What is the Asia Pacific Tax Hub?

Video | 3 May 2021

In a world reshaped by the COVID-19 pandemic, strengthening domestic resource mobilization and international tax cooperation have become an important strategic priority for ADB. The Asia Pacific Tax Hub is providing an open and inclusive platform for strategic policy dialogue, knowledge sharing, and development coordination among ADB, its members, and development partners.

Transcript

Developing Asia and the Pacific needs $1.5 trillion annually to end extreme poverty and move toward universal health coverage, quality education and infrastructure, while continuing efforts to limit and adapt to climate change.

Yet, average tax yields across developing Asia are low and have not kept pace with increased economic growth in the region.  

Strong policy and institutional reforms to raise tax yields and meet international standards are needed across the region.

Governments, however, must walk a fine line between raising tax revenues and promoting investments. 

Carbon tax or other environmental taxes can promote a green recovery, as well as facilitate adaptation and resilience.

One major issue facing countries in the region is base erosion and profit shifting, or “BEPS.” 

Through BEPS practices, some multinational companies doing businesses in developing countries move taxable assets and profits to low- or even zero-based tax jurisdictions.

Another issue is tax evasion, where individuals or companies abuse opportunities offered by technology and an interconnected global financial network to evade payment of taxes.

Joint action to combat both BEPS and tax evasion practices is urgently needed.

Unfortunately, cooperation is lagging in Asia and the Pacific. 

This could result in unilateral tax measures that lead to double or triple taxation, threatening cross-border trade and investments.

To tackle this problem, the Asian Development Bank is establishing the “Asia Pacific Tax Hub" as an effective regional hub to promote domestic resource mobilization and international tax cooperation.

The hub is set to facilitate the collaboration among the ministries of finance and tax authorities of developing member countries; international organizations such as ADB, the IMF, the OECD, and the World Bank; and regional tax associations.

The hub will also stimulate strategic dialogue among partners, promoting the formulation of country specific revenue strategies, and developing innovative technical assistance programs based on collaboration.

It will focus around three building blocks — medium-term revenue strategies, digital transformation of tax administration, and international tax cooperation.

ADB President Masatsugu Asakawa: “It is vital that we move forward together on these issues with a sense of urgency. Through our efforts on domestic resource mobilization and international tax cooperation, we can lay the foundation for a robust, resilient, and sustainable recovery from the challenges of the COVID-19 pandemic—and we will achieve the Sustainable Development Goals.”