In a world reshaped by the COVID-19 pandemic, the Tax Hub will be instrumental in strengthening Domestic Resource Mobilization (DRM) and International Tax Cooperation (ITC) and in supporting developing member countries’ efforts to achieve the Sustainable Development Goals.
Tax data is a key component to increase efficiency as it allows developing member countries and development partners to direct scarce resources where they are most needed. Collecting and analyzing data on Domestic Resource Mobilization and International Tax Cooperation is critical to establish baselines, benchmarks, and goals. ADB acknowledges the importance of tax data to guide evidence-based tax policymaking and to aid developing member countries in achieving the Sustainable Development Goals.
Tax integrity issues are of pressing global concern. While these issues adversely affect both developed and developing countries, the effect of lost tax revenues on developing countries in Asia and the Pacific is comparatively more severe. Since the adoption of the Tax Integrity Policy in 2016, ADB has enhanced its role in relation to international tax integrity principles, by promoting tax integrity at country, project, and institutional levels. This section illustrates the progress made by ADB regional members since 2016 in the implementation of tax integrity standards, by tracking their participation in key international tax initiatives.
With over 160 members, the GF is considered the leading international body working on the implementation of global transparency and exchange of information standards around the world. Through an in-depth peer review process, the GF ensures a level playing field, by monitoring that its members and any jurisdictions of relevance implement the internationally agreed standards of exchange of information on request (EOIR) and automatic exchange of information (AEOI).
With over 140 signatories, the MAC is considered the most advanced international legal instrument for international tax cooperation and the key tool for delivering the global tax transparency agenda, providing for an effective path for jurisdictions to implement the internationally agreed standards of exchange of information, both EOIR and AEOI.
The AEOI Standard represents the international consensus on automatic exchange of financial account information for tax purposes, on a reciprocal basis. Jurisdiction that commit to implement the AEOI standard by a specific date are required to disclose financial account information of nonresidents automatically to the account holders’ country of residence, in accordance with the Common Reporting Standard (CRS) developed by the OECD with G20 countries.
With almost 140 members, the BEPS IF was established to ensure that interested countries and jurisdictions, including developing economies, can participate on an equal footing in the development of standards on BEPS-related issues, while reviewing and monitoring the implementation of the OECD/G20 BEPS Project, and particularly the four BEPS minimum standards, through peer reviews.
The MLI offers concrete solutions for governments to close loopholes in international tax treaties by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties worldwide. The MLI allows governments to implement agreed BEPS minimum standards to counter treaty abuse and to improve dispute resolution mechanisms while providing flexibility to accommodate specific tax treaty policies.
*Data as of April 2021
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 country tax yields have not increased concomitantly with the strong and steady growth in GDP over the last decades.