2025 Revenue Report Reveals Tax-to-GDP Ratios Fell in Latin America and Caribbean

A newly released report shows that tax revenues in Latin America and the Caribbean (LAC) declined in 2023 as a share of gross domestic product (GDP), driven by economic deceleration and falling global commodity prices. According to the Revenue Statistics in Latin America and the Caribbean 2025 report, the average tax-to-GDP ratio across the region dropped to 21.3%, down from 21.5% in 2022 and slightly below pre-pandemic levels in 2019.

The findings, unveiled during the 37th Regional Fiscal Seminar hosted by the United Nations Economic Commission for Latin America and the Caribbean (UN-ECLAC) in Santiago, provide a sobering overview of fiscal challenges confronting the region’s economies.

“The overall drop in the tax-to-GDP ratio reflects both external economic pressures and internal fiscal dynamics,” noted the report's authors, a collaboration between CIAT, IDB, UN-ECLAC, and the OECD.

Key Findings: Regional Averages and Country Comparisons

The report covers 26 countries and reveals significant divergence in tax performance:

• Brazil maintained the region’s highest tax-to-GDP ratio at 32.0%, comparable to OECD levels.

• Guyana recorded the lowest at 11.6%.

• The OECD average for 2023 stood at 33.9%, underlining the structural revenue gap between LAC countries and more developed economies.

Between 2022 and 2023, 14 countries experienced a decline in their tax-to-GDP ratios. The most pronounced drops occurred in:

• Chile: Down 3.2 percentage points, largely due to a slump in income tax revenues amid lower commodity earnings and higher tax credits.

• Peru: Fell 2.1 percentage points, for similar reasons.

Impact of Falling Commodity Prices

The report identifies weakened commodity prices—particularly for oil and minerals—as a major contributor to reduced tax income. Countries dependent on hydrocarbon and mineral exports saw a marked decline in revenue from these sectors:

• Hydrocarbon-related revenues among the top 10 oil-producing countries in the region dropped from 4.4% of GDP in 2022 to 3.9% in 2023, and are projected to have fallen further to 3.2% in 2024.

• Mining revenues declined from 0.74% of GDP in 2022 to 0.59% in 2023, with further reductions to 0.5% in 2024.

These drops significantly impacted income tax collections, especially in countries where extractive industries are a central economic pillar.

Breakdown by Revenue Type

• Income Taxes: Declined by 0.1 percentage points to 6.2% of GDP across the region.

• Social Security Contributions: Rose by 0.1 percentage points, indicating slight growth in formal employment or compliance.

• Taxes on Goods and Services: Remained stable as a share of GDP, continuing to play a vital role in fiscal structures across LAC.

The report cautions that reliance on indirect taxes, such as VAT and sales taxes, may exacerbate inequality, as these tend to be regressive.

First-Ever Inclusion of Non-Tax Revenues

In a significant development, the 2025 edition of the report includes harmonised data on non-tax revenues—a category encompassing rents, royalties, interest, dividends, and sales of public goods and services. These are often overlooked in fiscal analyses but are crucial for understanding the broader revenue picture.

• In 2023, non-tax revenues averaged 3.1% of GDP across 22 reporting countries.

• Cuba topped the list with 11.6%, while Peru reported the lowest at 0.4%.

• From 2019 to 2023, non-tax revenues fell by 0.4 percentage points on average, including a sharp 0.7-point drop between 2022 and 2023, highlighting their volatility.

Policy Challenges Ahead

The report emphasizes that the LAC region continues to face structural constraints in domestic resource mobilisation. With the global SDG financing gap and increased post-pandemic expenditures, the need for sustainable, equitable, and resilient revenue systems has become more urgent.

The report recommends:

• Broadening tax bases to reduce reliance on volatile sectors.

• Modernising tax administrations to improve compliance and digital transformation.

• Strengthening fiscal transparency and data collection to better target tax policies.

• Leveraging non-tax revenue streams and public asset management to diversify government income.

Next Steps: Regional Collaboration and Global Forums

These findings feed directly into ongoing fiscal policy dialogues ahead of major global forums, including the Fourth International Conference on Financing for Development (FFD4). Policymakers and international institutions are expected to consider tailored fiscal strategies that reflect the region’s economic structure and development priorities.

The full report, country notes, statistical data, and infographics are available online at http://oe.cd/revstatslac25-en.

As Latin America and the Caribbean navigate a period of economic uncertainty and shifting global markets, robust and adaptive fiscal systems will be essential. The Revenue Statistics in Latin America and the Caribbean 2025 report serves as both a mirror and a roadmap—revealing current weaknesses while outlining pathways to sustainable revenue generation for inclusive development.