Speech by Masatsugu Asakawa, ADB President, at the 14th Global Forum Plenary Meeting: High-level Panel on Transparency and Exchange of Information at the Service of Economic Recovery, 17 November 2021
Secretary General Mr. Cormann, thank you for inviting me to speak at this 14th Plenary Meeting. Mr. Saint-Amans and fellow panelists, it is an honor to join you for this important discussion.
The Asian Development Bank fully stands behind the Global Forum in its efforts to strengthen international cooperation in the fields of tax transparency and exchange of information. This includes the Asia Initiative, which I join Sri Mulyani, the Minister of Finance of Indonesia, in supporting as it is launched today.
Let me focus my remarks on the importance of tax transparency for the Asia and the Pacific region and how ADB is working to strengthen it.
II. Enhancing domestic resource mobilization through transparency and exchange of information for tax purposes
As you know very well, governments are experiencing unprecedented pressure on their domestic financial resources due to the devastating impacts of the coronavirus disease (COVID-19) pandemic.
Countries need to find ways to secure additional resources – not only to recover from the pandemic, but also to get back on track to achieve the Sustainable Development Goals; to address climate change, gender equality, poverty alleviation, and related priorities; and to meet other structural challenges.
Amid these challenges, international cooperation will be crucial to tackling tax evasion and other illicit financial flows. As the Pandora papers and similar leaks in the past have shown, those practices undermine tax revenues and the public’s confidence in both the tax system and globalization.
Tax transparency and exchange of information (EOI) are powerful weapons in this fight. They allow tax authorities worldwide to share information and form a more complete picture of their taxpayers’ affairs. This can lead to improved tax compliance and tax revenue collection.
In sum, effective implementation of the EOI standards should be a key component of a country’s domestic resource mobilization strategy.
However, in Asia and the Pacific, cooperation on the EOI standards is lagging. Out of ADB’s 46 developing members countries, 19 are not yet members of the Global Forum, and 23 have not yet signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC).
ADB is committed to addressing this gap. Let me briefly outline our efforts.
III. ADB’s support for the objectives of the Asia Initiative and Global Forum
First, ADB strongly encourages its member countries to effectively implement the EOI standards. I am pleased that the Asia Initiative will play an important role to promote and implement these standards in the Asia Pacific region.
Second, ADB launched the Asia Pacific Tax Hub in May 2021 to provide an open platform where ADB member countries and development partners can collaborate to enhance international tax cooperation.
And third, ADB has increased its resource allocation for in-country technical assistance for our developing member countries to join the Global Forum and MAAC, and to implement the necessary tax reforms.
Concerning the Tax Hub, it can play a role in fostering international tax cooperation in this region in many ways. For example:
- First, by supporting the efforts of member countries to effectively implement international tax standards like the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), Common Reporting Standard (CRS), and so on;
- Second, by publishing tax-related knowledge products, including cost-benefit analyses of tax measures;
- Third, through capacity building for big data tools and data-driven tax policy analysis;
- Fourth, by facilitating the sharing of international best practices; and
- And fifth, by improving development coordination.
I hope that the Tax Hub will contribute to strategic policy dialogue, strengthen development cooperation, and coordinate DRM and ITC initiatives across the region, in cooperation with OECD.