The Asian Development Bank (ADB) will set up a 'regional hub' to facilitate achieving higher tax base in its member countries amid the impact of the Covid-19 pandemic when many of the economies are struggling with lower internal resources.
The ADB will help its 68 members in the Asia-Pacific (APAC) region to share knowledge and strengthen cooperation on tax policy and tax administration, the Manila-based lender said on Thursday.
The decision was taken on the first day of the ongoing two-daylong 53rd annual meeting of the ADB. Since many of the economies could not achieve a minimum tax yield of 15 per cent of GDP (gross domestic product) even before the pandemic, upgrading the internal resources mobilization system is required for the developments, the ADB said in a statement.
"Despite many developing economies having maintained strong and steady GDP growth in recent years, tax yields have not increased proportionately."
Bangladesh is one of the lowest tax-base countries in the APAC region as its tax-GDP ratio is below 10 per cent of GDP.
At a seminar during the annual meeting, ADB President Masatsugu Asakawa said: "I firmly believe that one of the keys to success in achieving the Sustainable Development Goals (SDGs) in a world reshaped by COVID-19will lie in strengthening domestic resource mobilization (DRM) and international tax cooperation (ITC)."
The ADB said the Regional Hub on DRM and ITC will focus on promoting DRM and ITC through close collaboration among finance and tax authorities of developing economies; international organizations such as the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), the World Bank; and regional tax associations.
The COVID-19 pandemic has worsened the situation due to increased pressure on economies' expenditures and a decrease in tax revenue, leaving little room to further increase external borrowing, the ADB said.