The Impact of Geopolitical Conflicts on Global Tax Policies
By Filipa Correia and Alessandro Valente – Co-Chairs of IAFEI International Tax Working Group | Crowe Global & Crowe UAE
In today’s increasingly unstable geopolitical landscape, conflicts and rivalries among states are reshaping the foundations of global tax policy. Trade wars, sanctions, and regional tensions directly impact tax revenues, investment flows, international cooperation, and the progress of multilateral reforms such as the OECD’s Global Minimum Tax.
How geopolitical tensions affect tax systems
Geopolitical conflicts affect fiscal systems through several key mechanisms:
- Economic sanctions that reduce trade and erode taxable income
- Increased defense spending, requiring urgent tax adjustments
- Disrupted global supply chains, impacting customs and VAT
- Regional blocs, altering harmonization or divergence strategies
These developments strain national tax structures and hamper the ability of states to work together.
A crisis for international tax collaboration?
In times of crisis, national sovereignty and strategic interests often take precedence over cooperation. Multilateral efforts like the global minimum tax may be delayed or weakened. The risk is a fragmentation of the tax landscape, with competing blocs, reduced trust, and growing inefficiencies in the fight against tax evasion, profit shifting, and inequality.
