I think the problem is from the quote you mark to each variable in sub. I have modified a little bit to your code and test print, it works, please try:

use XML::Twig;
use Data::Dumper;

my $xml=$ARGV[0];
my $tag_name=$ARGV[1];
my $att_name=$ARGV[2];
my $att_value=$ARGV[3];
my $tag_text=$ARGV[4];
my $twig = XML::Twig->new(twig_roots => {$tag_name =>  \&select_change
+},);
$twig->parsefile($xml);
$twig->print;
$twig->flush;

sub select_change
{
    my($twig,$tag_name)=@_;
    if ($tag_name->att($att_name) =~ $att_value)
    {
        $tag_name->set_text($tag_text);
    }
}
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