Moody’s Investors Service says that tax reforms in developing Asia Pacific (APAC) economies will help address the narrowness of revenue bases in some countries, but that many governments still face structural barriers to broadening these bases.
The report looks at the extent to which tax reforms are likely to support the sovereign credit profiles of 11 developing Asia Pacific economies that have underdeveloped tax systems. The 11 are Bangladesh, Cambodia, India, Indonesia, Maldives, Mongolia, Pakistan, the Philippines, Sri Lanka, Thailand and Vietnam.
By constraining revenue-generation potential, the narrow tax bases of many of these sovereigns increase their fiscal vulnerability, while also limiting the financial resources available to develop the social and infrastructure services needed for greater economic development.
Some sovereigns are now seeking to initiate reforms to broaden their tax-generation capacity.
