Domestic resource mobilization (DRM) has emerged as a major strategic priority in the aftermath of the coronavirus disease (COVID-19) pandemic both for the Asian Development Bank (ADB) and its developing member countries (DMC). It is now more important than ever for our developing member countries (DMCs) to address debt sustainability and to achieve the Sustainable Development Goals (SDGs). Unanticipated increases in public debt because of fiscal measures to mitigate the impact of COVID-19 and shrinking tax revenues during the pandemic, followed by the disruption in global supply chains caused by the Russian invasion of Ukraine have worsened the fiscal balance and substantially increased public debt in many of our DMCs. Many DMCs in the Asia Pacific region have a tax-to-GDP ratio below the 15% benchmark that is considered the minimum level needed to achieve sustainable growth. This region is falling short on all 17 SDGs. While the role of external finance is crucial in filling the fiscal gaps of DMCs, DRM (which is included as SDG Goal 17) is the indispensable foundation for achieving all the other SDGs and for supporting a strong, inclusive and green recovery.

International tax cooperation (ITC) can also play a key role in assisting DMCs to work together to close the tax loopholes exploited by aggressive tax planning and combat tax evasion. The consensus-based Two-Pillar solution to address tax challenges arising from digitalization of economy has great potential for helping DMCs collect additional revenue for building a prosperous, inclusive, resilient, and sustainable future. However, international cooperation on tax issues in this region is still lagging. The rate of participation in international tax initiatives such as the Inclusive Framework on Base Erosion and Profit Shifting (BEPS IF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) shows room for improvement.  

ADB officially launched the Asia Pacific Tax Hub (APTH) at the 54^th ADB Annual Meeting in 2021. The APTH serves as an open and inclusive platform for strategic policy dialogue, knowledge sharing, and development coordination among ADB, its member countries, and development partners. The APTH Secretariat organized the first High Level Regional Tax Conference (HLRTC) that underscored the importance of DRM in achieving the SDGs and the core role of the APTH in the taxation agenda in Asia and the Pacific. Held in November 2021, the event brought together officials of tax policy and administration agencies from ADB members, senior representatives of development partners (IMF, OECD, and World Bank), ADB staff, and other stakeholders who presented their experiences and brainstormed in plenary and breakout sessions. This knowledge exchange on reform experiences highlighted the challenges governments face in domestic resource mobilization and identified the possible support needed for future tax system reforms.