Alex Cobham ■ A draft UN tax convention: building momentum

A man in a suit holding a UN-labelled folder.

The idea for a UN convention on tax issues is developing what may prove to be an unstoppable momentum.

The Africa Group at the United Nations led the calls in 2019. The UN Secretary-General’s ‘Financing for Development in the Era of COVID-19’ initiative in 2020 identified a UN tax convention among the options for heads of state (at one stage, making it a central recommendation). The same year its position as one of the central policy demands of the tax justice movement was also underlined in the first, annual State of Tax Justice report published by the Global Alliance for Tax Justice, Public Services International and Tax Justice Network.

Then in 2021, the High Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (the UN FACTI Panel) made a UN tax convention one of the key recommendations of its final report. The World Economic Forum too, through its Global Futures Council (to which I’ve contributed), has joined the call. In November, the South Centre – the intergovernmental organisation of lower-income countries – published a briefing by Abdul Chowdhary and our senior adviser Prof Sol Picciotto, detailing a proposal for a framework UN convention on tax.

And now our great allies at Eurodad, supported by the Global Alliance for Tax Justice, have produced a full draft for a UN tax convention.

The Parties to this Convention,
        Conscious of the vital importance of fair, equitable, progressive, transparent and effective tax systems and related domestic resource mobilization for the prospect of States to achieve sustainable development and fulfil international goals, obligations and commitments, including those relating to human rights, environmental protection, equality and the Sustainable Development Goals…
        Determined to scale up international tax cooperation and strengthen efforts to combat tax-related illicit financial flows, including international tax avoidance and evasion…
Have agreed as follows:


It includes a full range of articles covering everything from the comprehensive standards for the ABC of transparency, through to the establishment of negotiations under UN auspices for the taxation of multinational companies. Please do read it here and share your thoughts and comments.

It could hardly be clearer that these reforms of the international governance of tax and financial regulation are long overdue. On corporate tax, the OECD reforms started in January 2019 from the recognition that the arm’s length principle was unfit for purpose, that global taxing rights were unfairly distributed between countries, and that a minimum effective tax rate was needed to end the race to the bottom. The process is still dragging on, despite a 2020 date for delivery, but it is clear that the arm’s length principle will remain in place for almost all profits, that the distribution of taxing rights will become if anything more unfair, and that the minimum tax rate is not only very low but may also be ineffective.

The difficulties of applying sanctions in light of Russia’s invasion of Ukraine, meanwhile, has highlighted the abject failure of current standards of financial transparency including the identification of the ultimate beneficial owners of companies and all other legal vehicles. Here the OECD-linked FATF has failed to create effective standards or to apply them fairly to major OECD members in particular.

Over the coming months, the Tax Justice Network will be convening a series of policy discussions around these issues. With partners and policymakers from around the world, we will aim to shed further light on these questions, to draw together more detailed analysis of the solutions and to build the momentum for the necessary changes. (Get in touch if you’d like to be involved!)

For now, we commend the great work of Eurodad in compiling this impressive draft UN tax convention, and look forward to the coming dialogue.

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