Domestic resource mobilization (DRM) has emerged as a major strategic priority in the aftermath of the coronavirus disease (COVID-19) pandemic. It is now more important than ever for the Asian Development Bank’s (ADB) developing member countries (DMCs) to address debt sustainability and to achieve the Sustainable Development Goals (SDGs). Unanticipated increases in public debt because of large fiscal measures to mitigate the impact of COVID-19 and shrinking tax revenues during the pandemic have worsened the fiscal balance and substantially increased public debt in many DMCs. Asia and the Pacific region are falling short on all 17 SDGs. Even before the pandemic, most DMCs recorded relatively weak revenue performance, and tax yields that were rather unstable and unpredictable, with many developing members having a tax-to-gross domestic product ratio below the 15% benchmark. While the role of external finance is crucial in filling the fiscal gaps of DMCs, DRM (SDG 17, Target 17.1)1 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 the economy has a great potential for helping DMCs collect additional revenue for building a prosperous, inclusive, resilient, and sustainable future. However, ITC issues in this region are still lagging. The rate of participation in international tax initiatives, such as the Inclusive Framework on Base Erosion and Profit Shifting and the Global Forum on Transparency and Exchange of Information for Tax Purposes, shows room for improvement.

In this regard, a significant gap in DRM and ITC in this region is the lack of a pan-regional tax community. While there are some important tax communities, they do not provide a platform for strategic policy dialogue, and the coverage of economies are limited.

To fill this gap, the Asian Development Bank (ADB) announced the creation of an Asia Pacific Tax Hub (the Tax Hub) in September 2020. Following this announcement, ADB has officially launched the Tax Hub at the 54th ADB Annual Meeting in May 2021. The Tax Hub is envisioned to serve as an open and inclusive platform for strategic policy dialogue, knowledge sharing, and development coordination among ADB, its members, and development partners.

[1] Sustainable Development Goal 17 (SDG 17 or Global Goal 17) is “Strengthen the means of implementation and revitalize the global partnership for sustainable development". SDG 17 has 19 targets and 24 indicators. Target 17.1 is formulated as: "Mobilize resources to improve domestic revenue collection: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection." Resolution adopted by the General Assembly on 6 July 2017: Work of the statistical commission pertaining to the 2030 Agenda for sustainable development. United Nations General Assembly. Pg. 22.