Transition of Tax-to-GDP ratios

Tax to gross domestic product (GDP) ratio is total tax revenue as a percentage of GDP, which indicates the share of a country's output that is collected by the government through taxes. It can be regarded as one measure of the degree to which the government controls the economy's resources.

ADB developing member tax yields have not increased concomitantly with the strong and steady growth in GDP over the last decades.

Even prior to the corona disease pandemic, many developing members did not achieve a tax yield of 15% of GDP due to a narrow tax base and low capacity of tax administration in general – now widely regarded as the minimum level required for sustainable development. For countries to finance their sustainable development goals, and to promote medium-term fiscal sustainability, greater effort in strengthening domestic resource mobilization and increasing tax revenues is significantly important.

ADB launched the Asia Pacific Tax Hub in 2021, which will serve multiple functions including open, inclusive, and pan-regional tax platform. The Hub assists each developing member to define country-specific and differentiated DRM and ITC goals appropriate for their specific circumstances and level of development.