The share of tax revenues to the Philippine economy has lingered below the regional average of efficient collections, highlighting the need to further improve tax administration and enforcement.

The Organization for Economic Co-operation and Development’s (OECD) Revenue Statistics in Asia and the Pacific 2025 report, published on July 8, showed that the Philippines’ tax-to-gross domestic product (GDP) ratio in 2023 stood at 17.8 percent, down by 0.6 percentage point (ppt) from 18.4 percent in 2022.

The Philippines’ 2023 ratio was also lower than the Asia-Pacific region’s average of 19.5 percent.

The Philippine ratio was likewise only more than half of the 33.9-percent average of the richer nations belonging to the OECD.

But among its Southeast Asian neighbors, the Philippines exceeded Thailand’s 17.1 percent, Vietnam’s 16.8 percent, Singapore’s 13.7 percent, Malaysia’s 13.1 percent, Cambodia’s 13 percent, Indonesia’s 12 percent, Laos’ 11 percent, and Timor-Leste’s 9.6 percent.

“The highest share of tax revenues in the Philippines in 2023 was derived from value-added taxes/goods and services tax (23.2 percent),” the OECD noted, referring to the 12-percent VAT.

“The second-highest share of tax revenues in 2023 was derived from other taxes on goods and services (18.2 percent),” it added.

For the period 2007 to 2023, the OECD noted that the Philippines’ tax-to-GDP ratio reached its peak in 2022, while the lowest was posted in 2010, at 14.1 percent.

Non-tax revenue as a percentage of GDP in the Philippines, meanwhile, rose to two percent in 2023 from 1.8 percent in 2022.

“Property income accounted for over 50 percent of total non-tax revenue in more than half the economies in 2023: Kazakhstan (81.7 percent), Pakistan (77 percent), Mongolia (74.3 percent), Singapore (70.6 percent), Hong Kong (67.1 percent), Bhutan (60 percent), and the Philippines (54.6 percent),” the OECD said.

“Other property income in the Philippines, mainly Bureau of the Treasury (BTr) income, made up 54.6 percent of non-tax revenue” two years ago, according to the OECD.

According to an Asian Development Bank (ADB) policy guide titled “Taxing Informal and Hard-to-Tax Sectors” published also on July 8, “smart enforcement can help governments unlock revenue potential from the informal, noncompliant, and hard-to-tax sectors by enabling targeted, data-driven enforcement strategies that maximize returns.”

“By leveraging big data and advanced analytics, tax authorities can identify high-risk sectors both inside and outside the formal sector,” the ADB said.

“Machine learning algorithms can analyze patterns of noncompliance, prioritize audits, and predict areas where enforcement will yield the highest revenue. This approach allows governments to allocate limited enforcement resources efficiently, focusing on sectors with significant tax gaps or high evasion rates,” the Manila-based multilateral lender added.

In general, the ADB said that revenue authorities, like the bureaus of Internal Revenue (BIR) and of Customs (BOC) in the Philippines, should target their enforcement efforts toward both registered but noncompliant as well as unregistered and noncompliant sectors.

The ADB said that hard-to-tax sectors—like agriculture, small retail, and professional services—are often registered but remain challenging to tax due to cash-based income and high evasion, requiring targeted tools like presumptive taxes, tech-driven enforcement, and tailored compliance.

Beyond smart enforcement, taxing informal and hard-to-tax sectors can be improved through simplified registration, tailored presumptive taxes, and digital tools like e-payments and e-invoicing—supported by ongoing education to boost trust and broaden the tax base, the ADB said.