.6	6.8	4.6	4.4	4.5	5.3	5.6	10.9	11.5	12.4	7.8
Singapore	3.5	3.5	3.4	3.5	3.9	4.4	4.4	5.3	4.3	7.1	4.6	3.8	3.8
Sri Lanka	1.5	1.7	1.6	1.3	1.3	0.8	1.7	1.0	1.3	0.8	0.8	0.7	0.9
Thailand	3.3	2.7	2.9	2.9	3.1	3.6	3.7	3.6	3.8	3.7	4.0	3.6	3.4
The Philippines	0.0	1.9	1.9	1.8	1.8	2.0	1.8	1.7	1.8	2.0	2.3	1.7	1.8
Tokelau	154.6	196.4	192.6	246.6	173.4	230.4	236.5	210.0	218.8	191.2	180.7	166.5	141.1
Vanuatu	8.6	6.1	5.5	4.5	6.2	15.4	9.8	14.2	19.8	24.3	23.6	16.4	9.0
Viet Nam	4.5	4.0	3.9	4.1	4.1	5.3	5.7	6.7	6.8	6.5	6.5	5.6	5.5

Note: Tokelau receives significant revenue from foreign vessels for access to Tokelau fishing waters. In the 2008 SNA, these revenues are recorded as part of GNI but they do not add to GDP.

Source: (OECD, 2024[2]), “Revenue Statistics in Asian and Pacific Economies: Comparative tables”, OECD Tax Statistics (database).

Statlink

Structure of non-tax revenue

Non-tax revenue is divided into different categories: grants; property income; sales of goods and services; fines, penalties and forfeits; and miscellaneous and unidentified revenues. In 2022, the share of each of these categories in total non-tax revenue varied across the 22 economies (Figure ‎1.16).

Grants were an important source of revenue for more than half of the economies in 2022, exceeding 40% of total non-tax revenue in seven economies: Cambodia (41.8%), Tokelau (43.0%), Bhutan (44.1%), the Cook Islands (52.4%), Samoa (58.4%), the Marshall Islands (66.6%) and Papua New Guinea (70.6%). Revenue from grants decreased on average by 1.9 p.p. from 8.2% of GDP in 2021 to 6.3% in 2022.
Property income accounted for over 30% of total non-tax revenue in more than half the economies in 2022: Kazakhstan (85.0%), Singapore (73.4%), Mongolia (69.3%), Pakistan (66.7%), Hong Kong (China) (54.9%), Nauru (53.8%), Tokelau (52.5%), Thailand (50.2%), Lao PDR (48.8%), the Philippines (45.9%), Fiji (41.3%), the Maldives (39.5%) and Bhutan (37.2%).
Property income in Tokelau and Nauru was derived predominantly from fisheries (i.e. fishing rents, fishing days, support vessels, etc.), which represented more than 90% of total property income in both. Rents and royalties accounted for 73.2% of total non-tax revenue in Kazakhstan in 2022, mainly from oil revenue and for 55.8% in Mongolia. Interest and dividends accounted for the majority of non-tax revenue for Pakistan (53.2%) and Singapore (67.6%). Other property income in the Philippines, mainly Bureau of the Treasury income, made up 45.0% of non-tax revenue.
Sales of goods and services accounted for more than half of non-tax revenue in Viet Nam (63.5%, composed of fees and charges, land rents and revenues from land user right assignment) and Maldives (55.0%, mainly from leasing, fees and charges).

Figure ‎1.16. Structure of non-tax revenue in selected Asian and Pacific economies, 2022

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Notes

← 1. The ADB recognises “Hong Kong (China)” as “Hong Kong, China”.

← 2. The ADB recognises “Kyrgyzstan” as the “Kyrgyz Republic”.

← 3. In this chapter, the group Pacific Islands covers the eleven Pacific Islands included in this publication: the Cook Islands, Fiji, Kiribati, the Marshall Islands, Nauru, Papua New Guinea, Samoa, the Solomon Islands, Timor-Leste, Tokelau and Vanuatu, while the group Pacific economies includes Australia and New Zealand in addition to the Pacific Islands.

← 4. Data for Pakistan are available from 2011, for Timor-Leste from 2012 and data for Nauru and Azerbaijan are available from 2014. In addition, 2022 data for Australia and Japan are not available in (OECD, 2023[1]), so 2021 data are used instead.

← 5. Data on SSCs are not available for Cambodia and Lao PDR.

← 6. 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 harmful impact on the environment regardless of whether the tax is intended to change behaviours or is levied for another purpose (OECD, 2005[64]).

← 7. The figures in this report do not include revenues (that may be significant) from other policies addressing environmental issues such as fees and charges or revenues from emissions trading schemes. However, the PINE database provides additional data on fees and charges, subsidies, voluntary approaches, tradable permits, deposit-refund systems for more than 80 countries (OECD, 2017[63]).

← 8. Data on environmentally related tax revenue are presented for four tax-base categories: energy (including all CO₂ related taxes); transport (mostly motor vehicle taxes); pollution (e.g. discharges of waste or pollutants, taxes on waste or packaging); and resources (e.g. water extraction, hunting and fishing, mining) (OECD, 2017[63]).

← 9. These figures need to be treated with caution as some environmentally related taxes may not be captured if the data are not sufficiently disaggregated.

← 10. Data for 2022 was not available for Australia and Japan. Malaysia’s sub-national disaggregation was not available, although its sub-national revenue was relatively small (OECD, 2016[65]).

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