State Sovereignty and Global Tax Governance: The Integration of Islamic Distributive Justice within International Economic Law

Anang Ma’ruf (UIN Syarif Hidayatullah Jakarta, Indonesia)
Fitrah Khairunnas (UIN Syarif Hidayatullah Jakarta, Indonesia)

Siyasah Dusturiyah: State Law Review
Vol. 1 No. 2 (2025): Siyasah Dusturiyah: State Law Review

The structural expansion of the digital economy precipitates a severe normative crisis within international economic law by eroding territorial fiscal sovereignty and entrenching base erosion and profit shifting. Current global tax governance spearheaded by the Organisation for Economic Co-operation and Development exhibits an acute distributive justice deficit, disproportionately subordinating market jurisdictions in the Global South under asymmetric soft law compromises while secular redistributive frameworks remain conceptually deadlocked. This study critically investigated the epistemic clash between state sovereignty and multilateral digital taxation, evaluating whether non-Western constitutional ethics can rectify these structural imbalances. Employing a doctrinal legal research methodology integrated with conceptual and statutory approaches, this research scrutinized contemporary multilateral treaty drafts alongside domestic responsive statutes through deductive syllogism. The analysis revealed that the Two-Pillar architecture systematically marginalizes developing economies by restricting reallocation to fractional residual profits and coercively invalidating legitimate unilateral digital levies. Furthermore, the findings established that Islamic constitutional jurisprudence—specifically through public fiscal governance doctrines and the overarching tenets of Islamic law—furnishes an imperative normative foundation to overcome this impasse. Rather than operating as private ritualistic philanthropy, principles forbidding wealth concentration and manipulative transactional ambiguities legally invalidate structural market exploitation. Consequently, this study definitively asserts that integrating Islamic distributive justice into binding multilateral conventions transforms global taxation from an instrument of neoliberal capital retention into an enforceable mechanism of equitable economic redistribution. Prescriptively, this epistemological integration establishes legitimate legal defenses for developing market states to preserve jurisdictional sovereignty, eradicate predatory tax competition, and guarantee universal welfare.