This paper considers issues related to tax, governance and administration through an analysis of aspects of the Chinese, Indonesian and Thai tax systems. It does this in the context of exploring some of the tax challenges and the opportunities that face such rapidly developing countries. The three countries examined in this paper are in many ways typical of others in the ASEAN region and in the broader community of developing nations, notwithstanding their socio-cultural, economic and political diversity. It is argued that key lessons can be learned from scrutiny of tax, governance and administration in these three countries.The tax system is a critical component in the governance and legitimacy of any nation, and in turn governance and legitimacy are essential to guarantee rule compliance. The purposes of the tax systems in China, Indonesia and Thailand are, rather obviously, no different from the purposes of most tax systems, whether in developed or in developing nations. In the first place they are clearly there to raise sufficient revenue to permit their governments to discharge their many spending responsibilities, whether on development, social welfare, education, defence, infrastructure building or whatever else. But tax systems are much more than simply revenue raising mechanisms. They also have a role to play in tackling income inequality, fostering economic growth and well-being and in building state legitimacy.Indeed, tax systems are a fundamental component of any attempt to build nations. As Brautigam has noted, “(t)axes underwrite the capacity of states to carry out their goals; they form one of the central arenas for the conduct of state-society relations, and they shape the balance between accumulation and redistribution that gives states their social character”. In short, taxes build capacity (to provide security, meet basic needs or foster economic development) and they build legitimacy and consent (helping to create consensual, accountable and representative government).The aim of this paper is therefore to consider aspects of the complex inter-relationships of tax, governance and administration in order to establish how China, Indonesia and Thailand are performing in these areas and to identify what other ASEAN and similar developing nations might learn from the experiences in the three countries under consideration.The paper is structured as follows. Section 2 expands upon the critical role that taxation plays and shows, in the three countries, how its revenue contributes to GDP and also how it relates to the level of tax effort or capacity. This analysis forms the basis for the development of a series of key challenges relating, inter alia, to institutional quality and tax administration. Section 3 then discusses governance issues, including aspects of institutional quality, in broad terms and then more specifically in relation to the effectiveness of government and the control of corruption, again with particular reference to the three countries that are the focus of this paper. Section 4 then considers aspects of the efficiency and effectiveness of tax administration in China, Indonesia and Thailand, contrasting the experiences in those countries with performance in the broader ASEAN region and in the OECD. Concluding comments, including identification of the challenges that confront countries such as China, Indonesia and Thailand along with the opportunities that may be available, are contained in Section 5
