Taxation is one of the primary means through which a government can finance development, promote equity, and improve governance. However, in developing economies, tax systems are generally characterized by structural weaknesses such as low tax-to-GDP ratios, large informal sectors, administrative inefficiencies, and high levels of tax evasion. The excessive dependence on indirect taxes, coupled with the limited capacity for enforcement, impairs fiscal stability and, at the same time, increases inequality. Besides, globalization makes revenue mobilization more challenging through issues such as transfer pricing and profit-shifting by multinational corporation
This article moves from identifying the problems of taxation in a developing economy to the possibilities of reform. It includes a wider tax base, the introduction of progressive taxation, and the use of digital technologies to facilitate compliance. The paper draws on the reform initiatives in South Asia, Africa, and Latin America, which reflect different strategies for tax reforms and examples of India’s Goods and Services Tax and Africa’s digital reforms in tax administration. The results indicate that efficient taxation is not only about raising revenue but also the foundation of state legitimacy and long-term economic growth