Smart reforms seen to boost tax collection efficiency

Despite facing a modest decline in its tax-to-GDP ratio, the Philippines remains ahead of many regional peers in tax revenue collection, signaling strong potential for improvement through targeted reforms.

The Organization for Economic Co-operation and Development (OECD), in its Revenue Statistics in Asia and the Pacific 2025 report, said the country’s tax effort stood at 17.8% of GDP in 2023—slightly lower than the previous year’s 18.4%, and below the Asia-Pacific average of 19.5%. Still, the Philippines ranked higher than major Southeast Asian economies, including Thailand, Vietnam, and Malaysia.

The bulk of the Philippines' tax revenues in 2023 came from value-added taxes and other consumption-based taxes, together comprising over 41% of total collections. Non-tax revenues also showed improvement, rising to 2% of GDP.

Citing its 2023 performance, the OECD acknowledged that property income—primarily earnings from the Bureau of the Treasury—contributed over half of the country’s non-tax revenue, underlining the fiscal system’s diverse revenue streams.

Amid global calls for more efficient fiscal systems, the Asian Development Bank (ADB) emphasized that “smart enforcement” and the use of big data and machine learning can unlock revenue from hard-to-tax and informal sectors. The strategy involves prioritizing high-risk areas and reallocating enforcement to boost returns.

The ADB highlighted digital tools such as e-invoicing and e-payments, simplified taxpayer registration, and data-driven audits as key to modernizing tax collection. These are seen as instrumental in expanding the Philippine tax base, strengthening compliance, and accelerating sustainable development goals.

With growing consensus around digital reforms and the Philippines outperforming several ASEAN neighbors, analysts suggest the country is well-positioned to raise its tax effort through innovation and targeted policy shifts.