Keynote address by Masatsugu Asakawa, ADB President, at the 50th SGATAR Annual Meeting – Heads of Delegations Forum, 16 November 2021
Distinguished guests and colleagues, good afternoon and warm greetings from the Asian Development Bank.
I am honored to join you at this milestone 50th Study Group on Asian Tax Administration and Research (SGATAR) Annual Meeting. I thank Mr. Oshika for inviting me to speak to you today.
Let me focus my remarks on the growing importance of domestic resource mobilization (DRM) and international tax cooperation (ITC) in the Asia and Pacific region. This topic is especially timely because of the challenges of our developing member countries (DMCs) will face in the aftermath of the coronavirus disease (COVID-19) pandemic; ADB’s newly launched Asia Pacific Tax Hub; and our ambition to enhance ADB’s partnership with SGATAR.
II. Why domestic resource mobilization and international tax cooperation matter for Asia and the Pacific
I want to begin by emphasizing that DRM and ITC will continue to be a major strategic priority for ADB in the immediate and longer term.
As you know very well, governments are experiencing unprecedented pressure on their domestic financial resources due to the devastating impacts of the pandemic.
With unanticipated increases in public debt and shrinking tax revenues, many of our DMCs face a worsening fiscal balance and substantially increased public debt.
In addition, the region was already falling short on all 17 Sustainable Development Goals, or SDGs.
In order to get back on track to achieve the SDGs, address climate change, and meet other structural challenges, countries need to find ways to secure additional resources through enhanced DRM.
At a time when governments explore additional resources through increasing tax revenues, they also need to build and maintain public trust by demonstrating that tax burdens are distributed fairly and equally.
ITC can play a key role here. Our DMCs can work together to close tax loopholes, combat tax evasion, and address tax issues in a digitalized economy through multilateral, consensus-based solutions.
So, ITC is especially relevant to economies in Asia and the Pacific, because their large markets and growing purchasing power will continue to draw larger investments from multinational corporations from all around the world.
And as you know, the G20 and the Base Erosion and Profit Shifting (BEPS) Inclusive Framework recently agreed on the last piece of BEPS Action 1.
But unfortunately, participation in ITC is lagging in the region. The lack of stronger engagement and coordination between countries could result in unilateral tax measures that increase the occurrence of double, or even triple, taxation and undermine cross-border trade and investments.
III. ADB strategy and leadership with the Asia Pacific Tax Hub in supporting DMCs
With this in mind, let me highlight ADB’s leadership to support our DMCs through key building blocks. Let me offer some context and outline the building blocks.
First, there are important tax communities in this region for knowledge sharing, capacity building, and tax cooperation, including SGATAR and the Pacific Islands Tax Administrators Association (PITAA). We believe the value of those tax communities can be enhanced by the existence of a pan-regional collaboration framework that will help to tie up the relationship among those communities, provide a venue for strategic policy dialogue, and support the activities of those communities.
Second, to this end, we created and launched the Asia Pacific Tax Hub in May of this year to provide an open and inclusive platform for strategic policy dialogue, knowledge sharing, and development coordination among ADB, its members, and development partners.
In particular, the Tax Hub will support our DMCs, through the following three key building blocks:
- The first building block is Medium-Term Revenue Strategies (MTRS). The Tax Hub will support the formulation of MTRS in our DMCs, with activities such as regional workshops, and diagnostic tools such as the Tax Administration Diagnostic Assessment Tool (TADAT).
- The second building block is tax administration reform through digital transformation. The Tax Hub will assist our DMCs in this area by developing and implementing a digital transformation roadmap.
- And the third building block is participation in international tax initiatives, like the Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The Tax Hub will support our DMCs through in-country capacity needs assessments and operational support.
In coordination with the Tax Hub, ADB will proactively use our technical assistance and financial instruments, such as policy-based and project lending, to support key outcomes aligned with the building blocks.
IV. Partnership enhancement between ADB and SGATAR
To realize the Tax Hub’s ambitious agenda, we fully recognize the value of collaboration with development partners, regional tax communities, and ADB members.
This brings me to the final area I want to discuss today: how we can enhance our partnership between ADB and SGATAR.
ADB has worked closely with SGATAR as one of our key regional partners, to promote knowledge sharing and capacity building.
For example, we have co-organized five joint workshops with other development partners over the past 2 years, bringing together more than 500 tax officials from SGATAR members.
And with the launch of the Tax Hub, we have a truly unique opportunity to deepen our partnership at this critical moment for our region.
We also look forward to ramping up our assistance to SGATAR members by supporting implementation of the SGATAR capacity building plan.
So my friends, let me conclude by noting that the Asia Pacific Tax Hub is hosting its first high-level regional tax conference on November 24 and 25, 2021.
We look forward to seeing the heads of delegation from SGATAR members there as we work toward enhancing domestic resource mobilization and international tax cooperation that can support a prosperous, inclusive, resilient, and sustainable Asia and the Pacific.
Thank you very much for your attention.