For low and middle income developing countries globalization means that effective taxation has become an issue of international development cooperation rather than simply one of domestic economic policy. This paper examines the underlying issues which make effective taxation of foreign companies and their own residents’ overseas assets so problematic for developing countries. Initial estimates of the scale of undeclared expatriated profits and assets held overseas, and the income tax that does not accrue to developing countries therefrom, are large in relation to other forms of development finance. International tax cooperation for development (ITCD) essentially involves information exchange between jurisdictions – the full application of existing tax codes – and would not require new institutions (other than for norm setting and monitoring) or tax rate coordination. None the less ITC has potentially fundamental implications for the relationship between rich and poor countries. As a potential source of 'innovative development finance' (IDF) based on an expanded global tax base (not new taxes or increased rates) ITCD could represent a much more sustainable and equitable system than forms of IDF based on the traditional donor-recipient relationship.