06/05/2014 - Tax revenues are currently rising as a proportion of national incomes in Indonesia and Malaysia but continue to be substantially lower than for Korea, Japan and other OECD countries, according to a new OECD report.

Revenue Statistics in Asian Countries: Trends in Indonesia and Malaysia provides for the first time cross-country comparisons between Asian economies and between Asian and OECD economies.

Increased domestic resource mobilisation is widely accepted as crucial for countries to successfully meet the challenges of development and achieve higher living standards for their people. Additional tax revenues enable governments to simultaneously strengthen infrastructure development, enhance the quality of education and promote social cohesion.

 

Key findings

• Since 2000, tax to GDP ratios have increased by 4 percentage points in Indonesia (9 to 13%) and 3 percentage points in Malaysia (14 to 17%). However, the latest 2012 figures are significantly lower than those for Korea (27%), Japan (29%) and the OECD average (34.6%).
• Taxes on incomes and profits are particularly important in Indonesia and Malaysia, representing 44% and 71% of tax revenues in each country, respectively. This compares with 30% in both Japan and Korea and 34% for OECD countries. 
• Consumption taxes represent 46% of revenues in Indonesia and 21% in Malaysia compared with 31% in the OECD. The collection of social security contributions in both these Asian countries is much smaller than in the OECD. 
• The findings in the report suggest that both Indonesia and Malaysia could benefit from some tax reforms. For example, the fuel subsidy in Indonesia and the GST (goods and services tax) in Malaysia could be reviewed, particularly as their economies continue to grow and experience structural transformations such as the expanding so called “middle classes”. 

Further information

More information is available at www.oecd.org/tax/tax-policy/revenue-statistics-in-asian-countries.htm.

For further information, journalists should contact Maurice Nettley (+33 1 45 24 9617) from the Centre for Tax Policy and Administration, Kensuke Tanaka (+33 1 45 24 8733) from the OECD Development Centre or Lawrence Speer (+33 1 45 24 9700).