Over $1 billion is lost everyday to tax abuse by the rich and multinational corporations, a result of a broken international tax system. The current system prevents countries, especially those from the Global South, from accessing the resources urgently needed to deliver development, public services, climate action, human rights, and gender equality.
“Tax policy is not just a technical question but a political question. How do we address inequalities and stop poverty? In this way, the political molds the technical. We must ask, do we want to continue down this path or create a new one?” questioned Adrian Falco, Coordinator of Red de Justicia Fiscal de América Latina y el Caribe.
Now, the global tax rules are undergoing a major overhaul as the negotiations advance for a UN Framework Convention (UN Tax Convention) and two early protocols. From August 4 – 15 countries are meeting at the UN Headquarters in NY for the first two negotiating sessions on a legally-binding global tax treaty. This is historic: it is the first time that all UN Member States can negotiate the global tax rules on an equal footing. For decades, global tax rules had been shaped by a framework that favoured wealthy nations, often excluding countries in the Global South from meaningful participation and decision-making. Then, in 2023, the Africa Group, with the support of the G77, tabled the UN resolution which began the process for a UN Tax Convention. These negotiations are an opportunity to break from the dominance of exclusionary decision-making spaces like the OECD, and move towards a framework where all UN Member States can participate as equals.
“Essentially the goal for Global South countries is first to transform the governance of international tax, moving it away from the OECD, to make it more equitable and make it more inclusive. Then, secondly, it is to transform international tax rules so that there’s a fair allocation of taxing rights between developed and developing countries,” shared Everlyn Muendo, Policy Office at Tax Justice Network Africa, on the negotiations.
From now until mid-2027 countries will come together to develop an inclusive, fair, transparent, and effective international tax system. Last year the UN General Assembly adopted the mandate for the negotiations, the Terms of Reference, which includes many of the core demands needed for a fair international tax system. The mandate is ambitious: combatting tax abuse, taxing the rich and multinationals, curbing illicit financial flows, advancing sustainable development, and establishing a fairer distribution of taxing rights across countries.
“We have high ambition from the Terms of Reference. Now that we have the mandate it is the time to do the work,” commented Tove Maria Ryding, Tax Justice Policy and Advocacy Manager at Eurodad.
Looking to the August Negotiations
Ahead of the August negotiations, governments have begun initial preparations on the three negotiating workstreams on the framework convention and two early protocols: Workstream I on the framework convention; Workstream II on the first early protocol, taxation of income derived from the provision of cross-border services in an increasingly digitalized and globalized economy; and Workstream III on the second early protocol, prevention and resolution of tax disputes. In July, governments and stakeholders shared inputs on the three workstreams, illustrating key issues in play in August.
To stop tax abuse and ensure countries have access to their own tax base, a fair allocation of taxing rights and the need to move past the transfer pricing system have been key issues. “Across all three workstreams, there is a strong recognition that this transfer pricing system is causing chaos and conflict. It is not a fair allocation of taxing rights and it’s not effective,” shared Tove Maria Ryding.
Everlyn Muendo expanded upon this, “When looking at moving away from transfer pricing and to a more just system of unitary taxation and formulary apportionment, it is important to also have the building blocks of tax transparency, public country by country reporting, and effective exchange of information.”
Outside of the workstreams, important developments have been made on the need for gender-responsive taxation. The link between tax systems and gender is clear: gender-responsive tax systems are crucial to ensuring that taxation promotes, rather than hinders, equality. “Care work is a public good and there is an urgent need to integrate that concept in tax and fiscal systems to mobilize the economic resources and the political will for a system change. We need negotiators from both the Global South and North who will champion gender equality,” shared Jeannie Manipon, Co-Coordinator of Tax and Fiscal Justice Asia.
In July, governments and stakeholders took part in the 4th International Conference on Financing for Development (FfD4). While the outcome document agreed by countries was largely criticised as failing to meet the ambition needed on issues of debt and climate, important commitments on taxation and gender were agreed-upon by Member States.
“In the FfD4 outcome document, the Compromiso de Sevilla, taxation and gender, as well as tax and the environment, and the need for progressive taxation are explicitly mentioned. Member States’ commitments in Sevilla give a strong basis for the UN Tax Convention negotiations,” added Manipon.
The Global South Leading the Way
“We are moving past this neocolonial approach of needing to capacity-build the Global South and instead recognising the people and governments of the Global South as rightfully having agency,” shared Dereje Alemayehu, Executive Coordinator of the Global Alliance for Tax Justice. In this context, stakeholders across the Global South must engage proactively and constructively in the negotiation process. “The unity and solidarity of the G77 is critical. We saw that in the negotiations for a Terms of Reference, the unity of the G77 led to a historic outcome and made possible the start of the negotiations.”
Building broad public awareness and mobilizing support will be essential to ensuring that the UN Tax Convention reflects the needs and aspirations of historically marginalized nations. The work within each region to mobilise governments and build ambition for the UN Tax Convention is crucial.
“Here, we have the Platform for Tax Cooperation in Latin America and the Caribbean which is an important space for countries to exchange experiences, learn from each other, and create common positions as a block,” explained Adrian Falco. It offers a space for both civil society and governments to engage and enhance ambition.
An Opportunity for Change
As we look to August, Dereje Alemayehu commented upon the role of civil society: “We must keep the ambition and the momentum intact. As civil society, we have to focus on the key issues in our respective countries to influence the position of our negotiators. And, as a movement, we must work to influence the negotiations themselves.”
Now, as governments and stakeholders gather for the first two weeks of August, the importance of this moment is high, and the ambition must match it. Jeannie Manipon, summarised, “We stand at the threshold of momentous change where the possibility of overhauling the international tax system is within reach as the member states commence negotiations for the Framework Convention.”
Watch the full conversation here in English, Spanish, or French: