Published by Eurodad here.
By Tove Maria Ryding, Tax Justice Policy and Advocacy Manager at Eurodad
The initial timid steps on the long road to a UN Convention on International Tax Cooperation were taken last month as government negotiators, civil society, trade unions, academia and business representatives met in New York for the first rounds of substance negotiations from 4-15 August.
The first week was clearly marked by a slightly nervous “first date” atmosphere among the many actors in the room, but the Chair had managed to break the ice by week two, and an open and constructive conversation then emerged. However, it is still early days. It is clear that, when it comes to the bigger issues about how the future international tax system should be designed, a number of government tax negotiators are still hesitant to leave behind the deeply flawed and failing – but very familiar – old ways of working.
The big picture – history in the making
From the onset of the negotiations, the opening statements by countries and groups brought important reminders of the historic shift that this process entails. . Speaking on behalf of the Africa Group, Ghana (see UN Web TV – 27:45) stressed that:
“This is not just another meeting. It is the first time in history that the global community – under the auspices of the United Nations – is coming together to design a new international framework convention on tax cooperation, one that is inclusive, one that is just, and one that is driven by shared principles rather than power asymmetries.”
With a reference to the fact that the G7 in June 2025 announced that US based multinational corporations should be exempt from the OECD’s so-called minimum effective corporate tax rate, the Africa Group also underlined that:
“The recent announcement by the G7 to exempt some countries from their commitments under Pillar 2 serves as a powerful reminder of the broken nature of the current tax architecture. It highlights a truth many of us have long known – that the status quo is not only inadequate, it is unfair.”
The group added that:
“The African Group comes to this session with full determination and a deep sense of responsibility. We are not here to replicate old structures or reinforce existing imbalances. We are here to co-create something new. A system that works for all. A framework that levels the playing field. A convention rooted in equity, transparency and the sovereign right of every nation to raise revenue justly from the economic activity that occurs within its borders.”
With a reference to the current “hiring stop” at the United Nations, and the fact that around 20 new positions planned for the UN Secretariat to lead the UN Tax Convention process have still not been hired, the group also stressed that the process must be treated as a priority and that the necessary resources must be provided in a timely manner.
The EU’s position on the UN Tax Convention has been quite unclear at times, and questions have been raised about whether the group supports the process. In this context, it is relevant to note the opening statement delivered by Denmark (see UN Web TV – 33:55), on behalf of EU Member States, which among other things highlighted that:
“For us, this process represents a good opportunity to consider current tax related challenges and to contribute to enhanced tax cooperation at international level.” While continuing to stress the importance of building on previous work by other forums (i.e. the OECD), the group also underlined that:
“We, the member states of the European Union, are looking forward to participating in these sessions, and to working with you towards a successful and substantive outcome.” Following this opening statement, the EU Member States went back to the approach that they have taken in the process, namely negotiating as individual countries rather than as a group.
Tax and sustainable development
One of the first items on the agenda was how a commitment on tax and sustainable development should look in the future Convention. The importance of this issue cannot be overstated – it holds the link to a number of other vital UN agendas, including environmental protection, public services, human rights and the fight against inequalities between and within countries, including gender inequalities.
The Terms of Reference for the UN Tax Convention makes it clear that a central objective of the process is to establish “an international tax system for sustainable development”, and that the future convention should include a commitment on “International tax cooperation approaches that will contribute to the achievement of sustainable development in its three dimensions, economic, social and environmental, in a balanced and integrated manner”. But how should this look in reality?
Unfortunately, as the negotiations progressed, it became apparent that the discussions were only just beginning. As such, many Member States seemed unprepared to provide substantive answers to this question. Some negotiators even highlighted the fact that was obvious in the room: Many governments had sent negotiators that are experts on the current international tax rules, but who are not equipped to discuss the detailed issues relating to sustainable development.
The same was not the case for the over 100 civil society organisations and trade unions – under the coordination of the Global Alliance for Tax Justice – which has sent a joint submission to the process outlining very specific recommendations on the issue of sustainable development. Over 50 representatives of these groups were present in New York , bringing not only expertise on international taxation, but also on issues such as development, public services, human rights, gender and environment. The group also came with clear proposals on how to move forward on the commitments related to sustainable development, including the suggestion to develop a sub-commitment on progressive environmental tax, and developing specific mechanisms to introduce polluter pays taxes on the profits of fossil fuel companies.
But with the government negotiators appearing largely unprepared to dive into the topic, the debate failed to even scratch the surface. However, a strong intervention by the delegate from Cameroon closed the debate, underlining that this issue must be addressed in depth in the Convention, and that the discussion must continue (see UN Web TV, 25:15). The delegate stated:
“We believe that it is essential to move from broad based intentions to targeted commitments that reflect real development priorities – especially for developing countries. In our view, international tax cooperation must do more than align abstractly with the SDGs – it must be purposefully designed to strengthen domestic resource mobilization in ways that directly finance climate adaptation, health systems and education, which to me are the key pillars to sustainable development in vulnerable countries like ours. We also have to incorporate environmental and social justice objectives in international tax rule making such as addressing harmful tax practices that drain revenues from resource rich but infrastructure poor countries. We advocate that sustainable development provisions in the convention include binding commitments to technology transfer and capacity building in tax administrations. Fair treatment in global tax norms that does not penalize countries pursuing innovative or redistributive fiscal policies. In short, sustainable development must not remain a rhetoric pillar. It should be a structural priority embedded in the design, implementation, and review of all instruments under this convention.”
It seems clear that this topic will be paramount at the next formal negotiating session, which will take place in Nairobi in November, and will run concurrently with the climate COP in Belem. Among the issues that are expected to be high on the climate-political agenda is the dire lack of climate finance, which is also an issue that is highly relevant to discuss in the tax negotiations. In addition to the discussion on sustainable development, it is also very interesting that the Africa Group has called for a specific commitment to be developed on the issue of taxation of extractive industries.
Intergovernmental amnesia – Sevilla what?
The discussion on sustainable development reflects a broader problem, whereby UN Member States’ commitments and promises are sometimes quickly forgotten. A little over a month prior to the UN tax convention negotiations in New York in August, the very same governments (albeit not the same negotiators) had met in Sevilla in Spain for the 4th Financing for Development Conference and adopted a decision – the so-called Compromiso de Sevilla – with very specific elements, including on taxation. For example, the Compromiso contains:
– a promise to advance discussions on gender responsive taxation (paragraph 27(g));
– an encouragement towards promoting financing of social protection systems and policies, including floors…” (paragraph 27(i)
– a reaffirmation that “the pursuit and enjoyment of human rights and fundamental freedoms for all, encompassing civil, political, economic, social and cultural rights, which includes the right to development, must be respected, protected and promoted, without distinction or discrimination of any kind.” (paragraph 3)
On the issue of transparency, the Compromiso de Sevilla also included important promises by the UN Member States, including to further evaluate ”the creation of a central public database for country-by-country reports” by multinational enterprises (paragraph 28(f)) and consider ”the feasibility and utility” of a global registry of the real ”beneficial” owners of legal vehicles such as companies (paragraph 28(g)).
It is very obvious that the UN tax convention is a central place to follow up on these commitments. And yet, although some governments, such as Germany, stressed the importance of the Sevilla outcome, there was no point in the discussion where negotiators started a systematic reflection and incorporation of these points into the UN tax convention negotiations. This remains a task for the future.
A feel-good exercise: Taxation of services in the digitalised economy
When it comes to taxation of the digitalised economy there are no longer any illusions about whether the US will cooperate – they clearly will not. In January 2025 – immediately after taking office, President Trump issued a decree to say the US will not implement the OECD tax deal on the digitalised economy. In February, the US walked out of the UN Tax Convention negotiations. However, as long as the major US digital corporations aim to do business in other countries, other countries will also be able to tax them, and several are in fact already doing that through so-called digital services taxes. Since taxation of services and the digitalised economy has been picked as the topic for the first early protocol under the convention, this was a central point on the agenda during the second week of negotiations. And having the US out of the room definitely improved the atmosphere in the negotiating room. In fact, taxation of the digitalised economy became one of the first examples of an issue where both developed and developing countries seemed ready to have an open-minded and constructive conversation.
However, while digital services taxes can provide much welcome extra revenues within the current tax system, civil society organisations in New York underlined that the discussion must not be limited to this. There is an urgent need to consider a fundamental reform of the entire international corporate tax system. However, while the Terms of Reference makes it clear that the convention should include a commitment to deliver “[f]air allocation of taxing rights, including equitable taxation of multinational enterprises”, the discussion about fundamental reforms has so far been slow to kick off among Member States. One key challenge in this context might relate to the fact that many government negotiators in the room are experts on the current international rules, but not necessarily on alternative – more effective and coherent – approaches to global governance.
Disputed dispute resolution mechanisms
The shortcomings of the current corporate tax system became even more evident when the discussion moved to the topic of the second early protocol – namely prevention and resolution of disputes. Developed countries came to the table with a proposal that raises strong concerns among both developing countries and civil society organisations, namely binding arbitration. While stressing the many concerns related to this approach, civil society called for the discussion to focus on preventing disputes from arising in the first place, and reiterated the urgent need for the transfer pricing system to be replaced by a new,clearer and more effective approach towards taxation of multinational corporations, namely unitary taxation with formulary apportionment.
The risk of fragmentation through protocolisation
The discussions around the two early protocols raised another issue that civil society organisations had cautioned against. Keeping in mind each protocol brings a separate governance system, and that the signatories to each might not include all of the signatories to the convention; there is a risk of introducing new fragmentations to the international tax system by developing too many different protocols. While it was clear during the first week of negotiations that some governments still foresee a relatively large number of protocols, civil society organisations called for the UN Member States to pursue a convention with strong and clear commitments that will allow implementation to be carried out by the future Conference of the Parties – without requiring the adoption of additional protocols.
The collective awareness about the risk of fragmentation hit the room during the middle of the second week, which became one of the most important moments during the negotiating sessions in August. The catalysing factor was a question of how disputes arising under the first protocol (on taxation of services) should be resolved. Should that be under the second protocol (on dispute prevention and resolution)? Or under the convention? Or the first protocol itself? While that question has yet to be resolved, it helped to build awareness about the fact that an overreliance on protocols can create incoherence in the system, and civil society organisations welcomed this as a “very important U-turn” in the debate.
Old habits die hard – including opacity
The formal negotiating sessions in New York became a positive example of inclusive and transparent international tax negotiations, with all of the sessions being livestreamed on UN Web TV, and a broad range of actors able to participate in the discussions, including civil society.
However, while the next formal session in Nairobi in November is expected to once again be open and transparent, the preparatory process is a very different story. In the months leading up to the next session, the negotiators from the Member States are planning to meet regularly in online meetings that are highly confidential and closed to observers, including civil society.
During the sessions in New York, delegates from UN Member States explained that this decision had been made by consensus amongst all of them, and provided a number of different arguments. One of these pointed to the fact that the negotiators in the room are mainly tax experts, who are used to closed-door negotiations at the OECD or in bilateral treaty negotiations, rather than the transparency and accountability that comes with the regular UN system. It was thus considered more comfortable for them to continue working behind closed doors.
Another argument related to the fact that representatives from different ministries might begin intervening if the process becomes too open and transparent. This is a highly concerning argument, especially given the lack of expertise shown by some negotiators in the discussion on tax and sustainable development. This alone exemplifies the need for more government experts on issues such as environment, development, human rights and gender equality to be involved in the negotiations. Furthermore, from the perspective of the legitimacy and inclusivity of the process, it is of great concern that civil society will be unable to follow a substantial part of the discussion, and thus not be in a position to provide informed and timely inputs and responses. In New York, civil society organisations raised strong concerns regarding the way the process had been managed, and, in a strong call on all UN Member States to change this approach, they underlined that “fair, inclusive and transparent tax systems do not get written behind closed doors”.