THE tax systems of Southeast Asia need to digitalize to raise the efficiency of tax administration while improving compliance, the Asian Development Bank (ADB) said.
The ADB estimates that optimizing tax policy and administration will yields an increase in the tax-to-gross domestic product (GDP) ratio of 3-4 percentage points in developing Asia and the Pacific (APAC).
Southeast Asia’s tax-to-GDP ratio is below the APAC average.
“Developing economies should have a tax-to-GDP ratio of 15% to ensure the resources necessary to invest and achieve sustainable economic growth,” ADB Senior Economist Aekapol Chongvilaivan said in a conference on Thursday.
Within the region, only Cambodia, Thailand and Vietnam consistently achieve the 15% threshold, with the Philippines “making steady progress.”
“With a higher level of internet users, digital transformation of revenue bodies holds the key to voluntary compliance,” he said.
Over 80% of the Southeast Asian population has access to an internet connection.
Mr. Chongvilaivan recommended that tax regulators turn to online tax registration, e-filing, and e-payments to improve tax compliance.
Subnational taxation has also not been fully addressed in Southeast Asia, Mr. Chongvilaivan said.
“Real property taxes make up a significant proportion of subnational revenue. Taxes on real property are widely regarded as the most efficient, equitable means of raising revenue,” he said.
“Post-pandemic tax reform will aim at not only domestic resource mobilization but also long-term development, including Sustainable Development Goals,” he added. — Luisa Maria Jacinta C. Jocson