IMF: Anti-tax avoidance reforms could deliver bigger gains for emerging economies

The International Monetary Fund (IMF) has suggested that reinforced anti-tax avoidance measures could result in substantial benefits for emerging market and developing economies. This assertion is found in the IMF's October 2026 World Economic Outlook, which explored how alterations in international tax rules are transforming the competition for multinational investment and profits.

International tax rules have made it simpler for multinational companies to segregate where they declare profits from where they operate, according to the IMF. Stronger anti-avoidance rules are gradually altering this trend, however, due to technological advancements and the increasing use of intangible assets like data, patents, software, and trademarks.

The IMF pointed out that international anti-avoidance reforms are increasingly connecting reported profits with the locations where companies carry out genuine investments. As a result, the link between reported profits and economic activity is growing stronger.

Changes in corporate tax rates can have far-reaching effects across borders. A one percentage-point rise in a country's corporate income tax rate, compared to other nations, is linked to a cumulative decline in foreign direct investment inflows equal to about 0.5% of GDP over three years.

Anti-avoidance measures can assist countries in preserving fiscal space and generating notably large gains for emerging market and developing economies, which often depend heavily on corporate income tax revenue to finance infrastructure, education, healthcare, and other growth-promoting investments. Nigeria is a particularly pertinent case, where tax compliance and revenue mobilization concerns have been part of the ongoing tax reform discussion.