In 2021, the average tax-to-GDP ratio in the 29 Asian and Pacific economies covered in this report was 19.8%, below the averages for the OECD and Latin America and the Caribbean (LAC), of 34.1% and 21.7%, respectively. Tax-to-GDP ratios in the region ranged from 9.7% in Lao PDR to 36.6% in Nauru.
The average tax-to-GDP ratio for the Asia-Pacific region increased by 0.2 percentage points (p.p.) between 2020 and 2021, having declined by 0.9 p.p. between 2019 and 2020. The LAC average tax-to-GDP ratio increased by 0.8 p.p. in 2021 while the OECD average increased by 0.6 p.p. Of the three regional averages, only that of the Asia-Pacific region remained below its pre-pandemic level in 2021.
More than two-thirds (19) of the 27 economies in the Asia-Pacific region for which data are available experienced increases in their tax-to-GDP ratio between 2020 and 2021; in 11 economies, the tax-to-GDP ratio recovered to its pre-COVID-19 level. The tax-to-GDP ratio increased by 2.0 p.p. or more in four economies in 2021: Bhutan (2.0 p.p.), Korea (2.1 p.p.), Kyrgyzstan (2.6 p.p.) and Mongolia (3.0 p.p.). Increases were driven by a range of factors, including a rebound in international trade, higher commodity prices (notably in Central Asia) and an end to pandemic-related border restrictions in certain economies.
Eight economies reported decreases in their tax-to-GDP ratio in 2021, with five economies reporting a fall larger than 1 p.p.: Maldives (1.3 p.p.), Fiji (1.4 p.p.), Cambodia (1.7 p.p.), Vanuatu (3.2 p.p.) and Nauru (4.9 p.p.). The continued impact of the COVID-19 pandemic, in particular on tourism, was the most common driver of these declines.
Over a longer timeframe, tax-to-GDP ratios increased in 15 Asian and Pacific economies between 2010 and 2021, declined in 13, and remained unchanged in the Cook Islands. The largest increases were observed in Samoa (6.0 p.p.), Japan (6.9 p.p., 2010-20), Korea (7.5 p.p.), Maldives (8.8 p.p.), Cambodia (10.7 p.p.) and Nauru (27.2 p.p., since 2014). The largest decreases over this period were in Malaysia (2.1 p.p.), China (2.7 p.p., excluding social security contributions), Bhutan (3.3 p.p.), Papua New Guinea (4.8 p.p.), Vanuatu (6.2 p.p.), Fiji (6.5 p.p.) and Kazakhstan (8.2 p.p.). Decreases in Fiji and Vanuatu over this period were attributable to the COVID-19 pandemic: Fiji’s tax-to-GDP ratio increased by 0.6 p.p. between 2010 and 2019 while Vanuatu’s tax-to-GDP ratio remained at a similar level, at 17.1% in 2010 and 17.0% in 2019, before both economies recorded sharp falls in 2020.
