VAT drove up tax revenues in the Asia-Pacific region in 2023

Tax Revenue Trends: In 2023, tax revenues as a share of GDP increased in two-thirds of the 35 Asia-Pacific economies analyzed, with notable rises in Niue (4.5 p.p.), the Cook Islands (3.4 p.p.), and Azerbaijan (3.4 p.p.). Conversely, 12 economies experienced declines, particularly Timor-Leste and Nauru, both with declines over 10 percentage points.
Tax-to-GDP Ratios: The average tax-to-GDP ratio across the Asia-Pacific region was 19.6% in 2023, a slight increase from previous years. This ratio varied significantly among countries, with Bangladesh at 7.3% and New Zealand exceeding 30%. The region’s average is lower than the OECD average of 33.9% and higher than Africa’s average of 16.0%.
Impact of Tourism and Non-Tax Revenue: A strong rebound in international tourism contributed to a rise in VAT revenues, averaging a 0.4% increase in GDP. Non-tax revenues also saw improvements in 16 out of 23 economies, with significant contributions from various sources, particularly in economies like Niue and Tokelau. The report is a collaborative effort involving multiple organizations and presents harmonized tax revenue data for 37 economies, including Niue for the first time.

Source OECD

VAT Receipts Drive Up Tax Revenue in Asia-Pacific Region According to OECD Report

Increase in Tax Revenues: The OECD report reveals that tax revenues in the Asia-Pacific region rose on average for the third consecutive year in 2023, primarily driven by higher value-added tax (VAT) receipts, with significant increases reported in several economies.
Impact of International Tourism: A strong rebound in international tourism contributed to a 0.4% increase in VAT revenues as a share of GDP, particularly benefiting Pacific Island nations where visitor numbers returned to pre-pandemic levels.
Tax-to-GDP Ratios: In 2023, the average tax-to-GDP ratio across the region was 19.6%, with many economies exceeding their pre-pandemic tax levels. However, corporate income tax revenues declined by 0.3 percentage points, highlighting ongoing challenges despite overall tax revenue growth.