When Tax Becomes a Question of Power

For decades, the world’s most valuable exports have not been oil, garments or automobiles. They have been profits. Every year, billions of dollars quietly travel across borders through accounting entries rather than cargo ships, often ending up in jurisdictions where taxes are negligible. While consumers in developing countries click advertisements, buy subscriptions, order products online and generate enormous digital revenues, the governments that provide the markets frequently receive only a fraction of the tax they deserve. In today’s global economy, wealth no longer escapes through hidden vaults alone. It disappears through legal loopholes.
This is why the ongoing negotiations under the United Nations for a new international tax cooperation framework deserve far more public attention than they have received. For nearly two decades, the international tax architecture has largely been shaped by the OECD and the G20 through initiatives such as the Base Erosion and Profit Shifting framework. While these efforts acknowledged the growing problem of multinational corporations shifting profits to low-tax jurisdictions, they also reflected the priorities of wealthier economies that dominate global financial governance. The UN’s latest initiative attempts to challenge that imbalance. Rather than allowing a relatively small group of advanced economies to define the rules, it seeks a more universal framework where developing countries have a stronger voice in determining how international taxation should function.
For countries like Bangladesh, this shift could be transformative. Every day, millions of Bangladeshis use global digital platforms to search information, stream videos, advertise businesses, purchase software or shop online. These interactions generate substantial revenues for multinational technology companies. Yet because of outdated tax rules designed for a physical economy, much of that income has historically escaped the reach of local tax authorities. The proposed reforms would allow countries like Bangladesh to claim a fairer share of taxes from economic activities taking place within their own markets.
The implications extend beyond digital platforms. Stronger international cooperation would also make it more difficult for corporations and wealthy individuals to move profits through artificial subsidiaries established in tax havens. For developing economies struggling with capital flight and limited fiscal capacity, even modest improvements in tax collection could translate into greater investments in education, healthcare, infrastructure and climate resilience.
Yet celebrating these reforms without recognising their limitations would be equally misleading. Global minimum taxation weakens one of the most widely used development strategies among lower-income countries. For decades, governments have competed for foreign investment by offering generous tax holidays, preferential corporate rates and extensive fiscal incentives. Bangladesh has relied on this model through export processing zones, high-tech parks and special investment schemes. Once multinational corporations are required to pay at least a 15% global tax regardless of where they operate, the attractiveness of these incentives inevitably declines.
This forces Bangladesh to confront a difficult but necessary question. If tax incentives no longer provide a competitive advantage, what exactly will? The uncomfortable answer is that the country must compete on fundamentals rather than concessions. Investors increasingly seek reliable electricity, efficient ports, predictable regulations, transparent institutions, skilled workers, effective contract enforcement and digital infrastructure. These factors cannot be created through tax exemptions. They require long-term institutional reforms, public investment and political commitment.
Equally important is administrative readiness. International taxation has become extraordinarily sophisticated. Multinational corporations employ armies of lawyers, economists and tax specialists capable of navigating highly complex financial structures. Detecting profit shifting, auditing digital transactions and enforcing cross-border tax obligations require expertise, technology and international cooperation that many developing tax authorities still lack. Bangladesh’s National Board of Revenue must therefore undergo significant institutional modernisation if it hopes to benefit fully from the emerging global framework.
There is another, less discussed dimension to this debate. Taxation has traditionally been understood as a domestic issue. Citizens pay taxes because governments provide services, security and public goods. But globalisation has steadily weakened that social contract. Companies operate internationally while tax systems remain largely national. As business transcended borders, governance struggled to keep pace.
The current UN initiative represents an attempt to restore that balance. It suggests that international economic integration cannot remain sustainable if its benefits are distributed asymmetrically while its costs are borne disproportionately by poorer countries. A global marketplace ultimately requires rules that are perceived as globally legitimate.
Whether this ambitious vision succeeds remains uncertain. International negotiations are rarely driven solely by principles of justice. Powerful economies continue to protect their own commercial interests, and multinational corporations possess enormous lobbying influence. Significant disagreements remain over implementation, enforcement, dispute resolution and the precise allocation of taxing rights. The path from negotiation to meaningful compliance will almost certainly be long and politically contested. Nevertheless, the conversation itself marks an important turning point. For perhaps the first time, international taxation is being debated not merely as an issue of fiscal efficiency but as a question of economic equity, democratic participation and development.
In an era where digital transactions cross continents within seconds and corporate profits often travel faster than governments can regulate them, tax policy has become inseparable from sovereignty itself. The countries that fail to adapt risk surrendering not only revenue but also their ability to finance independent development.
Global tax reform will not eliminate inequality overnight. It will not erase decades of structural imbalance or automatically redistribute wealth from North to South. But it offers an opportunity to build a fairer international economic order where markets, consumers and governments are more closely connected through shared rules and shared responsibilities.
For Bangladesh, the real challenge is not whether the world changes. It is whether the country is prepared to change with it. If this reform encourages stronger institutions, smarter governance and a transition from tax competition to productivity competition, its greatest contribution may not be the additional revenue it generates. It may be the opportunity it creates for countries like Bangladesh to redefine development on terms that are more sustainable, more resilient and ultimately more sovereign.
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The writer is an academic, journalist and political analyst. He can be reached at [email protected]