25/07/22

INTERNATIONAL TAX: Revenues in Asia and the Pacific hit hard by Covid-19, according to OECD.

As published on businesstimes.com.sg, Monday 25 July, 2022.

Average tax revenues in Asia-Pacific fell to 19.1 per cent of GDP in 2022 from 20.3 per cent in 2019 as a result of the Covid-19 pandemic, placing the average tax-to-GDP ratio in the region lower than the averages for the OECD and Latin America and the Caribean (LAC), according to the latest OECD report.

Specifically, tax-to-GDP ratios fell in 19 of the 26 economies for which 2020 data are available. The overall average drop was 1.2 percentage points.

The OECD’s average tax-to-GDP ratio increased by 0.1 percentage point to 33.5 per cent from 2019 to 2020 while the average tax-to-GDP ratio in the LAC region declined by 0.8 percentage point to 21.9 per cent.

Between 2019 and 2020, revenues from corporate income tax fell by 0.1 percentage point in Asia and the Pacific, a more modest decline was then observed in the OECD (-0.4 percentage point) and in the LAC region (-0.2 percentage point), noted the report.

Only 7 of the 18 Asian countries had a tax-to-GDP ratio equal to or above that of the Asia-Pacific average of 19.1 per cent in 2020: Japan (31.4 per cent), Korea (28 per cent), Vietnam (22.7 per cent), Mongolia (21.2 per cent), Cambodia (20.2 per cent), China (20.1 per cent) and the Maldives (19.1 per cent).

In the Pacific, 6 economies recorded tax-to-GDP ratios above the Asia-Pacific average (Australia, the Cook Islands, Nauru, New Zealand, Samoa and Tokelau) while 4 were below this level (Papua New Guinea, Vanuatu, Fiji and the Solomon Islands).

Revenues from personal income tax remained unchanged as a percentage of GDP on average in Asia and the Pacific and in the LAC region, while they increased by 0.3 percentage point in the OECD.

Revenue Statistics in Asia and the Pacific is jointly produced by the OECD’s Centre for Tax Policy and Administration and the OECD Development Centre with co-operation of the Asian Development Bank, the Pacific Island Tax Administrators Association and the Pacific Community. It also received support from the governments of Ireland, Japan, Luxembourg, the Netherlands, Norway, Sweden, Switzerland and the United Kingdom.