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Does Trade Openness Affect Taxation? Evidence from BRICS Countries

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  • Md. Mominur Rahman
  • Mohammad Ekramol Islam

Abstract

This study aims to investigate the relationship between trade openness and taxation in BRICS (Brazil, Russia, India, China and South Africa) countries. This study uses a panel dataset for 2000–2021 and employs various econometric techniques such as the cross-sectional dependence test, unit root test, panel regression selection criteria, robustness checking fully modified ordinary least square and dynamic ordinary least square to validate the research model. The study finds that trade openness positively impacts taxation in BRICS countries. Specifically, the study finds that trade freedom, trade ratio and average trade increase the tax-to-GDP ratio and tax collection. Additionally, the study finds that financial development (FDV), financial openness (FON), GDP per capita (GPR) and political stability (PLS) positively impact taxation, but inflation has a negative effect. The results imply support for comparative advantage theory, suggesting that trade openness can positively impact taxation. The findings also highlight the importance of FDV, FON, GPR and PLS for tax revenue collection. From a managerial perspective, the results suggest that policymakers in BRICS countries should prioritize measures that promote trade openness and economic growth to improve their taxation systems.

Suggested Citation

  • Md. Mominur Rahman & Mohammad Ekramol Islam, 2026. "Does Trade Openness Affect Taxation? Evidence from BRICS Countries," Millennial Asia, , vol. 17(1), pages 48-76, March.
    • Handle: RePEc:sae:millen:v:17:y:2026:i:1:p:48-76
    DOI: 10.1177/09763996231199310
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