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Tax is never neutral. It tells us whose wellbeing is protected and whose dignity is treated as negotiable. Around 500 million women and girls worldwide lack the facilities needed to manage menstruation safely. In too many countries, the products required to bridge that gap are still treated as taxable commodities, folding gender inequality into the architecture of public finance.
Ethiopia’s decision to charge a 15 percent value-added tax (VAT) on menstrual products, a flat levy paid by rich and poor alike and layered on top of import duties, shows exactly where women’s health sits in the hierarchy of fiscal priorities.
VAT is the country’s workhorse tax, collected from households regardless of income. When a system relies this heavily on regressive consumption taxes, those with the least end up paying the most, proportionally, because lower-income households must spend a larger share of what they earn simply to get by. Taxing menstrual products compounds that imbalance.
In reality, the revenue raised from menstrual products is a rounding error. Ethiopia loses far more to practices by corporations and wealthy elites that quietly drain public coffers. Illicit financial flows alone swallow an estimated 10 to 30 percent of government revenue each year. Multinational profit shifting, where companies report profits outside Ethiopia instead of where real economic activity occurs, costs the country more than US$1.1 billion annually.
The contrast matters. Capital faces no such restraint. Investors who expand production can secure full income tax relief and customs duty exemptions. Many sectors enjoy years-long tax holidays, with exporters granted even more. When the state wants to make something affordable for powerful actors, it knows exactly how to do it.
What is spared at the top is recovered in the price of everyday goods. When menstrual products are priced out of reach, only a minority of women and girls can afford to use them consistently. Others are pushed toward rags, newspapers, or ash-filled cloths out of necessity, putting their health in jeopardy.
This is the price of political convenience: instead of confronting systems that drain billions, the burden is passed onto women and girls.
Period poverty is widespread. In Ethiopia, particularly in rural areas, menstruation remains a barrier to school attendance. UNESCO estimates that one in ten girls in sub-Saharan Africa misses school during her period. Over time, losing days of learning each month compounds, narrowing girls’ educational and economic futures.
This is not simply a health or education issue. More broadly, the taxation of menstrual products reveals how social reproduction is treated in Ethiopia. The labour of caring for children, preparing food, supporting elders and sustaining households is essential, yet it is widely assumed to be women’s responsibility alone. This invisible work underpins the entire economy, but it remains largely absent from national economic planning.
Tax policy makes that invisibility concrete. The state under-taxes capital while taxing the goods women need to manage both their households and their own bodies. In periods of conflict, displacement, inflation and rising debt obligations, women are expected to stretch their labour even further, absorbing economic shocks without protection or compensation. When menstrual health is taxed, it reinforces a fiscal logic that treats women’s unpaid labour as an inexhaustible resource, available to subsidise public shortfalls.
Ethiopia already makes clear decisions about which goods are too essential to tax. In July 2025, the Addis Ababa Revenue Bureau removed value-added tax on unprocessed vegetables such as onions and potatoes to ease household food bills during a period of high inflation. Officials framed the move as necessary relief for consumers facing rising prices.
Yet menstrual products, which are just as essential, remain fully taxed.
This reflects a wider pattern. Ethiopia relies heavily on value-added tax, a consumption tax paid at the point of purchase, to fund its budget. In 2023–24, VAT collections exceeded 200 billion birr, making it the single largest source of tax revenue. Taxes on income, which rise with earnings, raised roughly half that amount. When a tax system depends more on what people buy than on what they earn, households with the least income end up paying a larger share of their resources in tax, simply because they have little room to save. That dependence is reinforced by generous tax incentives and preferential treatment for large firms, including multinationals, which drain revenue at the top and leave consumption taxes to do the fiscal heavy lifting.
A standard defence of VAT systems holds that exemptions create complexity, and that a uniform rate is more efficient, with revenues later redistributed to offset harm. In theory, that argument rests on the existence of effective public transfer schemes. In practice, no such mechanism exists in Ethiopia to guarantee that women and girls who cannot afford sanitary products will be compensated. Designing and targeting a separate cash transfer programme would be more administratively complex than simply removing VAT at the source.
Even if those practical hurdles were resolved, the case would remain unconvincing. The revenue gained from taxing menstrual products cannot justify the cost imposed on dignity, health and participation. In this case, the efficiency argument collapses under the weight of its own assumptions.
Removing tax from menstrual products would simply extend a principle Ethiopia already applies: when a good is essential to daily life and taxing it harms those with the least, the tax can be lifted. Ethiopia already adjusts its tax system when it recognises that a product matters for public wellbeing. What is missing is the political decision to treat menstrual health in the same way.
Kenya took a groundbreaking step in 2004, becoming the first country in the world to remove VAT on menstrual products. Since 2017, it has also provided free pads to girls in public schools through a national programme. Rwanda followed in 2019, removing VAT on sanitary pads and supporting local production to improve affordability and access. That same year, South Africa eliminated VAT on menstrual products.
Ethiopia, which often presents itself as a regional leader, is falling behind. It has every opportunity to change course, and the delay has become a form of structural violence, reproduced each month by a tax system that treats women’s needs as expendable.
The debate is not about affordability. Ethiopia loses far more through tax incentives, exemptions and profit shifting than it ever gains from taxing menstrual products. The real question is why a product so fundamental to dignity and health was treated as taxable in the first place. That question exposes a cruel irony: the very bleeding that makes human life possible is treated as fair ground for financing the state.
Abolishing the period tax will not fix everything, but it would mark a necessary departure from a fiscal system that treats women’s biological necessity as a legitimate source of revenue.
Tax policy is a mirror. What does Ethiopia want to see reflected back?
My mother was the first woman in my family to go to university.
She worked. A lot.
She raised her children alone. She cleaned, cooked and cared. She endured long commutes, low wages and systems that never quite worked in her favour.
I grew up in Brazil, where this was common. In most families around me, it was mothers, grandmothers and aunts who held everything together.
Now, working with colleagues from other parts of the world, I hear stories that sound so similar they feel like déjà vu. Different accents. Different policy settings. Different continents. The same pattern. Women step in where systems fall short. Women compensate for what states fail to provide.
This week, as we mark International Women’s Day, gather at the Commission on the Status of Women, reflect on the follow-up to the Beijing Declaration and Platform for Action and the Bogotá Declaration, I keep thinking about those women.
Because when we talk about women’s rights, we are talking about them. And when we talk about tax justice, we are talking about changing the conditions that shape their and our entire lives.
What Brazil’s tax system means for women
Through the shadow report to the Committee on the Elimination of Discrimination against Women in 2024, in collaboration with Inesc, Latindadd and RJFALC, we examined how Brazil’s tax and fiscal policies affect women’s rights.
Brazil has one of the most regressive tax systems in the world. It relies heavily on indirect taxes, which take a larger share of income from people who earn the least. The households most affected are often headed by women, especially Black women.
These reductions were framed as necessary adjustments, as if they were neutral or unavoidable. But budgets are never neutral. They reflect what a government chooses to prioritise and what it is willing to reduce. While social spending was constrained, tax incentives and exemptions that benefited higher-income groups remained largely intact.
These budget decisions shape whether social support is accessible, whether systems respond and whether women are left to manage alone. For women in lower-income households, the consequences are immediate.
Brazil is not an isolated case
In 2025, we expanded this strand of research in Bled dry, in collaboration with AIDC and CESR. This time we analysed social impacts of tax abuse, illicit financial flows and debt across African countries. The pattern felt painfully familiar. Different histories and institutions, but the same underlying model of revenue loss, debt pressure and weakened public systems.
In parts of Africa, one in five infants miss out on basic vaccines. By adolescence, millions of girls are already out of school. The majority of working women are concentrated in informal employment.
Different countries. Same logic.
Revenue is lost to tax abuse. Debt pressures intensify. Public services weaken. Women absorb the impact across generations.
Why we are mobilising through the Global Days of Action campaign
The global gender gap is projected to take more than a century to close at the current pace. That is far too long to ask women to keep compensating for broken systems. This is why we are part of the Global Days of Action on Tax Justice for Women’s Rights.
This year’s theme, “Tax Justice for the Human Right to Care”, speaks directly to realities many of us recognise. Care is not a private burden to be managed inside families. It is a public responsibility.
Care requires investment. Investment requires revenue. Revenue requires fair taxation.
As the Commission on the Status of Women convenes and we reflect on the Beijing Declaration and Platform for Action, governments are also negotiating the future of international taxation through the UN framework convention on international tax cooperation. Decisions are being made about transparency, taxing rights and whether multinational corporations and the wealthiest individuals will finally pay their fair share. For the first time, these negotiations are unfolding in a space that aspires to broader global legitimacy and inclusivity, with countries from the Global South participating on more equal footing in shaping international tax rules.
Those decisions will shape whether women continue to carry systemic failures or whether states build strong public care systems that redistribute responsibility instead of concentrating it at home.
International Women’s Day is often framed as a celebration. For us, it is also about accountability.
Thirty years after Beijing, we cannot speak about gender equality without speaking about how governments raise and spend money. We cannot talk about empowerment while allowing tax abuse to continue. We cannot demand care without funding it. As negotiations toward the UN tax convention continue this year, this is a once in a generation chance to reshape global tax rules so they support the commitments made to women’s rights decades ago. Tax justice will not solve everything. But without it, gender equality remains underfunded and fragile.
So this week, as movements mobilise, we are clear about what this work means.
It means making taxes work for women.
In Brazil.
Across Africa.
Everywhere.
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This guest blog was written by Nicolás Brennan Hernández, an economist specialising in international trade and political economy. The views expressed are those of the author.
Malta is one of a number of European Union member states that actively undermine their neighbours through the provision of financial secrecy and opportunities for corporate tax abuse. As our Corporate Tax Haven Index shows, Malta has ensured that its headline corporate tax rate of 35% translates for multinationals into an effective tax rate of just 5%. We are pleased to share the following analysis of Malta’s corrupting approach and the challenges it now faces.
This archipelago of 500,000 people, scattered across 316 square kilometres of Mediterranean limestone, hosts €479.7 billion in foreign investment, equivalent to more than 20 times its yearly GDP. Perched in the centre of the Mediterranean, Malta has served as a waystation since Phoenician merchants first recognised its strategic value. It continues this role, only now serving as a convenient stopover for corporate profits fleeing European tax collectors and illicit capital evading oversight.
In a world where the European Union is searching in every nook and cranny for the funds to pay for rearmament, an ageing population, the energy transition, and to compensate those affected by American tariffs and Chinese exports, the matter of taxation and where funds go to avoid it is as important as ever. Jurisdictions that allow corporations to evade taxes are generally frowned upon, but some attract more criticism than others.
As an Irishman abroad in the EU with a passion for policy debates, I have grown accustomed to apologizing for Ireland’s liberal approach to corporate taxation. It is an approach designed to attract hundreds of billions of capital flows, but that isn’t always reflected in average wages. Its Gross National Income (GNI), which looks solely at the income generated on the island, is almost half of its nominal GDP. Yet Ireland attracts disproportionate criticism. Walk down Grand Canal Dock and you’ll find genuine European headquarters. Luxembourg and the Netherlands have proven equally adept at carving profitable niches in the race toward rock-bottom rates. There is, however, a jurisdiction that makes all three look restrained: the Republic of Malta. The country makes Ireland’s GDP iffy statistics look like shoplifting compared to the Louvre robbery.
The numbers are an affront to credulity. Though Malta accounts for 0.1% of EU-27 GDP and population, and is the smallest member state on both counts, its inward FDI stock reached €479.7 billion in December 2024. For context, Spain, with 100 times Malta’s population and nearly 70 times its GDP, hosts €917 billion, less than double Malta’s haul. Against a GDP of roughly €20 billion, that €479.7 billion yields a ratio exceeding 2,300%, compared to the EU average of 48.5%.
Walk through Valletta’s ancient streets, and you won’t find the gleaming towers or bustling headquarters this half-trillion might suggest. This is because the companies exist solely on paper, channeling revenues and assets from other jurisdictions through Special Purpose Entities (SPEs). 98.2% of Malta’s inward FDI and 99.4% of outward flows derive from financial and insurance activities. Even the European Central Bank itself states bluntly that special purpose entities, the companies established on paper in Maltese soil, “dominate external accounts” with “very limited impact on real economic activity.”
At first glance, Malta’s tax regime appears, if anything, burdensome. The nominal corporate tax rate sits at 35%, exceeding Spain (25%), Italy (24%), and dwarfing Ireland’s 12.5%. Yet this façade conceals the mechanism that matters: Malta’s tax refund system for non-residents. While Maltese-owned companies face the 35% rate, those with non-domiciled shareholders pay just 5%, the EU’s lowest effective rate, and less than half of Ireland’s demonised 12.5% rate.
The policy is simple. Companies remit 35% to Maltese authorities, and shareholders then receive tax credits equal to the corporate tax paid. For non-residents, Malta permits refunds of 86% of corporate tax remitted. What began as 35% drops to 5%, and occasionally to zero, for royalties and capital gains. Easy money. Aside from hotels, pharmaceutical companies, and gaming offices, however, the multinational headquarters taking advantage of the regime are nowhere to be seen. Why?
Well, Maltese law doesn’t require physical presence. Under 2019 regulations, companies need only maintain a registered office, hold one annual board meeting on Maltese soil, and retain local records. Directors need not be residents. Staff need not be nationals. Office space can be shared among dozens of entities. The bar for “adequate” presence is nearly subterranean.
Surely someone must supervise the €30 billion that enters and leaves annually? Yes: the firms’ own representatives, of course. In practice, this means the same individual servicing a dozen letterbox companies from a shared Valletta office bears personal responsibility for detecting suspicious patterns in billion-euro flows passing through structures that exist primarily to obscure ownership. The Financial Intelligence Analysis Unit (FIAU) supervises from a distance; day-to-day monitoring rests with professionals whose business model depends on not asking inconvenient questions. For those who missed the 2008 financial crisis or found its lessons on self-regulation insufficiently clear, Malta offers a refresher course. The lack of oversight, alongside a significant online gambling sector, has led the island to develop a reputation for money laundering and “tax optimisation.”
These schemes did not pass unnoticed, however. The consequences arrived in June 2021, when the Financial Action Task Force (FATF) greylisted Malta for strategic deficiencies in combating money laundering and terrorist financing. FATF’s 2019 evaluation found chronic enforcement failures, including that money laundering investigations weren’t priorities, teams lacked resources, and authorities couldn’t investigate financial crimes involving corruption.
The permissiveness surrounding money laundering and corruption would reach a boiling point in 2017. Investigative journalist Daphne Caruana Galizia, whose Panama Papers reporting exposed the “intimacy between big business and politics,” was assassinated by car bomb in October of that year. An official government inquiry concluded the state bore responsibility for creating an “atmosphere of impunity.” The greylisting was a belated acknowledgement that Malta had become a jurisdiction where financial crime flourished under official protection.
The delisting twelve months later proved nearly as controversial. In 2022, FATF declared that Malta had “strengthened its [Anti-Money Laundering] regime,” but some civil society groups were convinced that the progress was meant to assuage FATF’s concerns rather than solve internal deficiencies. Money laundering charges plummeted from 57 in 2021 to 16 in 2023, a decline critics viewed as evidence that reforms “targeted smaller players” while structural issues persisted. More troubling, Maltese courts began overturning FIAU penalties as “unconstitutional,” invalidating hundreds of thousands of euros in fines that had helped convince FATF to delist Malta.
Malta’s National Risk Assessment, published in December 2023 by the very body tasked with improving the country’s reputation, painted a damning picture: only 5% of lawyers and 1% of tax advisors submitted suspicious transaction reports. Advisors handling cross-border planning operated without licensing or fitness checks, and their effectiveness was rated “LOW.” Clearly, while legislation was put in place to improve Malta’s reputation and return capital flows, enforcement remains weak. In spite of it, or perhaps because of it, Malta’s FDI was reaching new heights by 2024.
Malta’s less than thorough approach to financial monitoring was highlighted in its response to EU sanctions following Russia’s invasion of Ukraine. Across Europe, enforcement produced substantial results: Italy seized €143 million, France impounded vessels worth hundreds of millions, and Spain froze assets exceeding €10 billion. In contrast, Malta only identified €150,000 in sanctioned assets, less than the price of a studio apartment. This comes from a jurisdiction that cultivated Russian elites as clients, selling, as recently as 2024, passports to Russian oligarchs with direct involvement in the war in Ukraine, until the EU struck down the law. When a country hosts €479.7 billion in FDI stock, the claim it harbours virtually no sanctioned Russian wealth is highly suspicious. Either Malta’s enforcement proved especially incompetent, or it declined to look where uncomfortable discoveries might lurk.
Defenders might argue Russian capital simply wasn’t a significant share. I would love to verify the claim, but Malta, conveniently perhaps, stands alone among EU-27 members in refusing to report the geographic origin and destination of FDI flows and stocks to Eurostat. While every other jurisdiction publishes detailed breakdowns, Malta’s submissions contain only aggregate totals. This opacity is not oversight but deliberate policy. The ECB notes diplomatically that Malta’s special purpose entities “dominate external accounts,” yet ultimate beneficial owners remain shrouded. Jurisdictions declining to disclose capital sources typically have compelling reasons for doing so.
It is easy to understand Malta’s economic calculus. As intangible as the capital held on the island might be, law offices and financial services firms are thriving, generating high revenues and wages for thousands of workers. The 5% corporate tax rate, while incredibly low by EU standards, helps fund an important share of Malta’s public services, accounting for 21% of government revenue, compared to an EU average of around 10%. Without these arrangements, an island of 500,000 people, devoid of natural resources and with little arable land, would face grim prospects.
Yet economic pragmatism cannot excuse complicity in financial crime. The car bomb that killed Daphne Caruana Galizia in October 2017 illuminated the toxic endpoint of a state captured by interests it’s meant to regulate. Her murder revealed the logic underpinning Malta’s business model: when prosperity depends upon not asking difficult questions about capital flows, those who insist on asking become existential threats.
Moreover, not only is this arrangement morally questionable, but it is far from sustainable. The OECD’s Pillar Two framework, which establishes a global 15% floor, fundamentally alters the calculus that sustains Malta’s model. Countries will be able to tax profits generated within their borders but booked in jurisdictions with a corporate tax rate below 15%. Ireland will weather this transition with its scale, infrastructure, educated workforce and genuine multinational operations. Malta offers none of these. When refund mechanisms reducing effective rates to 5% stop working, capital will evaporate as swiftly as it arrived; capital has no loyalty other than to itself.
Malta will then face a reckoning: what remains when the €479.7 billion in FDI stock leaves as easily as it entered, when nameplate companies vanish, and Valletta office buildings stand vacant? The Mediterranean sun will continue shining on ancient stone, and the Maltese people will remain. But the pass-through economy, that extraordinary construction of legal architecture and regulatory gymnastics, cannot survive contact with a world that no longer has a need for it.
Illicit cash flows might continue being laundered on the island, but after the greylisting, the country is unlikely to loosen enforcement much further. If it continues in its current trajectory, it will isolate itself further from an EU that already has little need for an island encouraging Russian oligarchs to purchase Maltese citizenship and firms to avoid paying taxes in other EU states. In the name of European solidarity, ethical financing and economic sustainability, it will need to pivot before it is left to dry out in the Mediterranean sun.
We’re pleased to share this guest blog from Jason Ward, Centre for International Corporate Tax Accountability and Research, CICTAR. This report on Starbucks provides a great example of how the current global tax system is abused in order to shift profits from producer countries in the Global South to multinational corporations headquartered in the Global North. It also shows why the current UN Tax Convention negotiations are so important for ending profit shifting and extraction from commodity-exporting countries.
Hidden behind Starbucks’ ‘ethical sourcing’ programme is a massive global tax dodge that shifts profits from coffee-producing countries to Switzerland. Customers pay an ‘ethical’ premium while Starbucks’ ‘Swiss Swindle’ helps to perpetuate poverty for farmers and workers who grow and harvest the coffee beans. The Swiss scheme also deprives governments in coffee-producing countries of much needed revenues to fund schools, hospitals and other public services to help tackle growing inequality and create a path towards a sustainable future.
As is often the case, corporations which have aggressive tax avoidance practices often treat all stakeholders with the same disregard, shifting profits to executives and shareholders and externalizing costs on society. Despite its claims, there appears to be nothing ethical about Starbucks. The global coffee giant has been charged with massive labour violations in its supply chain and now faces multiple class action lawsuits for misleading consumer on human rights claims. It has paid record fines for violating the rights of its direct employees in US stores and has refused to bargain in good faith with the growing and currently striking Starbucks Workers United union. If that wasn’t enough, Starbucks’ CEO gets paid more than 6,666 times the median worker, a ratio higher than any other S&P500 company.
The incredibly harmful role of Switzerland – as a commodity trading centre, a tax haven and secrecy jurisdiction – in aiding and abetting multinational corporations to shift profits away from producers in the Global South is too frequently overlooked. Starbucks provides a clear example of a much bigger global problem. However, while commodity trading and profit shifting are standard practice for many large multinationals, Starbucks appears to push this further than most others, with a stunning 18% mark-up on coffee beans in Switzerland, despite the beans never actually making their way up the Swiss Alps.
This 18% mark-up by Starbucks’ Coffee Trading Company (SCTC) in Switzerland on all global coffee purchases before re-selling to other Starbucks subsidiaries for roasting and retailing has been in place since 2011. A previous Starbucks report by us at the Centre for International Corporate Tax Accountability & Research estimated that this scheme had shifted at least US$1.3 billion in profits into the Swiss subsidiary over the last decade, or between US$100 and $150 million per year. The profits booked in Switzerland are also one way in which Starbucks reduces taxable income where customers actually buy their Pumpkin Spice lattes or other coffee drinks.
The 18% mark-up would not have been known without a European Commission investigation into Starbucks in 2015, following the 2012 expose of Starbucks’ UK tax dodging. Starbucks was compelled to provide financial information from the Swiss subsidiary to the European Commission which would otherwise not be publicly available. However, since Switzerland is not part of the European Union, the investigation focused on the issue of illegal state aid in the Netherlands. The inflated coffee prices paid by the Dutch subsidiary created losses and a tax shelter for the European operations. The Commission ruled against the Netherlands, but that was later – as with several other cases – overturned by the European court.
The Centre for International Corporate Tax Accountability & Research’s previous analysis found evidence – through the tracking of ongoing dividend payments from the Swiss subsidiary through Dutch and UK subsidiaries – that the 18% Swiss mark-up was ongoing. Starbucks changed the ownership of the Swiss subsidiary to one directly owned by a subsidiary in Washington state, where there is no state income tax and no requirement for financial reporting, as there is in the Netherlands and the UK. The dividend flows from Switzerland, derived from the 18% mark-up, are no longer traceable but there’s no reason to believe that the practice isn’t ongoing. The basic allegation was not contested by Starbucks. The Swiss subsidiary, despite its central role in Starbucks’ global corporate structure, is never mentioned in its recent annual reports to shareholders.
When Starbucks attempted to justify the introduction of the 18% mark-up (up from 3%) to the European Commission and in response to the Centre for International Corporate Tax Accountability & Research report, it argued that this was the costs of running C.A.F.E. Practices, its ‘ethical sourcing program’ via the Swiss subsidiary, including the use of its intellectual property. A brand new report by us, The ‘Swiss Swindle’: Does Starbucks short-change coffee-producing countries?, set out to evaluate these claims. The report examines the only publicly available financial statements from Starbucks’ ten Farmer Support Centers, which it claims are at the heart of its ‘ethical’ sourcing and are owned via the Swiss subsidiary.
Our analysis of the financial statements from Starbucks’ Farmer Support Centers in Colombia and Tanzania found negligible expenditures and limited benefits to farmers. The actual costs of the Farmer Support Centers are a tiny fraction of the 18% margin booked in Switzerland, where – on paper – the purchase of coffee beans occurs. The Farmer Support Centers appear more concerned about quality and supply of coffee beans rather than anything to do with the welfare of coffee-producing communities. There was no evidence that Starbucks holds or values any intellectual property from its C.A.F.E. Practices programme in Switzerland. If there is any intellectual property it is created, held and used by the Farmer Support Centers in coffee-producing countries, not in Switzerland.
Our latest report concludes that the primary purpose of the Swiss set-up is not to support farmers but to book profits from the purchase and sale of green coffee beans in Switzerland, at very low tax rates, and far from the reach of tax authorities in producer countries where revenue for public services, including health, education and sanitation, is urgently needed. However, the existence of these Farmer Support Centers means that Starbucks has a legal physical presence in coffee-producing countries and that revenue from coffee sales that is currently shifted to Switzerland, should be taxable where beans are grown and value is genuinely created. This is the core principle, although not the practice, of the current global tax system.
The report recommends that governments from nations like Brazil, Vietnam, Colombia, Indonesia, Tanzania, Uganda, Ethiopia and others – which rely extensively on coffee production and export – fully explore all options under existing rules to tax the coffee-trading profits currently booked in Switzerland. Additionally, it calls for major global tax reforms through the current UN Tax Convention negotiations to end the profit shifting and extraction from commodity-exporting countries.
Starbucks provides an example – within one corporation’s global supply chain – of how the current global tax system is abused to shift profits from producer countries in the Global South to multinational corporations headquartered in the Global North. Switzerland, as a commodity trading center with low tax rates and high levels of secrecy, plays a major role in facilitating these practices.
If Starbucks wants to live up to its language on ethical sourcing, it could easily use the current 18% margin to pay farmers a significantly higher price and book those sales in the countries where they actually occur and where value is created. In the meanwhile, governments should immediately seek to tax profits artificially shifted by Starbucks to Switzerland and for everyone to push for reforms to the global tax system to end the ongoing exploitation of commodity producing countries across the Global South.
We’re pleased to share this blog by Rachel Etter-Phoya, originally posted by Africa Is a Country. From colonial accounting tricks to modern tax havens, Nkrumah understood how capital escapes, and why political independence was never enough.
You won’t find the words “tax haven” or “profit shifting” among the pages of Kwame Nkrumah’s Neocolonialism, the Last Stage of Imperialism, published 60 years ago. Yet Ghana’s first president and pan-Africanist recounts a familiar story of corporate greed and capital flight, where imperial corporations with their complex multi-jurisdiction structures, aggressive tax practices, and clandestine deals are a “drain on resources from the less developed countries to the highly developed ones.”
From Liberia’s rubber to the Congo’s copper, Nkrumah tells story after story of how the control over resources and finance was in the hands of corporations created or backed by former colonial powers.
“And when independent African countries attempt to establish a certain rectification by leveling taxes on company profits,” Nkrumah writes, “they draw resentment that is echoed in dire warnings in the imperialist press that they will stifle foreign investment if they continue such encroachments upon expatriate rights.”
We can tell a similar tale today. The Tax Justice Network’s Corporate Tax Haven Index, updated in December 2025, shows that European countries enable more than 50% of the total tax abuse perpetrated by multinational corporations, while African countries enable less than 5%.
Multinational corporations use a web of tax havens, woven together with unfair tax treaties, to pay proportionally far less tax than many people, even though their own employees pay, and yet still argue they can’t increase wages. The most corrosive corporate tax havens are Switzerland and two British Overseas Territories—the British Virgin Islands and the Cayman Islands.
A particularly insidious device is the patent box regime. Originally designed to incentivize innovative research and development, such as vaccines, multinational corporations tend to move their patents out of the places where they develop, make, or sell their goods and services, and into corporate tax havens, allowing them to underpay tax. Forty-two countries of the 70 countries monitored on the Corporate Tax Haven Index, which together host 87% of global foreign direct investments, have patent box rules or fully exempt multinational corporations from paying tax.
French pharma company Sanofi established a regional hub in South Africa to produce polio vaccines. A tax treaty between the countries prevents South Africa from taxing royalty payments made in the course of drug manufacturing at the usual 15%. Sanofi’s South African subsidiary likely pays royalties to its French company for using the patent to manufacture the vaccines. The company essentially pays itself to use its own knowledge, reducing the taxes it owes in South Africa.
US pharmaceutical companies Johnson & Johnson and Pfizer are following suit with manufacturing plants in South Africa, where the US-South Africa tax treaty means South Africa imposes no tax on royalty payments from South African subsidiaries to American multinationals, similar to the France-South Africa treaty. The intellectual property tax discount that the US, Ireland, France, UK, and other countries offer helps multinational corporations to shift profits away from countries like South Africa, where drugs are actually manufactured.
All countries lose out to tax abuse, but the impacts are greatest for those most historically plundered nations. Global North countries forgo huge sums of tax revenue with patent box regimes, and South Africa is estimated to lose more than US$450 million due to intellectual property profit shifting.
Exploiting patent box regimes is just one reason Africa continues to lose close to $90 billion each year to illicit financial flows. The other challenge is a century-old global tax system that was designed by the League of Nations when most African countries were still colonies, which taxes multinational corporations based on where they declare profits rather than where they do business, employ workers, extract resources, make products, and sell services.
The scale of the losses and the inability (or unwillingness) of the club of rich countries—the OECD—to effectively and inclusively address the problem is why African countries are acting.
Taking heed of Nkrumah’s words that Africa’s structural transformation from the “financial and economic empires [that] are pan-African […] can only be challenged on a pan-African basis,” the African Group at the UN has successfully tabled a resolution to start negotiations on a UN tax convention, which will conclude in 2027.
In November, negotiations on the UN Framework Convention on International Tax Cooperation—as it is known—happened for the first time on African soil, in Nairobi, Kenya. Countries discussed a new approach to taxing multinational corporations based on the principle of the “fair allocation of taxing rights,” which would allocate profits to countries based on real economic activity and tax them accordingly, rather than allowing profits to be squirreled away in tax havens.
Fairer taxing rights would be supported by transparency tools that disclose the real (beneficial) owners of companies, allow tax authorities to automatically exchange information on residents, and require companies to publicly report their activity on a country-by-country basis.
Most countries agree that tax rules need to be fairer, but OECD countries, including notorious tax havens like Switzerland and the Netherlands, would prefer existing fora, rules, and processes to continue to apply.
If Nkrumah were alive today, there’s no question he would be backing another attempt to break Africa free from old rules that only work for their old masters. As he wrote, “With economic unity, [of] countries in Africa […]. We would all be in a better bargaining position […] to establish adequate taxation of foreign factor earnings. In fact, a whole new pattern of economic development would be made possible.” How different the pattern might have been had those words been heeded at the time.
Image: Not known, Diefenbaker Centre credits British Government, Public domain, via Wikimedia Commons,
Queen Elizabeth II with several of her prime ministers and other Commonwealth of Nations leaders at the 1960 Commonwealth Prime Ministers’ Conference
New Convention draft and background documents to watch
The UN has released a new draft convention text and background documents for each of the workstreams ahead of the next round of negotiations in New York (available here). At the same time, we are publishing an update to our comprehensive database of the positions taken by individual countries thus far – so it’s possible to see how different positions are reflected, or not, in the text so far. Comparing the newly issued text with the positions States have adopted in their oral and written submissions, especially those from the latest round of negotiations in Nairobi, reveals interesting patterns and sheds light on how the Convention is gradually taking shape through successive interactions.
What happened in Nairobi?
Nairobi marked an important moment in the process leading to an UN Framework Convention on International Tax Cooperation (UNFCITC). Demands for fairer global tax governance have long been driven by countries from the Global South, particularly since the Addis Ababa Agenda, but this was the first time that formal negotiations of this process took place on the African continent. Throughout the sessions, delegations and stakeholders repeatedly noted that holding the negotiations in Nairobi made the process more accessible. In particular, it enabled strong participation from stakeholders who are often unable to attend tax negotiations because of visa barriers, travel costs, or limited formal channels for engagement.
How we covered the negotiations
We followed the negotiations closely and covered the debates on our UN Tax Convention landing page. For each topic discussed, the page includes a summary of how discussions unfolded. The landing page— recently updated—also brings together key resources such as upcoming negotiation dates, an FAQ, thematic sections, one-pagers on key concepts and additional background materials.
Submissions and database update
After the sessions concluded, member states and other stakeholders were invited to submit written comments on the papers prepared by the Secretariat for the Framework Convention workstream (WS1) and the dispute resolution workstream (WS3). The Tax Justice Network submitted contributions to both WS1 and WS3. We also co-signed the joint submission coordinated through the CSO mechanism, as well as specific submission focused on gender-related aspects.
Following this consultation, the Secretariat published all written submissions, which we have begun integrating into our Who Wants What database, which can be accessed via our UN tax convention webpage and available in a summarising report. This public database has tracked countries’ positions since the start of the negotiations and is now being updated to reflect the latest contributions. Users can explore positions by country, by article, or over time. This is an ongoing, collaborative project developed with academics from the University of Virginia’s Law International Human Right Clinic. We aim to update the database quickly, as a helpful tool as we navigate this process, but there is a trade-off between the speed and the exactitude at which we keep track of all the positions. Errors may occur, and we thus encourage readers to flag any issues they identify. As much as possible, we try to stick to the specific text and wording raised by oral and written submissions.
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Mapping arguments and narratives in the negotiations
One useful feature of this database is the nuance it allows in analysing country positions, particularly in mapping how specific arguments are framed and defended. Unsurprisingly, many of the themes found in the written submissions echo points previously raised by country delegations in earlier sessions. Those closely following the process will, by this stage, be familiar with the repeated use of certain expressions to limit the scope or lower the ambition of the framework convention. Notions such as sovereignty, the relationship with other instruments and institutions, or the absence of clear definitions – all legitimate considerations in the development of an effective and ambitious framework – are too often invoked, or misused, to justify weakening that ambition.
Sovereignty and cooperation
For instance, consider the concept of sovereignty, raised in 53 interventions, either in Nairobi or in written submissions. The large majority of these positions relate to Article 5 on High Net-Worth Individuals (15), Article 8 on Harmful Tax Practices (10), and Article 10 on Dispute Prevention and Resolution (10).
Most positions referring to sovereignty are grounded in a way of thinking that views sovereignty as restrictive, if not directly in opposition, to cooperation. In this view, whether a country decides or not to implement a progressive tax system, or the types of tax incentive it decides to propose is a matter of domestic decision-making. The problem with this approach is that it too often overlooks how a country’s tax rules can lead to international spillovers, undermining each other’s sovereignty. For instance, tax regimes implemented in one country can have significant effects on the capacity of others to enact their own rules. Further, the claim that the taxation of high-net-worth individuals is a domestic issue forgets the reality that wealthy individuals source their income and wealth in multiple jurisdictions, and information necessary to enact domestic laws may be dependent on exchange of information.
In other words, guaranteeing and strengthening sovereign tax systems must be a key objective of international tax cooperation, but the status quo fails to secure that. While previous efforts to address the cross-border spillovers of such regimes have often been marked by unfairness and even hypocrisy, the very objective of the General Assembly’s mandate is to address these cross-border implications in a fairer and more inclusive setting. As the Kenyan delegate defended in Nairobi, for Global South countries, fighting the negative spillovers of higher-income countries’ aggressive tax practices is in itself a matter of safeguarding their national sovereignty. This notion is also echoed in Brazil’s written submission which advocates, in the context of Article 4, for “fiscal sovereignty and fairness in the apportionment of taxing rights, restoring the capacity of source countries to tax income-generating activities provided within their borders without necessarily requiring a physical presence”.
In addition, invoking sovereignty should not preclude forms of cooperation that entail some degree of policy coordination—including, for example, coordinated approaches to tax multinational corporations or high-net-worth individuals. As important as creating an enabling environment for protecting domestic tax-sovereign decisions is, the Convention should also open the door to coordinated approaches that help Member States advance its aims, including establishing an inclusive, fair, transparent, efficient, equitable and effective international tax system for sustainable development, enhancing the legitimacy, certainty, resilience and fairness of international tax rules, and addressing challenges to strengthening domestic resource mobilisation.
The need for an inclusive and universal framework in response to limitations of pre-existing institutions
Another familiar argument for those following the debates is the idea of duplication, or that the Framework Convention should not include in its scope or simply defer the treatment of topics which have been negotiated through pre-existing instruments or forums. Among the 139 positions that address the relationship with other instruments or institutions and the risk of overlap, the large majority focus on Article 8 on Harmful Tax Practices (38) and Article 6 on Mutual Administrative Assistance (21), followed by Article 4 on the Allocation of Taxing Rights (17) and Article 5 on High Net-Worth Individuals (16).
Most concerns about overlap focus on two specific forums: the Global Forum – and particularly Multilateral Convention on Mutual Administrative Assistance with its subsidiary instruments for exchange of information – and the Forum on Harmful Tax Practices. With regard to Art. 4, existing bilateral treaties are invoked, with some countries advancing the strained argument that the mere fact of agreement between two parties is sufficient to render such treaties fair. It is indicative of a bias in the current status quo that very limited concerns about relationships with pre-existing instruments, or about overlap more broadly, are raised in relation to the articles on illicit financial flows or sustainable development.
In addition, as eloquently argued by countries such as Kenya, Nigeria, Ghana, Sierra Leone and Rwanda —both during discussions in Nairobi and in some of their written submissions — while the relationship with pre-existing instruments and forums is an important point, it cannot be ignored that existing forums lack universal participation and do not appear to deliver equally for all UN Member States. The momentum behind the call for a Framework Convention and the adoption of new commitments should reflect the desire among countries to generate the political will necessary to move beyond the limitations of the current system and achieve better outcomes.
Take, for instance, the Convention on Mutual Administrative Assistance. The 2010 amendment of this legal instrument represented a great achievement in international tax cooperation, as it allowed a broader set of countries to become party to the Convention and join the legal framework to engage in exchange of information and other forms of cooperative assistance. Yet, from a technical perspective, the Convention and its associated Multilateral Competent Authority Agreements still have significant problems, particularly regarding reciprocity requirements and the use of reservations.
With respect to reciprocity, the strict requirement in some competent authority agreements that all parties provide information at the same pace imposes equal obligations on countries with vastly unequal export of financial sectors. Large financial centres are expected to exchange information under the same conditions as low-income countries. Given the higher likelihood that wealthy individuals conceal assets in major financial hubs rather than in poorer jurisdictions, this formal equality results in a substantively biased arrangement. This does not imply that these countries would not participate, and in fact the Africa group made sure to strengthen the commitment, including by proposing the removal of “as such exchange become possible” from the article on High-Net-Worth Individuals. But strict reciprocity remains a clear obstacle to effective exchange in practice.
Regarding reservations, as discussed in previous research, the Convention allows countries to opt out of certain forms of cooperation. These include the exchange of information covering a broader range of taxes and assistance in the collection of tax debts. In practice, this “flexibility” allows certain developed countries to pick and choose which countries they want to provide a broader access cooperation to, for instance, by adopting more comprehensive forms of cooperation through regional instruments, while denying equivalent treatment to developing countries. Beyond these technical concerns, the political institutional framework built on top of the Convention, the Global Forum, was established under the umbrella of the exclusionary OECD, and despite its relatively formal autonomy, it is not an adequate substitute for a truly universal body with inclusive decision-making at the United Nations.
Definitions and the concept of illicit financial flows
At the same time, this concern for coherence with existing processes is applied unevenly. In certain areas, pre-existing discussions appear to be strategically set aside, most notably with respect to existing definitions of illicit financial flows. Clear and workable definitions are essential for the effective development of the Framework, and this will be an important element of the upcoming work of the Secretariat and Member States. However, concerns regarding definitions are not evenly distributed, but are instead heavily concentrated in Article 7 on illicit financial flows. Of the 68 positions that raise issues related to definitional clarity, 27 focus on this article. Concerns about definitions are also prominent in Articles 4 on the allocation of taxing rights (13), Article 5 on High Net-Worth Individuals (12), and Article 8 on Harmful Tax Practices (11).
However, illicit financial flows are not a concept without history. It can be traced back to the African Union and the Economic Commission for Africa’s High-Level Panel on Illicit Financial Flows out of Africa, chaired by former South African President Thabo Mbeki. As India clearly noted in Nairobi, a statistical definition has already been agreed as a part of the Sustainable Development process, one that includes both tax avoidance and tax evasion. This is not to dismiss the existence of disagreements over definitions – which might remain – but rather to underscore that these discussions do not begin from a blank slate.
What’s coming up
International tax negotiations are at a critical moment. The side-by-side agreement, negotiated behind closed doors, makes it all the more urgent to advance towards a system of international tax governance that is responsive and delivers for the needs of all. The UN tax convention is a rare opportunity to do just that.
In 2026, the Ad Hoc Committee will convene three meetings: the first in February in New York, followed by a second session in August, also in New York, and a final session in November/December in Nairobi. It is deeply concerning that, at this critical moment in the negotiations, the participation of certain stakeholders is at risk due to visa-related barriers.
We need to deliver an instrument that reflects the views of different countries committed to building a fairer, more effective international tax system. The database, which is an ongoing effort to understand what different countries aspire to achieve in this process, is an effort to assist in that.
Stay tuned to our UN tax convention webpage for a detailed analysis of these documents and insights into what to expect at the next negotiating session.
What a year! In 2025, our work featured in more than 43 broadcasts, 2,950 online media articles, and 278 print pieces, and attracted over 427,668 visitors to our website.
To help you revisit some of the highlights, we’ve pulled together a roundup of our most read pieces from 2025.
Our three most-viewed pages on our website this year included press releases, Millionaire exodus did not occur, study reveals, Trump demands countries surrender tax sovereignty at economic gunpoint and our blog Britain’s Slave Owner Compensation Loan, reparations and tax havenry which continues to make the top three for yet another year.
Our most read reports this year
Our flagship State of Tax Justice 2024 report topped our reads, followed by our eye-opening report debunking The millionaire exodus myth and revealing analysis on Taxing extreme wealth: what countries around the world could gain from progressive wealth taxes.
Our most read pieces from 2025
We published 59 blogs and press releases this year. Here’s a look at our top 10 most read new pieces:
Other pages our readers particularly loved in 2025
Our frequently asked question continued to be a go-to resource throughout the year, with the top spots being taken by “what is transfer pricing”, “Is tax avoidance legal? How is it different from tax evasion?”, “what is profit shifting”, “Where are tax havens located?” and “Is taxation theft?”.
Country profiles also proved popular this year, with Switzerland topping our most viewed, followed by Indonesia. The United Kingdom remained in third place, while Norway moved up to fourth. The United States rounded out the top five holding on to is fifth place position.
Several of our cornerstone topics also attracted strong engagement.
In the areas of human rights and advocacy, our work linking tax justice and climate justice, Reclaiming tax sovereignty to transform global climate finance generated high levels of engagement and helped drive momentum ahead of COP30. This momentum continued with a co-organised event, ‘A climate for change: Towards just taxation for climate finance’, held during the negotiations toward a UN tax convention.
Alongside this, our work on tax and gender also drew considerable interest, particularly with the release of Bled dry: The gendered impact of tax abuse, illicit financial flows and debt in Africa.
Lastly, our work on beneficial ownership transparency received strong readership, led by our report Asset beneficial ownership – Enforcing wealth tax & other positive spillover effects.
Happy reading, from all of us at the Tax Justice Network!
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“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”
― Charles Dickens, A Tale of Two Cities
We are living through two quite distinct, but inseparable tales of tax justice. In one tale, the greatest triumph of all is at hand. But in the other lurks the spectre of catastrophe.
Tax is our social superpower. When taxes are effective, they not only raise revenue for crucial public services, but allow redistribution to curb inequalities, repricing to curb social ‘bads’ like tobacco consumption and carbon emission, and above all representation. Yes, tax turns out to be one of the only things that is consistently associated with stronger democracies and more effective political representation. Worth remembering in these turbulent times, as billionaires seek political power for their own, antisocial ends.
The overarching challenge for tax justice is, as it has always been, to ensure that people are empowered to choose the societies they wish. That relies on people living in states that have full tax sovereignty. And that, in turn, requires international tax cooperation.
Each year, countries lose around half a trillion dollars from the crossborder tax abuse of multinational companies, and wealthy individuals hiding their ownership of assets and income streams offshore. But we know what the solutions are! Critical measures brought forward by the tax justice movement, including the ABC (automatic exchange of information, beneficial ownership transparency and country by country reporting by multinational companies) have brought literally trillions of dollars of income into the sight of tax authorities for the first time, and increased revenues by billions.
But none of these steps have been delivered in full. First, because the OECD is fundamentally unjust. This club of rich countries has dominated international rule-setting, claiming for themselves the majority of the benefits of introducing tax justice approaches, largely excluding lower-income countries. And second, because the OECD is deeply flawed. The absence of open decision-making, the effective veto of the United States, and the deeply embedded corporate lobby, mean even within the OECD countries, the adoption of each measure has been so limited and piecemeal, and lacking in the transparency to allow public accountability, that even the very substantial benefits obtained are a fraction of what they could be.
No, the great triumph is not in the partial adoption of a swathe of once-impossible technical measures. It is instead in the political – and specifically, in the potential to overturn the ineffective and unfair dominance of the OECD, and replace it with a globally inclusive and fully effective forum.
Such are the failures of the current system, that almost everyone stands to gain from a fundamental fix. The OECD’s member countries would benefit from hundreds of billions of dollars in additional revenue. Lower-income countries would see the largest proportional gains, translating into much greater human impacts – from stronger governance to reductions in infant and maternal mortality.
And so here is the real triumph: in 2025, for the first time ever, each country of the world sat around the same table to negotiate international tax rules.
Specifically, countries are negotiating a UN Framework Convention on International Tax Cooperation. The convention can provide immediate progress on key issues, and also create the framework body where Conferences of the Parties will agree new tax rules in future.
Nothing is won yet, however. The next 18 months will determine the final text. The challenge for the Tax Justice Network, the Global Alliance for Tax Justice and the global movement spanning from climate justice to human rights, is to channel our collective efforts to ensure the opportunity is seized – because if we fail, a hundred years is a long time to wait for a second chance.
Here’s the thing. With just a few bumps on the road, the global movement for tax justice has been building and growing for two decades now. That’s how we got here – how we have delivered so many policies once derided as ‘impossible’ or ‘Utopian’ onto the global agenda as well as nationally, in countries all around the world. That’s how we were able to normalise the idea of a UN convention as the path to the fundamental reform that is needed, and where the momentum came from.
But now, as we sit at the cusp of the greatest progress in a hundred years, a threat is looming.
Money. Or rather, the lack of it.
This issue runs through the whole negotiations. The secretariat is woefully under-resourced because of the hiring freeze affecting the whole United Nations, and the failure of rich countries to meet their responsibilities – either to the UN itself or to the tax negotiations more specifically.
At the same time, the tax justice movement has hit a major bump. Funding from governments and major foundations has never been large – but now it is shrinking, fast. Official aid budgets are under pressure like never before. Major US foundations are understandably focused on defending democracy at home. The ‘philanthropy blind spot’ on tax, identified by funders themselves as long ago as 2021, has become an urgent problem.
Elsewhere, the search for research funding is increasingly desperate, as universities across the global North face tightening budgets – and increasingly malign approaches from a range of governments, not only in the US.
A range of organisations in the space of tax justice, including the important overlaps with human rights, are now facing budget cuts and sometimes painful restructuring.
The Tax Justice Network, in common with partners and allies in this space, is an incredibly ‘thin’ organisation. We have no physical office or associated costs. Our people, spread across the world, are our core asset and the great majority of our budget is made up of salaries. (Salaries that are far from excessive, I should add.)
The effect is that any budget cut translates directly and starkly into cuts to the team. We are in the process of losing eight key members of the team – around 20% of our core staff. And to be clear, these are exceptional people who have been carrying out work of clear strategic value. (Hire them!) It’s not that there were ‘easy’ cuts to make to work that didn’t matter.
We have focused the restructure on ensuring even greater support to the UN convention negotiations. But we are inevitably weaker as an organisation, just as the process enters its critical, final 18 months.
With other organisations facing the pinch too, there will be systemic effects on the ability to support the convention – and indeed to push for national and international priorities outside of the negotiations, including wealth taxes and the crucial policies to deliver meaningful climate finance. Not least, the need to focus ever more closely on fundraising, from individual donations to commercial licensing of our data as well as the search for institutional support and bidding for research grants, can only take attention away from the core work of achieving change.
And so as Dickens put it, we face both a spring of hope, and a winter of despair. The UN convention negotiations may unleash the social superpower of tax in a way that allows fundamental improvements to people’s lives all around the world. But we run the risk of missing this unprecedented opportunity – and all for want of a trivial amount of money.
The Tax Justice Network’s total budget has never exceeded three million dollars, and has been far lower on average across most of our history. With whatever caveats you might think of, and the most cautious attribution possible, the return on investment in terms of tax revenues has been thousands to one – and possibly far higher. And that goes for the whole tax justice movement too. (Our independent 20-year evaluation has more on this.)
What is my ask to you, kind reader? There are two – one for each city in this tale. Together they might take us to the best of times.
First, if you are able, please support our work directly. Individual donations can play an important role in giving us the financial flexibility to respond effectively to the challenges of institutional funding and philanthropy.
Second, if you are involved with an institutional funder or in philanthropy, please consider the argument for prioritising tax justice at this critical juncture. If it will ever be worth supporting the efforts of our movement, it is surely now – and the window of the UN negotiations is a short one. Do get in touch if we can help to explore how you could provide strategic support.
Over 100 million children are going hungry this Christmas.
Elon Musk could give every child in the world a $90 gift card, creating 2 billion smiles and still be the richest man alive!
Let’s help the world’s richest man feel like the richest man in town this Christmas, by inviting him to gift 44% of his wealth to the children of the world.
We’d also settle for a 2% wealth tax on the superrich.
Help us spread the cheer to Elon
Sign our “Christmas Card” to Elon Musk
Spread the cheer on social media
“Hi @elonmusk wishing you become the world’s richest man this Xmas by buying every child a $90 gift card with half ur wealth. You’d stop 100m children from going hungry, create 2bn smiles & still be the richest man alive! I’d also settle for a 2% #WealthTax
https://c.org/jnnZhmp6J4
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Watch and share our interview with The Guardian
Extreme wealth shrinks our economies, makes us poorer and weakens our democracy.
We can protect people, economies and planet from the harms of extreme wealth by fixing the tax rules that make extreme wealth possible.
That’s what wealth taxes do.
Our economies are supposed to let us earn the wealth we need to lead secure and comfortable lives.
But our tax rules make it easier for the superrich to collect wealth than for the rest of us to earn it.
This has let the superrich collect extreme wealth to the point of making our economies insecure, and making it barely pay to earn a living.
Elon Musk earns a $1 salary as CEO, just like some of the other richest billionaires like Mark Zuckerberg and Larry Ellison. His wealth doesn’t come from ‘earned wealth’ like yours, it comes from ‘collected wealth’.
Earned wealth is wealth you gain by working. It’s getting paid a salary, income or tips for what you do. Collected wealth is wealth you gain by owning things. It’s getting paid dividends for owing stocks or rent money for owning real estate.
Most people primarily earn their wealth, but the superrich’s wealth is almost entirely collected.
Earned wealth cannot create billionaires. Only collected wealth grows fast enough to do so.
It’s impossible to earn a billion dollars.
The average US worker would have to work 20 times longer than humans have existed – over 7 million years – to earn as much wealth as Elon Musk has collected.
Most countries tax collected wealth a lot less than earned wealth. And because the wealth of billionaires like Elon Musk is practically entirely collected, billionaires tend to pay half the tax rates everybody else pays on their wealth.
This special tax treatment has helped the superrich quadruple their wealth since the 1980s to extreme levels. Studies directly link this rise in extreme wealth to lower economic productivity, to more households going into debt and to people living shorter lives.
A prestigious report published this year by some of the world’s most respected economists concluded that the rise of extreme wealth is a “threat to democracy”. Over half of millionaires agree.
Countries can raise $2 trillion in tax a year by applying a 2% wealth tax today. That’s enough public money to meet most countries’ climate finance needs, and leave billions to spare for local public services.
But wealth taxes do a lot more than just raise trillions.
Wealth taxes end the special treatment that collected wealth gets over earned wealth. They protect the earner way of life we all rely on from the harms of extreme wealth.
That’s what makes wealth taxes so powerful.
Whether you’re a wealth collector or a wealth earner, we all have an equal responsibility to pitch in our fair share.
Make noise about the UN tax convention
Our governments are currently negotiating the biggest shakeup in history to global tax rules at the UN. The outcome of these talks – a world-first UN tax convention – will impact every one of us, wherever we are in the world, and shape people’s lives for generations to come.
The UN tax convention is already on course to deliver huge tax justice wins for all us, including commitments to stop the superrich from cheating on tax and to making sure they’re taxed more effectively.
If you’re not already, get up to speed on the UN talks here and sign up to our newsletter stay updated.
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Dive deeper
The wealth Elon Musk owns stands at $494.5 billion, according to Forbes’ Real Time Billionaire List on 11 December 2025. There are more than 2.4 billion children in the world under the age of 18, according to the United Nations.
Buying every child a $90 gift card would come to a total of $216.8 billion. Subtracting this sum from Elon Musk’s reported $494.5 billion, for illustrative purposes, would leaved Elon with $277.7 billion. That’s enough to keep Elon Musk at the top of list Forbes’ billionaire list in first place, just above Larry Ellison, who’s wealth stood at $276.3 billion according to Forbes on 11 December 2025.
Over the past decade, the use of administrative tax data has somewhat quietly transformed academic research on tax abuse, compliance, and enforcement. These datasets—corporate tax returns, country by country reports, transaction-level customs records, payroll files, and other administrative sources—make it possible to study firm behaviour, compliance, and tax avoidance with a level of precision that survey or macro data simply cannot provide.
As we increasingly worked with such data at the Tax Justice Network, in collaboration with colleagues across governments and research institutions around the world, it became clear that administrative data is not just valuable; it is indispensable for understanding how tax systems function in practice rather than in theory.
But alongside this immense value, we also saw a high level of fragmentation. Every country, every institution, every research team had its own systems, protocols, formats, and access procedures. Some governments operated full-fledged secure research labs; others relied on informal arrangements or ad-hoc agreements tied to specific individuals. Even among researchers, knowledge about where administrative data existed—or how it could be accessed—tended to travel through personal networks rather than through any systematic channels. The result was predictable: duplicated efforts, steep learning curves, and missed opportunities for collaboration. We saw skilled researchers struggling to find basic information about what had already been done, and tax administrations unsure how their data was being used elsewhere or how to structure new partnerships.
That experience is what led us to launch Admin Data for Tax Justice, a new initiative aimed at reducing this fragmentation and strengthening global collaborations around administrative tax data. The central idea is simple: if we want more evidence-based tax policy, we need structures that make it easy for researchers and tax administrations to work together—ethically, securely and efficiently. That means mapping the existing research, documenting where administrative data has been used and how, supporting institutions as they develop or expand their own data-access infrastructures, and creating opportunities for networking across two groups of stakeholders that have remained largely isolated in the past: researchers and tax administration staff.
A major step toward that goal is the release of the initiative’s website, available today at admindata.taxjustice.net, providing the first systematic database of academic and policy research using administrative tax data worldwide. The database already contains hundreds of papers, covering a wide range of countries, datasets, and empirical strategies. This makes the field visible in a way it has never been before: early-career researchers can quickly see what has been done in which countries using which data; tax administrations can observe how comparable data is used elsewhere; and funders can identify gaps where new investments would have the greatest impact. It is also a foundation on which we can build better standards—whether for documentation, anonymisation, secure access, or cross-institutional collaboration. The website will be filled with such resources as the initiative develops. To illustrate how rapidly this field has grown, the figure below shows the number of papers in the database published over time. The trend is unmistakable and confirms what many of us have seen at recent academic conferences and workshops: administrative data is becoming central to modern tax research, and the growth in output reflects both the increasing availability of data and the expanding demand for rigorous, micro-level evidence.
We are launching the initiative formally through a virtual event on 15 December 2025, at 16:00 CET, where we will introduce the website and the database and discuss its role in building a more connected and accessible research ecosystem. This will be followed by a high-level panel discussion with leading researchers and policymakers who have helped shape the field of administrative-data research: moderated by Alex Cobham (Chief Executive, Tax Justice Network) and featuring Annette Alstadsæter (Professor of Economics, Skatteforsk – Centre for Tax Research, Norwegian University of Life Sciences), Pierre Bachas (Senior Economist, World Bank and EU Tax Observatory), Kat Bilicka (Lars Peter Hansen Associate Professor of Economics and Statistics, Utah State University), Abdul Muheet Chowdhary (Senior Programme Officer, South Centre), and Giovanni Occhiali (Development Economist, International Centre for Tax and Development). The discussion will examine the analytical potential of administrative microdata, lessons from successful data-access models, and the institutional conditions required for secure, ethical, and long-term data use. Panellists will also reflect on how better data infrastructures can transform research on tax avoidance, compliance, inequality, and public-sector capacity.
The initiative is supported by a growing network of partners, including Skatteforsk, the EU Tax Observatory, UNU-WIDER, the World Bank, the Institute for Fiscal Studies (TaxDev), the International Centre for Tax and Development, UNCTAD, United Nations Economic Commission for Africa, ODI Global, the South Centre, and Charles University.
Let us know if your institution would like to join the initiative!
The virtual launch will also pave the way for the initiative’s first in-person workshop in Prague, bringing together 35 researchers and tax-administration partners from 19 countries to share lessons, identify next steps, and strengthen the foundation for long-term collaboration. Further events are planned for 2026, including a regional convening in Accra in Q2, as we expand the initiative’s global reach and continue building a network capable of supporting better tax research and better tax policy worldwide.
As 2025 draws to a close, tax justice is no longer just a political demand. It has become part of the core problem-solving infrastructure that governments and movements rely on to confront climate breakdown, debt distress, inequality and democratic strain. From climate finance and public services to gendered austerity and the fight for accountability, tax justice now sits at the centre of the defining challenges of our time.
This was also the year a second Trump administration sought to roll back the global minimum tax and retreat from multilateral cooperation, even as countries at the United Nations continued negotiating a new framework convention on international tax cooperation. At the same time, the climate emergency accelerated, while many governments still failed to resource a just transition at the scale required.
Amid these pressures, 2025 was marked by a historic breakthrough: for the first time ever, every government sat at the same negotiating table to begin shaping global tax rules through a UN convention, a milestone a century in the making.
Within this shifting global context, the tax justice movement, and the Tax Justice Network in particular, made important strides: deepening our data and research, connecting climate and tax justice more firmly, and supporting allies to defend human rights in the face of secrecy and tax abuse.
Here are some of the key moments that defined our work in 2025.
In 2025 we significantly expanded both the quality and reach of our research.
A central focus was our shift towards tax administrative data as a core pillar of our evidence base. We continued our collaborations with tax authorities in Nigeria, Uganda, Slovakia and Czechia, and began new work in South Africa, Kenya, Greece, Ghana, Portugal, Norway, Ethiopia, Zambia and Rwanda. These partnerships are helping tax administrations use their own micro-data to identify profit shifting, illicit financial flows and tax abuse, and to design more effective responses.
Building on this experience, we have been preparing to launch Admin Data for Tax Justice, a new initiative that will bring together researchers and tax authorities to codify best practice on secure-room access, data preparation and joint analytical work. The initiative will have its own website, admindata.taxjustice.net, including a searchable database of research projects that use administrative data to study tax abuse. An in-person workshop in Prague in December kicks off a series of events planned for 2026 to share lessons across countries.
We also made substantial progress in developing methods to quantify profit shifting and offshore-related illicit financial flows using micro-level datasets. New analyses this year drew on country by country reporting data, examined the effects of transparency reforms, and explored how recent measures such as windfall taxes and wealth taxes change behaviour.
These methodological advances will feed into an updated Illicit Financial Flows Tracker to be launched in 2026. They already strengthened our ability to provide independent, data-driven assessments of tax abuse practices and to support reform proposals at UN and EU level.
In November, we published the State of Tax Justice 2025, our annual assessment of how much tax revenue countries lose each year due to multinational corporations and wealthy individuals using tax havens to underpay tax. This year’s report also highlights the harmful impacts of keeping country by country reporting data out of the public eye, at a time when public scrutiny is more important than ever.
Beneficial ownership transparency remained a core battleground in 2025.
Early in the year we published Asset beneficial ownership – Enforcing wealth tax and other positive spillover effects, which sets out what a robust approach to beneficial ownership of assets would look like. The report explains how asset-level beneficial ownership rules, going beyond companies alone, are critical to enforcing wealth taxes and supporting asset recovery. The approach aligns with the IMF’s 2025 work on sectoral beneficial ownership, which we reviewed. Both papers were presented at a panel co-organised by the Tax Justice Network during the Civil Society Public Forum at the IMF–World Bank Annual Meetings.
The Financial Secrecy Index 2025 update captured the sharp deterioration in public access to beneficial ownership information following the 2022 European Court of Justice ruling that restricted public access to registers. Our assessment tracks where governments are closing off transparency and where they are still moving ahead, despite legal and political pushback.
This year also showed how tax justice data is becoming part of the core toolkit for regulators, investigators and compliance professionals.
New research published in May demonstrated how Financial Secrecy Index risk scores can be combined with minimal transaction data to build functional, transaction-level risk scores for illicit financial flows. We applied this Financial Secrecy Index-based scoring to leaked suspicious transaction reports revealed in the FinCEN Files investigation to show the added value of robust geographic risk mapping on a large set of real-world transactions. The work features as a chapter in the final book from the EU-funded TRACE project, which over four years developed new technologies for financial crime investigations.
The same methodology can help financial intelligence units and law enforcement prioritise large backlogs of suspicious transaction reports by turning heterogeneous data into a ranked list of higher-risk cases.
Major banks, financial technology firms and compliance teams are increasingly integrating Financial Secrecy Index indicators and other Tax Justice Network data into their country risk classifications, automated anti-money-laundering and counter-terrorist financing models, and tax evasion risk flags. Transactions and clients linked to high-secrecy jurisdictions are being more systematically scored and escalated, and our data is reportedly used in customer due-diligence checks.
The growing interest in our risk data from criminology experts and public authorities was highlighted at the launch of the 2025–26 scientific season at the International Centre for Comparative Criminology in Montréal, where practical uses of our data in investigative work were presented. Our geographic risk methodologies were also presented in November to the European Commission’s directorate responsible for financial stability and financial regulation (DG FISMA), followed by further sessions with anti-money laundering practitioner audiences in Germany.
Beyond individual institutions, our Financial Secrecy Index scores now feed into a range of widely used global risk assessment tools, including the Basel index on anti-money laundering risks (Basel AML Index), the Risk-Informed Financial Flows tool (RIFF), and the Global Risk Assessment system (GRAS). These tools guide both supervisory risk assessments and private-sector compliance processes and help embed tax justice indicators in the wider ecosystem that works to combat financial crime.
The Corporate Tax Haven Index remained central to our work on corporate tax abuse.
The latest index findings show that countries are giving multinational corporations an average 63 per cent tax discount on profits generated from intellectual property. That is proportionally equivalent to allowing workers to pay no income tax for seven months of the year.
Countries offering these intellectual property tax breaks are giving away at least US$29 billion of their own tax revenue each year. They also cost other countries around US$84 billion in annual tax losses as multinationals respond to the discount by shifting profits out of the countries where they carry out real economic activity.
We also renewed our website this year, making it easier for journalists, policymakers and campaigners to explore the Corporate Tax Haven Index, the Financial Secrecy Index and other tools, and to connect the dots between corporate tax abuse, secrecy and public underfunding.
2025 cemented the link between tax justice and climate justice in both research and advocacy.
Our report Reclaiming tax sovereignty to transform global climate finance set out how countries can use fair taxing rights, progressive tax measures and stronger cooperation to raise at least US$1.3 trillion a year in climate finance. The report received strong endorsement across movements and wide media uptake, including at COP30 in Belém.
Building on this, we co-organised A Climate for Change: Towards Just Taxation for Climate Finance, a two-day conference in October hosted by the University of Campinas (UNICAMP) in Campinas, Brazil. The event took place just weeks before COP30 and during the first year of negotiations towards a UN tax convention, at a moment when both climate and tax systems are under intense pressure.
More than 250 delegates from advocacy, policy, research and grassroots organisations joined the conference in person, with many more online. Together they explored why connecting climate and tax is essential for a just transition and how to design climate finance tools that are grounded in equity and tax justice.
Keynotes and panels featured voices from across regions and disciplines, including Rodrigo Orair, Director of the Extraordinary Secretariat for Tax Reform at Brazil’s Ministry of Finance; Elisa Morgera, UN Special Rapporteur on Climate Change and Human Rights; José Antonio Ocampo, Chair of the UN Committee for Development Policy and Chair of ICRICT; and Sabrina Fernandes, Head of Research at the Alameda Institute and Senior Research Advisor at Oxford University’s TIDE Centre. All conference papers and videos are available online and will continue to inform joint work across the tax and climate movements.
2025 marked the biggest breakthrough in the history of tax justice: for the first time ever, every country in the world sat at the same table to negotiate international tax rules. This moment has been a century in the making, and represents a direct reversal of the exclusionary processes that shaped today’s tax architecture.
It follows a long lineage of turning points: the League of Nations allowing imperial powers to design global rules; the creation of the OECD to prevent UN leadership on tax; the Zedillo report’s call for a globally inclusive tax body; and two decades of civil society advocacy — including the Tax Justice Network’s early insistence that theUN was the only legitimate forum for global tax rule-setting. The African Union and UN Economic Commission for Africa’s High Level Panel on Illicit Financial Flows reaffirmed this need, and African finance ministers’ call in 2022 pushed the demand into the UN General Assembly process.
Nothing is guaranteed. The first year of negotiations has moved quickly, and the next eighteen months will determine the future of international tax rules. This opportunity may not come again for generations.
One factor shaping the talks is the self-imposed absence of the United States. The State of Tax Justice 2025 shows that US multinationals are now the most aggressive tax abusers globally, while the country sits at the top of the Financial Secrecy Index. Threats of retaliation against governments seeking fair taxation have clarified the choice: either move forward collectively through a UN convention, or allow a narrow group of economic powers to continue dictating the rules.
Throughout 2025, we worked with partners across the tax justice, climate and human rights movements to shape a unified civil society position on the UN Framework Convention on International Tax Cooperation.
We contributed presentations and substantive input to coordination spaces for the climate and human rights movements, including an event hosted by the Office of the UN High Commissioner for Human Rights in Geneva in July, and regular calls with climate–tax allies.
The Tax Justice Network submitted detailed contributions to each of the three UN workstreams on the framework convention in August (see Workstream 1, Workstream 2 and Workstream 3), with further submissions to workstreams 1 and 3 to be made accessible on the UN DESA website. To support broader engagement, we also developed a dedicated UN tax convention hub where civil society organisations, policymakers and the wider public can follow the development of the convention, explore the substantive issues under negotiation, and track analysis as intergovernmental discussions evolve.
Alongside this, we continued to foreground the human rights impacts of tax abuse and governance failures. We developed a range of tools and resources to strengthen understanding of the links between tax, rights and accountability, including a video and briefing exploring how multinational corporations’ tax practices affect human rights. We also contributed to reports from the Global Initiative for Economic, Social and Cultural Rights (GI-ESCR) that examine the human rights impacts of tax abuse, and through the TaxEd Alliance we deepened our collaboration on financing education.
2025 was also a year of introspection for the Tax Justice Network. As a network founded in the global North, we invited leading thinkers to challenge us on post-colonial power, reparations and our own role in the global movement. We also brought a tax justice lens, belatedly, to the context of the genocide against Palestinians.
Our podcast family expanded its reach and relevance in 2025, bringing tax justice debates into living rooms, classrooms and commute playlists around the world.
Across all shows, one key theme was the regional fallout from President Trump’s tariffs, the US withdrawal from the OECD global minimum tax deal and the formal announcement that the US would no longer participate in UN negotiations for a new global tax convention. Producers examined what these decisions mean for tax sovereignty, multilateralism and the global balance of power.
On The Taxcast (our English-language show), highlights included:
In 2025 we also ran a six-part monthly series, Unequal India Decoded, which:
Looking ahead, Series Two of our weekly podcast The Corruption Diaries will start in 2026. This time we follow the story of a music lover who ran a record label, toured with bands like Porcupine Tree, and then unexpectedly became a campaigner taking on tax dodgers and the authorities in the UK from his garden shed. Like all our podcasts, it is available wherever you get your podcasts.
Our regional language podcasts continued to grow:
Across all languages, our podcasts continue to show that tax justice is not just about numbers. It is about power, democracy and the everyday lives behind the statistics.
With pro bono legal support through TrustLaw at the Thomson Reuters Foundation and in partnership with an exceptional lawyer, we strengthened and modernised our data licensing framework. The updated system provides clearer terms and improved consistency. It also offers more robust protections for everyone who uses our data for research, media work or anti-money-laundering and risk-analysis purposes. These improvements support the long-term sustainability of the Tax Justice Network’s Data Portal.
We also completed the transition to rolling update cycles for all our indices. These smaller and more frequent releases help build momentum around our research outputs. They also provide a regularly updated resource for everyone who relies on our data, including students, researchers, journalists writing on tax justice, and private companies and international institutions working on risk profiling.
2025 was a turbulent year for tax and climate governance, it was also a year in which the tax justice movement showed its ability to adapt and lead. It was a year marked not only by historic breakthroughs in global tax cooperation, but also by rising authoritarianism, democratic backsliding and horrific levels of violence against civilian populations. These overlapping crises remind us that tax, power and accountability are inseparable from wider struggles for justice.
In this context, the work of the Tax Justice Network took on new urgency. Our advances in data and methodology were not just technical achievements. They were part of a wider effort to support governments and communities to uncover illicit flows, challenge secrecy and strengthen public oversight. At the same time, our alliances across climate, education and human rights movements helped to push the debate toward systemic change and widen the circle of actors shaping tax justice.
The coming negotiations on the UN tax convention, unfolding amid major shifts in global politics and finance, will test governments’ willingness to cooperate. They also present a genuine opportunity to secure the structural reforms that movements have demanded for decades.
We will keep working with partners around the world to build tax systems that serve the public interest, knowing that tax remains one of our strongest social superpowers.
See you in 2026.
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This year marks the 30th anniversary of the Beijing Declaration and Platform for Action. At the time, the Beijing Platform was considered the most progressive blueprint for advancing gender equality. Subsequently, the world set specific global targets for gender equality with the Millennium Development Goals in 2000 and the Sustainable Development Goals in 2015. It felt like the world would continue to move towards progressively realizing greater gender equality so that women and girls in all their diversity could reach their full potential and enjoy the full spectrum of their human rights, unburdened by discrimination. Unfortunately, 2025 paints a bleaker picture than the one envisioned 30 years ago. According to UN Women, it would take 123 more years to close the gender gap at the current rate of progress.
The Alternative Information Development Center, the Center for Economic and Social Rights, and the Tax Justice Network have launched a paper today that shows how the global financial architecture affects women and girls, exacerbating the feminisation of poverty and further entrenching systemic gendered inequalities. In Bled Dry: How tax abuse, illicit financial flows and debt affect women and girls in Africa, we explore how tax abuse and illicit financial flows, and the resulting loss of public revenue, have pushed states towards regressive tax policies, debt, and austerity measures.
Tax justice is gender justice. Women and girls in all their diversity bear the brunt of the adverse effects of illicit financial flows, debt and austerity, especially on the African continent. Africa loses about US$88 billion annually in illicit financial flows, US$7.5 billion in tax revenues to multinational corporate profit shifting and offshore wealth, and currently owes US$1.16 trillion in debt. Africa spends more on debt servicing than on health or education. Illicit financial flows rob states of their ability to mobilise the maximum available resources to ensure that human rights, including women’s rights, are realised. When the state does not provide healthcare, women take care of the sick; when education is not affordable or accessible, women care for children who should be in school; when the state fails to provide clean water and energy, women travel as far as needed to fetch water and firewood.
Current neoliberal global economic policies uphold colonial models of extraction and deepen inequalities. For women and girls, this leads to the feminisation of poverty, higher maternal mortality rates, low school enrolment and early marriages, and pushes women into unpaid care work and informal employment. These issues affect women and girls across their lifetimes, from birth to adulthood. Currently, 62.8 per cent of the world’s poorest women and girls reside in sub-Saharan Africa, and African women spend significantly more time engaged in unpaid and domestic work compared to men across the continent.
The ongoing negotiations around the UN Framework Convention on International Tax Cooperation provide a once-in-a-lifetime opportunity for reform of the global tax system. Therefore, it is imperative for the African Group of negotiators and Global South countries to engage boldly in the negotiation process, demanding more equitable and gender-responsive global tax systems. Global tax norms, institutional frameworks and practices must better enable African and Global South countries to maximise resource mobilisation for the good of people and planet, in line with existing obligations outlined in the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the International Covenant on Economic, Social and Cultural Rights (ICESCR), the Beijing Declaration and Platform of Action and the Sevilla Compromise, among others.
On the eve of Human Rights Day (2025), we demand global economic governance and policy reform that aligns international debt, tax, finance and investment policies with human rights principles. This reform must be genuinely gender-transformative and responsive to the needs of people and planet. It is time for governments to move beyond rhetoric and create a more equitable and inclusive global financial architecture grounded in the fair allocation of taxing rights.
Photo by David Geneugelijk, sourced from Unsplash.
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The Tax Justice Network updated its Corporate Tax Haven Index today with a new rolling batch. The index ranks countries by evaluating how much wiggle room for corporate tax abuse their laws provide and by monitoring how much financial activity conducted by multinational corporations enters and exits the countries. Laws are evaluated against 18 indicators. In this batch update, we focused on four of the indicators from the indicator group on ‘loopholes and exemptions’
In this blog, we’ll do a deep dive into one of these indicators: the ‘patent box regimes’ indicator.
A patent box (often also called an intellectual property (IP) box or innovation box) is a corporate tax regime that allows companies to pay a significantly lower tax rate for a long term on income derived from patents and other qualifying IP.
A patent box is a profit-based tax incentive. At the Tax Justice Network, we generally believe that cost-based tax incentives should be preferred over profit-based incentives. Cost-based incentives (also known as expenditure-based incentives) reduce a company’s tax liability by allowing it to deduct investment costs from their taxable income faster or in greater amounts than the standard rules allow. Profit-based incentives, on the other hand, reduce the tax an investor pays on the profits their investment generates. These incentives reward commercial success and profitability, often creating windfall profits. Profit-based incentives also come with limited revenue cost predictability for government. In the case of cost-based incentives, the cost to governments is capped by the amount of investment.
Patent boxes are prime examples of profit-based tax incentives to stimulate Research & Development (R&D). In line with our general view described above, we however think cost-based R&D incentives like accelerated depreciation, investment tax credits and super-deductions are superior policies. For this reason, the indicator on patent box regime gives countries that have adopted a patent box (or a patent box like regime, as explained below) the maximum ‘haven score’ of 100.
Under the Indicator, countries that have a patent box but have added a ‘nexus constraint’ receive a slightly improved score of 90, compared to the score of 100 for a patent box without nexus constraint. The assessment of the nexus constraint is based on the OECD’s work under BEPS Action 5 on harmful tax practices. Under the OECD’s nexus approach, the royalty income derived from the IP can only benefit from a patent box regime in proportion to the share of qualifying R&D expenses (uplifted by 30%) on the total of the company’s expenses.
For example, a pharmaceutical company has developed a new drug and generates $1000 in profits from this drug. The company applies to benefit from the local patent box regime which offers a 10% rate on profits instead of the standard 25% rate of corporate tax. The patent box includes the OECD nexus constraint rule. To develop the drug, the company has spent $60 on in-house research (qualifying R&D expenses in light of the nexus constraint) and $100 on acquiring external IP rights (not-qualifying expense). As a result, the ratio of qualifying expenses is $60/$100. Because of the uplift, $60 is increased by 30%, meaning that the final ratio is $78/$100. As a result, because of the nexus constraint, only 78% of the company’s $1000 profits can benefit from the preferential rate of 10% under the patent box.
The nexus constraint certainly limits the benefit of the patent box, but it does not prevent a situation where the bulk of qualifying profits already include significant tax benefits. In many countries, the application of the benefit is unrestricted in time, turning the benefit into a perpetual windfall gain. For this reason, we take into account the presence of the nexus constraint in countries’ patent box regimes, but we give it only a small reward.
To assess whether countries apply a nexus constraint to their patent box regimes, we rely mostly on the OECD’s Forum on Harmful Tax Practices (FHTP) peer reviews. But we also do a bit more digging. For some countries, the FHTP concludes that the nexus approach is in place, but the actual implementation of the nexus rules is riddled with loopholes. In Belgium, for example, the law implementing the innovation box includes the OECD’s nexus approach but adds that the proportion of qualifying income can be extended beyond the nexus limit if there is proof of exceptional circumstances which make it so that the additional value of the IP developing company is higher than the standard ratio. For our purposes, this kind of discretionary loophole (to define what are exceptional circumstances?) is sufficient to conclude that the nexus constraint has not been implemented correctly, even if the FHTP determines otherwise.
Among the OECD countries that figure in the Corporate Tax Haven Index, about 65% have a patent box or a similar measure in place that exempts certain types of royalty income. Interestingly, on average, OECD countries with patent boxes rank about 9 places higher on the index than OECD countries without patent boxes or similar regimes.
These findings show two things. First, there is a clear pattern where OECD countries that embrace a patent box regime also tend to adopt other policies we consider to be prone to corporate tax abuse in the index. This clearly shows if we compare the average difference in haven score of OECD countries with patent boxes (average score of 63.4) and OECD countries without patent boxes (average score of 52). The haven score is the Index’ qualitative component, based on the performance of countries’ legal frameworks across all indicators (for more details, see the Index methodology). Adoption of a patent box generates a difference of 2.7 in haven score as compared to a country without a patent box. In that sense, the adoption of a patent box by an OECD country – which only accounts for a tiny fraction of the haven score – seems to be a good predictor for this country to have a bad overall score and thus of the country operating as a corporate tax haven.
Second, unlike what is often claimed in patent box countries, the group of OECD countries without patent boxes, show that the adoption of such a regime is not a prerequisite for a country to create a tax environment that incentivises innovation. Denmark, for example, has preferred to apply a super deduction for qualifying R&D expenses of up to 110%. Loss-making businesses can apply for a payment equal to the tax value of the negative income related to R&D. Instead of a patent box, Germany and Italy, too, grant innovators a tax credit of up to 25% and 20%, respectively, for qualifying R&D costs. The fact that Denmark, Germany and Italy are important hubs of innovation in the European region, indicates that the use of patent boxes is not necessary for fostering a climate for innovation. .
Patent box countries often defend their patent box regime by claiming that it not only incentivises local R&D but also prevents IP flight. Unlike in the case of cost-based R&D incentives, patent boxes are said to prevent the move of patents and other IP held by local companies to offshore companies of the same group once costs have been recuperated to benefit from other beneficial regimes elsewhere. It is true that in a globalised economy, it is relatively easy for multinationals to move intangible assets (IP) to low-tax jurisdictions. It is also true that under a patent box, companies have less of an incentive to move IP to low-tax jurisdictions as the patent box country itself has turned into one for income derived from the IP. However, since the adoption of the so-called DEMPE rules in transfer pricing (See Chapter VI of the OECD Transfer Pricing Guidelines), the justification of patent boxes as the only way to prevent IP flight has lost much of its validity. Under these new transfer pricing rules, legal ownership has largely become irrelevant for-profit allocation under IP. Instead, tax authorities now look at which group company does or has done the work on (D)evelopment, (E)nhancement, (M)aintanance, (P)rotection, and (E)xploitation of the patents and other IP in question. This means that countries can safely rely on cost-based incentive regimes without fearing future profits under the locally subsidised IP will be shifted to other group companies in other countries. Even if the ownership of the IP is moved to another group company and that group company will derive the income generated by the IP, the DEMPE rules will force the multinational to recognise that the IP was developed elsewhere in the group and adequate profit adjustment between the relevant companies will have to be made.
Finally, our research reveals that a number of non-OECD jurisdictions have less visible but nonetheless aggressive tax policies in place to incentivise profit shifting through the hosting of IP in a local group company. Especially for externally acquired IP, these strategies remain relevant: they allow multinationals to buy existing patents and other protected immovable assets and locate them strategically in group companies in those countries where future royalty income is left untaxed. One such policy is for countries to exempt foreign income (including foreign royalties) as part of a purely territorial corporate tax system (i.e. a system that taxes only locally derived income). Such is the case in countries like Hong Kong, Liberia, Mauritius, Panama, Seychelles and Singapore A second obvious policy, and one which is embraced by many countries in the top 15 on the Corporate Tax Haven Index, is to simply refrain from levying any corporate tax in general. Logically, the absence of a corporate tax system has the same effect as a full royalty exemption without nexus. Such is the case in jurisdictions like Bermuda, the British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey and Turks and Caicos.
Interestingly and worryingly, none of the countries adopting either of these strategies – exemption of foreign royalty income or absence of corporate tax – have had these policies marked as ‘harmful’ by the OECD’s FHTP. For countries without or with a zero corporate tax, referred to by the OECD as the ‘no or only nominal tax jurisdictions’, the FHTP has tried to translate its nexus requirements for patent box regimes (see above) so it can also be applied to the taxation of companies by no or only nominal tax jurisdictions. As such, under the FHTP’s rules, these jurisdictions should only allow companies to benefit from their zero corporate tax regime on taxable income (including income from IP) if the companies meet certain rebuttable substance requirements like having ‘adequate’ employees and expenditures. However, the FHTP’s tweak of the nexus constraint rule does not work very well. The nexus requirement for patent boxes is essentially a formula to determine how much income can benefit from a lower tax rate. The sanction for income that does not comply with the patent box nexus constraint is taxation at the ordinary tax rate. However, in no or only nominal tax jurisdictions, all income benefits anyway from a zero tax rate and thus there is no ordinary tax rate to fall back on as a sanction.
The FHTP’s prescribed alternative sanction is for the no-corporate-tax countries – all of them known corporate tax havens – to issue fines and eventually to strike the company that operates without substance off the register. In such case, the country should also spontaneously exchange all relevant information with the parent jurisdiction so the latter is aware of what has been going on with the local group company. It is however highly doubtful whether this ‘catch-22’ system of tax haven self-reporting can effectively work in practice: the parent jurisdiction will receive information from the tax haven, only if the tax haven itself agrees the local group company has acted as such. In any case, under the Patent Box Indicator, countries without or with a zero corporate tax receive the full score of 100, just like countries that have a patent box without nexus restraint.
Our research shows that there are quite a few lose ends on the current global standards for harmful tax practices in the field of R&D tax policies. The FHTP may deem patent boxes with or without a zero corporate tax as not harmful if they come with sufficient nexus constraint but this does not change the fact that many countries worry about base erosion through outbound royalty payments. Arguably, the rise of ‘defensive measures’ in the form of countries adopting anti-abuse measures in the form of limits to the deduction of royalties paid abroad is strong evidence that the FHTP mechanism to curb royalty flows to no-corporate-tax countries is insufficient: countries still worry about their tax bases being eroded because of outsized royalty payments to local group companies to group companies abroad where the group’s IP is held. As we have shown under the index indicator on ‘deduction limitation of royalty payments’, a rising group of countries has rules in place that disallow to some extent the tax deduction of royalty payments to related companies abroad.
Interestingly, among those countries with defensive measures restricting royalty deductions are also a significant number of non-OECD countries that are generally not considered tax havens. The fact that certain non-OECD countries worry about the state of global OECD shaped rules on harmful tax practices also corroborates with the most recent negotiation session of the UN Framework Convention, held in November 2025. One of the things discussed in Nairobi during these negotiations was the text of a commitment in the Framework Convention to address harmful tax practices. Probed by a few OECD countries who claimed the work done by the FHTP is perfectly adequate, Nigeria responded that the mere fact that the negotiators of the Framework Convention have received a mandate to do work on the matter of harmful tax practices is an acknowledgement that existing OECD standards on harmful tax practices are inadequate or unacceptable for some countries. In the view of Nigeria and other Global South countries, one of the goals of the Framework Convention should be to create a framework to deal with all harmful tax practices that works for all developed and developing countries in north, south, east and west.
Time will tell how alternative standards to fight harmful tax practices will take shape at the UN. It is clear that if the view of Nigeria and others would be turned into binding rules under the Framework Convention, this may result in a world without patent boxes and without countries that refuse to adopt corporate taxes. This, in turn, would prevent other countries from having to adopt defensive measures to deal with the negative spillovers of those tax practices that are currently deemed ‘not harmful’ but in FHTP name only.
Last week, governments negotiated climate finance in Belém and new global tax rules in Nairobi. The coincidence of these talks happening at the same time — yet with almost no structured conversation between them — shows how fragmented the global response to climate action remains.
Climate negotiators discuss financing needs without asking where predictable public resources will come from, while tax negotiators debate revenue rules without acknowledging the rising costs of the climate crisis.
Treating these as separate worlds is no longer viable. Both confront cross-border harms that no country can manage alone and inequalities that no domestic policy can fix. Both demand cooperation rooted in equity and shared responsibility.
The climate regime learned early that unequal responsibility cannot be ignored. Countries adopted the principle of common but differentiated responsibilities and respective capabilities, accepting that those with greater capacity and higher historical emissions must contribute more. Under the Paris Agreement, global goals are delivered through nationally determined contributions, backed by rules on transparency, monitoring, and climate finance from countries with greater means. This system links global expectations with domestic realities and establishes a structured cycle of planning and reporting.
International taxation never made this leap. Failures to cooperate have allowed multinational corporations and wealthy individuals to underpay tax by shifting profits to low-tax jurisdictions and hiding wealth behind secrecy. As a result, countries lose an estimated US$492 billion each year to cross-border tax abuse, according to Tax Justice Network research. These losses directly undermine governments’ ability to fund the climate action, social protection, care systems, and economic diversification essential for a just transition.
With this round of Nairobi negotiations now concluded, countries have signalled a rare opportunity to advance a stronger UN tax convention—one that delivers fairer rules on taxing rights, tackles profit shifting and strengthens transparency.
Most importantly, it offers a historic opportunity to shift the burden from ordinary people to those who profit most from pollution and extraction. In practical terms, it can help build an international system that restores countries’ tax sovereignty so that governments can use tax to deliver on their people’s aspirations.
Cities, states and regions are carrying the weight of climate action. They build early-warning systems, reinforce infrastructure, manage disaster response, and support communities through heatwaves, floods and droughts. In practice, this means that the vast majority of climate implementation takes place at the subnational level—in some countries this accounts for 70% or more of climate-significant public expenditure, rising to over 80% in cases. Yet these same actors receive only around 10% of climate finance.
This mismatch is structural. Global climate finance is built around national governments and large international funds, with access that is slow, complex and tilted toward institutions with high administrative capacity. Local authorities dealing with climate impacts every day are left without the stable resources they need.
Despite this, subnational governments are modelling innovative approaches to fair climate finance. In India, the state of Kerala applies a 1 per cent flood levy to most goods and services sold within the state, using the revenue to rebuild homes, roads and schools after major floods and to strengthen community readiness for future shocks. In London, drivers of high-emitting vehicles pay a charge under the Ultra Low Emission Zone, and the net revenue is legally ring-fenced and reinvested across the city to improve air quality and strengthen local climate-resilience efforts. These examples show how small, well-designed levies can generate stable public revenue and ensure those with greater responsibility contribute more.
These local approaches matter far beyond their borders. They show that progressive, people-centred taxation can be implemented at scale and can complement national and international systems. They are blueprints for how global rules could be designed to be more equitable and more closely aligned with lived realities.
Aviation remains one of the most carbon-intensive and undertaxed sectors globally. In response, a coalition of eight countries—including Kenya, Colombia, Barbados, the Dominican Republic, Mozambique, Tanzania, France, and Spain—launched the Premium Flyers Solidarity Coalition, backing levies on business class, first class and private jet travel. These charges target the highest emitters and, if coordinated across willing countries, could raise around €121 billion a year, depending on design—offering a major new source of finance for adaptation, resilience and loss and damage.
This approach builds on existing practice: more than 52 countries already apply some form of aviation levy. Several governments in the Global South are now examining just and equitable air-passenger levies that place higher costs on higher-income and higher-emitting travellers. In Kenya, for example, a new air-ticket fee that supports tourism and related sectors charges KSh 600 (about US $4) for domestic flights and KSh 6,500 (about US $50) for international flights, with higher rates for premium-class tickets and the possibility of future increases through Gazette notice. This kind of tiered design can support sectoral objectives, such as tourism, while also advancing broader goals like climate ambition and strengthening the revenue tools needed to deliver them.
For many countries across Africa, Latin America and the Caribbean, fiscal space is tightening, debt is rising, aid is faltering, and private finance cannot meet essential adaptation needs. Solidarity levies are not a replacement for existing commitments, but they remain one of the most practical tools for generating reliable, debt-free public revenue at the scale highlighted in the Baku-to-Belém roadmap.
A familiar dynamic has emerged in Nairobi. Countries from Africa and the wider South are pushing for meaningful shifts, while some high-income countries and tax havens are using procedural delays and vague language to dilute commitments. Concerns about tax sovereignty are raised selectively, even as the climate crisis shows that sovereignty today is strengthened through cooperation, shared rules and predictable public finance—not through isolation.
A new global tax system is being designed, but many negotiators do not yet seem aware of the scale of this moment or its implications for climate action, inequality and development. Without mechanisms to tax major emitters, high-net-worth individuals and multinational polluters, the emerging convention risks becoming another symbolic agreement.
The reforms under discussion are not abstract. Ending harmful tax incentives, tackling profit shifting and strengthening transparency could raise US$2.6 trillion a year for governments worldwide—more than enough to meet climate-finance needs and expand fiscal space for development. These are the tools countries require to invest in resilience and reduce debt pressures. Choosing not to adopt them is, in effect, choosing climate austerity—underfunded systems facing ever-rising climate costs.
The climate crisis has made the links between public finance, inequality and environmental survival impossible to ignore. Since 2015, the richest 1% have captured US$33.9 trillion in newly created wealth—an amount that dwarfs the total wealth owned today by the entire bottom half of the world’s population.
Alongside this, the world’s largest oil and gas companies made approximately US$200 billion in profits in 2022, much of it in the form of windfall gains amid the global energy crisis triggered by Russia’s invasion of Ukraine. And all of this sits atop a global economy that still directs more than US$7 trillion a year in fossil fuel subsidies—public money that props up the very industries driving the crisis.
It is against this concentration of wealth and public resources that these negotiations show how closely climate action and revenue systems are intertwined. Recognising that connection — and acting on it — will determine the future governments choose to build, and whose pockets they expect to fund it.
A version of this blog appears in Common Dreams and The Energy Mix.
During negotiations in Nairobi this week on a future UN tax convention, India delivered one of the sharpest interventions of the process so far. Addressing the long-contested issue of illicit financial flows, the delegation said:
“Illicit financial flows as a definition is the elephant in the room. The United Nations already has a formal statistical definition, which includes a specific category of illicit financial flows related to tax. This definition recognises tax avoidance as an illicit financial flow. Under the SDG framework, the UN and member states have broadly accepted that illicit flows can also arise from legal economic activities through aggressive tax avoidance — including manipulation of transfer pricing, strategic placement of debt and intellectual property, tax treaty shopping and the use of hybrid instruments and entities. India would like to emphasise that a good starting point for defining illicit financial flows is the UN’s conceptual framework for measuring them.”
This is a pivotal moment. For years, several OECD countries have argued that illicit financial flows cannot be defined, or that tax-related illicit financial flows fall outside the scope of the term. This position followed a long period in which OECD members resisted the UN adopting a definition grounded in the landmark work of the African Union and Economic Commission for Africa High Level Panel on Illicit Financial Flows out of Africa, chaired by former South African president Thabo Mbeki — which identified multinational companies’ tax abuse as the gravest threat.
India’s intervention cuts through the noise by publicly affirming what the UN system has already agreed at the technical level. The definition exists, it is clear, and it explicitly recognises tax-related illicit financial flows as a major component, including the aggressive ways multinational companies underpay tax. Crucially, the statistical framework for measuring these flows is already established and ready to be used.
The Tax Justice Network has warned for years that some states have sought to strip multinational tax abuse out of the definition of illicit financial flows. In 2017, our chief executive Alex Cobham addressed the UN Financing for Development Forum and sounded the alarm about a coordinated effort to narrow the scope of the Sustainable Development Goal target on illicit financial flows. He documented a clear political attempt to remove multinational tax avoidance from the definition, despite the overwhelming evidence that these flows account for some of the largest and most damaging revenue losses in lower-income countries. Allowing multinational tax abuse to slip out of the definition would have weakened accountability, undermined the purpose of SDG 16.4 and erased one of the central drivers of illicit financial flows.
That warning has now been vindicated. India’s intervention this week directly echoes the concerns the Tax Justice Network raised in 2017 and reaffirms what the global evidence base has long shown. There is a globally agreed statistical definition. It explicitly covers tax-related illicit financial flows. The UN Statistical Commission has endorsed it. The conceptual framework developed under Indicator 16.4.1 already recognises aggressive tax avoidance as a form of illicit financial flow. And yet some OECD countries are still resisting what has been agreed by UN member states and embedded in the Sustainable Development Goals. India’s statement makes clear that the debate should have moved on long ago. Under the UN framework, illicit financial flows are defined by the harm they cause to societies and public finances, not simply by whether they break the law. This is why the UN recognises aggressive tax avoidance, even when it is technically legal, as an illicit financial flow.
India’s intervention restates the facts. The United Nations has already adopted a formal statistical definition of illicit financial flows through the Sustainable Development Goal framework. Indicator 16.4.1 mandates the measurement of illicit financial flows, and two UN bodies, UNODC and UNCTAD, were tasked with developing the conceptual measurement framework after extensive technical consultations. That framework, later adopted by the UN Statistical Commission, recognises that illicit financial flows can arise from aggressive forms of tax avoidance, including profit shifting through transfer pricing manipulation, tax treaty shopping and the strategic placement of debt and intellectual property. These are not marginal practices. They are some of the most common tools used by multinational companies to shift profits out of the countries where they operate and into jurisdictions offering secrecy or ultra-low tax rates.
India’s confirmation should close the door on repeated attempts to suggest that tax-related illicit financial flows are somehow optional, disputed or outside the scope of the UN framework. The global standard already exists. It has been negotiated, endorsed and agreed by all UN member states. The measurement framework is publicly available, technically robust and explicitly recognises tax abuse as a form of illicit financial flow. Continuing to deny this reality is not a technical position. It is a political one, and it runs counter to the commitments countries have made under the Sustainable Development Goals.
The research base behind the definition is extensive and long established. As the open access chapter by Alex Cobham and Petr Janský shows, multinational profit shifting and corporate tax abuse represent not just one element of illicit financial flows, but one of the largest and most systematically harmful components. The academic and policy literature is unequivocal. Tax-motivated illicit financial flows drain government budgets, weaken the ability of states to provide essential services, and erode governance by breaking the link between taxation and political accountability. When multinationals can shift profits out of countries without consequence, it becomes harder for governments to respond to their citizens, and easier for powerful actors to shape policy behind closed doors. The resulting inequalities are not incidental. They are baked into the architecture of a global tax system that allows a small number of jurisdictions to profit from secrecy and artificially low tax rates.
A globally inclusive understanding of illicit financial flows therefore requires recognising the central role played by multinational enterprises, the opacity of corporate accounts and the financial secrecy offered by high-income jurisdictions. These factors enable profit shifting, conceal the true location of economic activity and allow harmful tax practices to persist across borders. Without confronting these structural drivers, efforts to tackle illicit financial flows will fall short. Recognising tax abuse as a core component of illicit financial flows is not only consistent with the evidence. It is essential to building a fair, transparent and effective international tax system.
India’s contribution marks the clearest public statement so far that the definition already approved by the UN Statistical Commission should guide negotiations on a UN tax convention. It also exposes a widening gap between the globally inclusive UN framework and the resistance from some OECD members to acknowledge and address multinational tax abuse as a core part of illicit financial flows.
As negotiations continue in Nairobi, governments now face a clear choice. They can continue to promote ambiguity for political convenience, or they can follow the evidence and uphold the commitments already embedded in the Sustainable Development Goals and agreed by all UN member states. A key element to track tax-related illicit financial flows is the analysis of country by country reporting from multinational companies – and the convention negotiations have already seen repeated calls for the adoption of a global, public database of this reporting. Given the evidence showing how this transparency leads multinationals to curb their tax abuse, the recent State of Tax Justice 2025 report shows that such a measure could have generated an additional US$495 billion in revenues worldwide since 2016.
India’s statement should mark the end of manufactured uncertainty. Illicit financial flows include tax abuse. The UN definition exists. The measurement framework exists. The evidence exists. The scope for major revenue gains is abundantly clear. What remains is political will.
In this blog, I explore the idea of treating taxation as a form of climate reparations — a necessary step toward recognising the historical injustices that have shaped today’s climate inequality and reimagining how responsibility for repair is shared.
According to a recent report by the United Nations Environment Programme (UNEP) within the next decade, the world is likely to overshoot the temperature goal of 1.5 degrees Celsius, set a decade ago by the Paris Agreement. As countries meet at COP30 in Belem, the question of who bears the greatest responsibility for remedying the climate crisis is likely to take centre stage yet again.
This question of ‘climate reparations,’ however, is not new.
Three decades ago, the Association of Small Island Developing States called for an insurance scheme which would be funded by global North states to pay reparations to small island developing states.
This call has largely been ignored.
More recently, the Pacific Islands Students Fighting Climate Justice spearheaded the effort to obtain an Advisory Opinion on climate change from the International Court of Justice. Speaking at the ICJ’s hearings earlier this year, its President, Vishal Prasad, had this to say: “If greenhouse emissions are not stopped, we are not just risking our future, we are welcoming its demise.”
Contemporary calls for climate justice from the global South are rooted in notions of historical responsibility stemming from the racist history of colonial extraction. These advocates argue that climate reparations must address both racial injustice and the ecological crisis, regarding the two as intertwined.
In this blog, I advance a decolonial reading of the recent advisory opinion issued by the International Court of Justice (ICJ) and make the case for treating wealth taxes as a form of climate reparations. I outline several key claims here, though each is developed in greater detail in my forthcoming policy brief.
Firstly, inequality is a defining feature of the climate crisis — and it is deeply racialised. The racist history of colonial extraction lies at the root of this inequality, making it a foundational driver of both climate vulnerability and injustice.
While the Paris Agreement correctly regards the climate crisis as a ‘common concern of humankind’, not all human beings will be affected in equal measure.
It is well documented that the global North bears disproportionate responsibility for the climate crisis. According to the latest report of the IPCC, climate change is not only caused by inequality between countries but also inequality between households with wealthier households contributing disproportionately. The same report found (with high confidence) that vulnerability to climate change is exacerbated by inequity linked to historical processes such as colonialism.
The conventional origin story of climate change needs to be decolonised. According to this story: the ‘Anthropocene’, climate change began in the Industrial Revolution in the mid-eighteenth century when the highest emission of greenhouse gases was first recorded.
Critics of the Anthropocene argue however that this view fails to engage in a robust political economy analysis that acknowledges which human beings bear primary responsibility.
Decolonial scholars argue that colonialism — particularly racial capitalism with its commodification of both nature and human beings and its model of extractivism — facilitated the present-day ecological crisis. Racial capitalism can be defined as ‘the fabrication and manipulation of racial hierarchies by colonising countries to maintain control over populations and extract labour, wealth, and resources.’ By “race,” I mean social classifications based on phenotypical features, as well as culture, language, and ways of life that were deemed inferior vis-à-vis Europeans during the transatlantic slave trade, as well as the genocide and dispossession of Indigenous peoples from their lands.
My second claim is that, given the significant role of colonialism in driving the climate crisis, particularly climate inequality, racial justice should be an essential component of climate reparations.
Article 8 of the Paris Agreement provides that the allocation of resources for loss and damage, does “not involve or provide a basis for any liability or compensation”.
The International Court of Justice’s (ICJ) recent advisory opinion, however, arguably paves the way for climate reparations. The Court held that there is a customary law duty to prevent significant harm to the environment, and this includes a duty to prevent significant harm to the climate system. Failure to adhere to this duty is an internationally wrongful act giving rise to climate reparations with the caveat that attribution and causation can be established on a case-by-case basis.
A question left open by the ICJ’s Opinion is the temporal dimension of climate reparations: just how far may one turn back the clock? Unlike the IPCC, in identifying the root causes of climate change, it did not mention colonialism.
It did however point to the necessity of phasing out fossil fuels which was a central feature of extractivism during colonialism.
In addition, it stressed that the principles of equity and common but differentiated responsibilities and respective capabilities (CBDR principle) have a bearing on the interpretation of the normative content of states’ obligations under climate law.
Legal scholar Duncan French argues that the primary justification for the CBDR principle is to acknowledge the historical responsibility of the North for current environmental degradation, its present capability to remedy such problems, and the way it disproportionately benefited from them.
The ICJ also considered international human rights law as a relevant normative source in interpreting states’ obligations in respect of climate change. Equity is a core principle of international human rights law. The core international human rights treaties prioritise substantive over formal equality. This includes gender and racial equality both within and between countries as well as advancing the rights to self-determination and development.
A decolonial reading of the ICJ’s Opinion should prefer a definition of reparations which is both backward-looking and forward-looking because reparations are meant to attend to past, present and future harms. A decolonial reading of the ICJ’s Opinion that is rooted in historical responsibility is necessary so that climate finance is not regarded as charity but as a legal obligation.
In my opinion reparations should take the form of wealth taxes:
Taxation as reparations should be regarded only as a first step towards decolonising the global economy. Reparative justice would also involve significant debt cancellation, technology transfers and reform of global economic governance systems so that they are more democratic and adequately consider the distinct needs, priorities and capacities of countries in the global South.
Decolonisation, however, ultimately requires an overhaul of the present international economic order, which continues to disadvantage the peoples of the global South. After all, ‘true reparations can never be delivered by a system that is founded on white supremacy.’ Taxation is, at best, a non-reformist reform that challenges the status quo and marshals the world toward greater racial and climate justice.
The global reliance on oil and gas as a primary energy source comes at a significant cost to the environment and to vulnerable communities. The oil and gas industry, dominated by a few large multinational enterprises, is a major polluter and a key actor in global tax abuse. This creates a double burden: environmental degradation and loss of public revenue for governments that host their operations. Beer and Loeprick (2015) estimate that firms in the extractive sector shift around 34 per cent of their true profits to low-tax jurisdictions. Developing countries lose between 3 and 7 per cent of GDP to profit shifting annually (Cobham and Janský, 2017). A forthcoming South Centre study by Ferré et al. (2025), analysing publicly available country by country reports by oil and gas companies, finds that a significant number of these companies have effective tax rates below 15 per cent in several developing countries, with Morocco, Colombia and Gabon among the most affected South Centre member states.
Effective taxation of oil and gas multinational enterprises is not only a matter of revenue mobilisation but also a mechanism to align tax systems with climate justice — especially as the world approaches COP30 in Brazil and continues negotiations under the UN Framework Convention on International Tax Cooperation.
In this blog, we briefly explore some of the tax abuse tools used and the overly generous tax incentives enjoyed by the oil and gas sector, and propose five key measures to enhance the tax capacity of host countries, particularly developing countries. A detailed paper will be published at a later date.
The oil and gas sector poses unique tax challenges. Projects require huge upfront investment, take many years to develop and involve high risks, but can generate large profits once production begins. To attract investors, many governments offer generous tax concessions such as tax holidays, reduced tax rates, exemptions from indirect taxes and duties, accelerated depreciation, and stabilisation clauses — legal provisions that guarantee companies the same tax terms for decades, even if national laws change (Calder, 2015; Mager et al., 2024; UN, 2021, p. 149). While these measures may help attract investment at first, they often erode the tax base and prevent host governments from benefiting once projects become profitable. Stabilisation clauses, in particular, can trap countries in outdated tax deals and limit their ability to respond to changing economic conditions (Oshionebo, 2010).
The effectiveness of tax incentives in attracting investment remains debated. Studies suggest that factors such as political stability, infrastructure, governance and regulatory quality often rank higher than tax rates or incentives in influencing investment decisions (James, 2010). Geography and resource endowment are particularly crucial for extractive investments, overshadowing tax incentives as primary determinants (Hvozdyk and Mercer-Blackman, 2010).
The global operations of oil and gas multinational enterprises make it easy for them to shift profits across borders through complex accounting practices such as transfer pricing, the use of marketing hubs and offshore shell companies (Calder, 2015; Marcolongo and Zambiasi, 2022). In practice, this often involves moving money between their own subsidiaries — for example, by charging inflated fees for technical services, leasing rigs, intercompany loans or the use of intellectual property (Calder, 2015; Kalra and Afzal, 2023). These transactions can be deliberately mispriced to shift profits from high-tax to low-tax jurisdictions. Developing countries usually lack the data, expertise and comparable market information needed to challenge such schemes, leading to ongoing revenue losses (Kalra and Afzal, 2023).
Tax treaties modelled after the OECD Model Tax Convention prioritise residence-based taxation at the expense of source countries, meaning that the right to tax often goes to the country where a multinational is headquartered rather than the country where its profits are generated. This design restricts source countries’ taxing rights over business profits, technical services and capital gains of resource companies. Tax treaties often restrict how much tax a country can collect from foreign companies. They do this by lowering the taxes countries can charge on dividends, interest and royalties, and by excluding services from taxation. Many treaties also define “permanent establishment” (PE) — the legal threshold for when a company’s operations can be taxed — in very narrow terms. Oil and gas multinational enterprises take advantage of this by splitting their activities across subsidiaries, rotating drilling rigs to stay below time limits, or providing services remotely so that their presence never officially counts as taxable.
Feng et al. (2024) analysed more than 180 tax treaties between OECD countries and South Centre member states. They found that the average source taxing rights index was below 0.4 (on a scale where 1 represents maximum taxing rights under the UN Model), showing that developing countries lose a large share of their taxing rights under these treaties. Similarly, Amaro et al. (2024) show that many treaties restrict taxation of services, even though developing countries are mostly net importers of services.
1. Strengthen transfer pricing rules.
Transfer pricing rules should align with international best practice, such as the UN Practical Manual on Transfer Pricing, and apply to all related-party transactions — exchanges of goods or services between companies within the same multinational group. These rules ensure that internal prices reflect real market values, preventing profits from being shifted to low-tax countries. Key steps include building the capacity of tax authorities to apply the rules effectively, setting clear documentation requirements for cross-border transactions, and establishing reference price benchmarks for commodities like oil and gas to check whether declared prices are fair. Regional cooperation can further strengthen enforcement by enabling information sharing, joint audits and shared databases to detect and prevent profit shifting.
2. Strengthen source taxation rights.
Developing countries should renegotiate or terminate outdated treaties that overly restrict source taxation. New treaties should incorporate United Nations Model provisions that strengthen source taxation, such as Article 12AA on Fees for Services, the revised Article 8 on Income from Shipping and Air Transport, and Article 5A on Income from Exploration and Exploitation of Natural Resources, which reduces the time threshold for establishing a permanent establishment (PE) to 30 days. The definition of a permanent establishment should include all forms of physical presence and economic activities typical of oil and gas operations, and should adopt anti-fragmentation rules to prevent the artificial avoidance of a taxable presence.
3. Explore formulary apportionment for oil and gas multinational enterprises.
Instead of relying on the complex arm’s length principle — which treats each subsidiary of a multinational as if it were an independent company — countries could adopt formulary apportionment. This approach looks at a company’s global profits as a whole and divides them among countries based on real economic activity, such as sales, assets and employment. It ensures profits are taxed where value is actually created. For the extractives sector, some experts like Kerry Sadiq (2024) suggest adding a fourth factor based on production levels, so that resource-rich countries receive a fair share of tax revenues.
4. Mandate public country by country reporting.
Public country by country reporting should be mandatory for all fossil fuel companies. Contractual agreements with governments should also be made public. This would help tax administrations and the public track profits, payments and emissions across jurisdictions.
5. Remove harmful tax incentives.
Governments should review tax expenditures, remove costly and unproductive concessions, and replace profit-based incentives with transparent, time-bound, production-based measures such as royalties linked to output. All incentives should be disclosed publicly in national budgets and through open registries for accountability. International and regional coordination can harmonise incentive regimes, prevent harmful competition and establish global standards for extractive companies.
Ensuring that oil and gas multinational enterprises pay their fair share is essential to financing a just climate transition for the Global South — one grounded in both tax justice and climate justice.
References
Amaro, F., Grondona, V., & Picciotto, S. (2024). The Implications of Treaty Restrictions of Taxing Rights on Services, Especially for Developing Countries. South Centre. https://www.southcentre.int/wp-content/uploads/2024/10/RP211_The-Implications-of-Treaty-Restrictions-of-Taxing-Rights-on-Services-Especially-for-Developing-Countries_EN.pdf
Beer, S., & Loeprick, J. (2015). Taxing income in the oil and gas sector: Challenges of international and domestic profit allocation. WU International Taxation Research Paper Series No. 2015 – 18. https://research.wu.ac.at/ws/portalfiles/portal/18981643/SSRN-id2610558.pdf
Black, S., Liu, A. A., Parry, I. W. H., & Vernon, N. (2023). IMF Fossil Fuel Subsidies Data: 2023 Update. IMF Working Papers, 2023(169), 1. Crossref. https://doi.org/10.5089/9798400249006.001
Calder, J. (2015). Administering Fiscal Regimes for Extractive Industries. International Monetary Fund.
Cobham, A., & Janský, P. (2017). Global distribution of revenue loss from tax avoidance: Re-estimation and country results (No. 9292562797). WIDER Working Paper.
Ferré, L., Kawashima, N., & Piot, A. (2025). Curtailing Tax Avoidance by Oil and Gas Multinational Companies (MNCs) in Developing Countries. South Centre; Geneva Graduate Institute.
Hvozdyk, L., & Mercer-Blackman, V. (2010). What Determines Investment in the Oil Sector? A New Era for National and International Oil Companies. Inter-American Development Bank.
James, S. (2010). Providing Incentives for Investment: Advice for policymakers in developing countries. Investment Climate in Practice.
Kadafa, A. A. (2012). Environmental impacts of oil exploration and exploitation in the Niger Delta of Nigeria. Global Journal of Science Frontier Research Environment & Earth Sciences, 12(3), 19–28.
Kalra, A., & Afzal, M. N. I. (2023). Transfer pricing practices in multinational corporations and their effects on developing countries’ tax revenue: A systematic literature review. International Trade, Politics and Development, 7(3), 172–190.
Mager, F., Meinzer, M., & Millán, L. (2024, June). How corporate tax incentives undermine climate justice. Tax Justice Network.
Marcolongo, G., & Zambiasi, D. (2022). Incorporation of offshore shell companies as an indicator of corruption risk in the extractive industries. Incorporation of Offshore Shell Companies as an Indicator of Corruption Risk in the Extractive Industries, 2022(14). https://doi.org/10.35188/UNU-WIDER/2022/145-7
Oshionebo, E. (2010). Stabilization clauses in natural resource extraction contracts: Legal, economic and social implications for developing countries. Asper Rev. Int’l Bus. & Trade L., 10, 1.
Sadiq, K. (2024). Formulary Apportionment for the Extractives Industry—How Should Resource Rents be Taxed. Journal Financing for Development, Vol 1(5). https://uonjournals.uonbi.ac.ke/ojs/index.php/ffd/article/view/2287
San Sebastián, M., & Hurtig, A.-K. (2004). Oil exploitation in the Amazon basin of Ecuador: A public health emergency. Revista Panamericana de Salud Pública, 15(3), 205–211.
UN. (2021). Handbook on Selected Issues for Taxation of the Extractive Industries by Developing Countries. United Nations (UN). https://www.un.org/esa/ffd/wp-content/uploads/2018/05/Extractives-Handbook_2017.pdf
The new EU Money Laundering Regulation (EU 2024/1624) explicitly defines financial secrecy as a geographical risk factor that obliged entities must take into account when applying their customer due diligence obligations to customers from third countries in the future. According to the regulation, financial secrecy arises, for example, when countries hinder the exchange of information, do not maintain registers of beneficial owners or have strict banking secrecy. These factors overlap with the indicators of the Financial Secrecy Index, thus opening up the possibility of assessing geographical risks in money laundering prevention in a more evidence-based and less politically biased manner.
Traditional high-risk country lists (so-called ‘blacklists’) fall short: they are politically biased, binary (yes-no) and thus overly simplistic, and risk having discriminatory effects. These lists usually target small countries or those with lower incomes, while large financial centres are often overlooked. This is why they have been criticised by the IMF, for example, and why the FATF has promised improvements. A data-driven assessment can compensate for this distortion and draw attention to those countries and transactions that actually pose a high risk of money laundering.
Against this backdrop, on 26 September, I had the honour of presenting a geographical risk model for money laundering using data from the Financial Secrecy Index at a roundtable on ‘Anti-Money Laundering in the Berlin-Brandenburg Region’. It is based on the results of the EU-funded TRACE research project (Horizon 2020) and is explained in more detail in a scientific article accepted for publication by Cambridge University Press (see a working paper version here). My slides from the roundtable can be found here.
The Financial Secrecy Index assesses 141 countries on the basis of 20 indicators. The secrecy score reflects the extent of financial secrecy in each country on a scale of 0 to 100, thus providing an objective basis for geographical risk models. The underlying database is structured according to scientific standards and makes an unrivalled wealth and depth of comparative legal data and gap analyses publicly available in over 120 data points per country. The index method was statistically validated by the Joint Research Centre of the European Commission in 2018.
The model presented combines the secrecy score with the transaction volume and uses this to calculate a risk score for each transaction or suspicious activity report. This allows suspicious activity reports to be prioritised – particularly important given the large volumes that are received daily by the FIU or generated by transaction monitoring by obliged parties. This model can serve as a safety net to ensure that no big (money laundering) fish slip through the net of other risk assessments.
As an example, we applied this method to the FinCEN Files, a dataset containing over 18,000 suspicious activity reports from the United States. Our model can help not only FIUs, but also banks and other obliged parties to fulfil their reporting obligations in a more targeted and efficient manner and reduce the risk of fines. Supervisory and law enforcement authorities can sort suspicious activity reports according to urgency and substantiate national risk analyses with data (as we outline in greater detail in an article in the European Journal of Criminal Policy and Research – open access, here).
The model is modularly expandable – for example, for sectors such as real estate or cryptocurrencies – and can be continuously improved via feedback loops. Using anonymised data packages from FIUs, supervisory authorities or obliged parties, the model could be further refined and calibrated to achieve the best results and reduce false positives. We are therefore open to partnerships with authorities, supervisory bodies and the private sector or obliged parties in order to further improve anti-money laundering and risk assessment. A data-based geographical risk assessment could lead to a more targeted use of resources and thus make the fight against money laundering significantly more effective.
The European Union could certainly be even more ambitious in this regard: according to the EU Money Laundering Directive, the above-mentioned consideration of financial secrecy as a geographical risk factor is only mandatory for non-EU member states (‘third countries’). Of course, obliged entities can go beyond this and apply the same risk parameters to transactions or business relationships within EU countries. After all, the idea that financial secrecy and money laundering risks are not a problem in the EU is far from reality.
We’re pleased to share this blog from the Kelon Felix, Chris Jones, Johan Rewilak & Yama Temouri, orginally posted by Centre for Business Prosperity here.
With over 36% of multinational firm profits shifted to low-tax jurisdictions each year, the use of tax havens has become one of the defining features of global capitalism. Estimates suggest that without such practices, domestic tax revenues in EU countries would be around 20% higher (Tørsløv et al., 2023). Globally, the State of Tax Justice Report finds that some US$1.42 trillion in profits are moved offshore annually, costing governments an estimated US$348 billion in lost tax revenue (Tax Justice Network, 2024). These flows undermine the provision of public goods such as education, healthcare, and infrastructure, distort competition, and generate deep ethical concerns. For many commentators, “dark offshore money” has even become a threat to democracy itself (Johnson & Acemoglu, 2024).
Questions remain on how political systems shape these practices, particularly in emerging markets, despite our knowledge on the scale and tax management strategies of firms in their quest to avoid taxation. Our recent study, published in Management International Review fills this gap by examining how the level of democracy and the presence of natural resource rents in a firm’s home country influence their use of tax haven locations. Emerging markets provide an ideal setting for such analysis, given the fluidity and diversity in their political systems in comparison to long-established democracies in the developed world.
Using a large dataset of around 4,500 multinational firms with detailed financial and ownership information, we find that firms headquartered in more democratic emerging markets are significantly less likely to route investments through tax havens. As Rodrik (2000) describes, democracy functions as a “meta-institution”—a higher-order framework that shapes the operation of all others. By promoting transparency, accountability, and the rule of law, democratic systems limit firms’ ability to pursue secrecy without scrutiny. Autocratic regimes, by contrast, often foster environments where tax haven use serves not only fiscal purposes but also the protection of elite interests and the preservation of political power.
Yet we also find that natural resource dependence can erode the constraining effects of democracy on tax avoidance. Resource rents foster rent-seeking, entrench elite power, and weaken institutional oversight, making firms in resource-rich countries more inclined to use tax havens. Moreover, resource wealth moderates the influence of democracy itself: even in relatively democratic settings, entrenched elite interests can persist, limiting the ability of institutions to curb offshore practices.
Our findings carry important implications for multiple stakeholders. Managers of emerging-market multinational firms may see offshore tax avoidance as a rational response to domestic conditions—such as political norms or entrenched elite networks—but this strategy entails serious ethical and reputational risks. When exposed, such behaviour can invite intense scrutiny from civil society, consumers, employees, and shareholders alike. For policymakers, they face a double-edged sword. Whereas an autocratic political system and granting favours to elites help secure political support and help maintain power, democracy and dismantling deep-rooted elite networks, may reduce offshore activity and stimulate government revenues. If these supplementary revenues are well managed, they can build public trust and support ultimately strengthening a government’s case for re-election. At the international level, stronger multilateral cooperation on tax transparency and information exchange is needed to prevent profit-shifting, but the effectiveness of these efforts will depend heavily on the domestic institutions of participating countries.
Our study shows that tax haven use is not simply a matter of lowering tax bills. It is deeply embedded in the political and institutional fabric of emerging markets. Democracies constrain offshore secrecy, while resource rents encourage it, and together they shape a complex geography and web of global tax avoidance. At a time when geopolitical competition and the search for fair taxation are intensifying, recognising the role of political institutions is essential. Moving away from autocratic regimes may not eliminate offshore use, but they point countries in a more sustainable and accountable direction.
Lastly, our findings also have relevance for developed economies where institutions are weakening and the erosion of democratic norms and growing political polarization raise concerns about institutional resilience. As oversight weakens and trust declines, these nations may become more exposed to rent-seeking behaviour that may lead to greater offshore secrecy.
This October, climate and tax justice movements will gather in Brazil for A Climate for Change: Towards Just Taxation for Climate Finance. The two-day conference at UNICAMP (13–14 October 2025) comes at a pivotal moment: just weeks before COP30 in Belém and on the road to the next stage of UN tax convention talks in Nairobi.
The arc from Belém to Nairobi defines the crossroads we face. In Belém, governments will deliberate on how to mobilise trillions for the climate transition. In Nairobi, they will decide who sets the tax rules that determine where that money comes from and who controls it. Linking the two is vital: without tax justice, climate finance will remain unreliable, unequal, and undemocratic. Without climate justice, tax revenues will remain misdirected, inequitable, and detached from the people and communities they are meant to serve. These are not parallel struggles but interdependent ones, each giving meaning and force to the other.
Climate finance debates can feel like déjà vu. For over a decade, leaders have stood on global stages, pledging billions, announcing shiny new funds, and promising to unlock trillions through markets. Yet too often, those pledges fade quietly into the background.
The most famous commitment — to mobilise US$100 billion a year by 2020 — was missed for years. When donor countries finally reported it as “achieved” in 2022, watchdogs pointed out that much of the total was made up of loans counted at their full face value, development aid re-labelled as climate finance, and private flows of doubtful additionality. Instead of easing the burden, almost 69% of this finance came as loans, leaving many of the most climate-vulnerable countries paying back more than they received.
At COP29, governments announced the New Collective Quantified Goal (NCQG): a promise of USD 300 billion annually by 2035, billed as the successor to the failed $100 billion pledge. But rather than restoring trust, the NCQG has already become an emblem of delay, dispute, and deep division over who pays, how much, and who benefits. This cycle repeats itself: promises at one COP, quarrels over delivery at the next, and citizens left waiting for finance that never truly arrives. Meanwhile, climate disasters accelerate — from floods and fires to heatwaves and droughts — and the bill for adaptation, loss and damage, and energy transition keeps growing.
But here’s the twist: while negotiators scour the world for “innovative” fixes — carbon markets, blended finance, green bonds — the biggest climate fund already exists. It’s hiding in plain sight: in tax havens, fossil fuel subsidies and unfair financial rules, all flowing in the wrong direction. Governments are subsidising crisis, locking economies into fossil fuel dependence, stalling investment in renewables, and delaying diversification. In reality, rich countries could raise up to US$6.6 trillion a year through polluter-pays measures — taxing the super-rich, ending fossil fuel handouts, enforcing minimum corporate tax rates, cancelling unjust debt payments and cutting bloated military budgets. Unlocking those resources doesn’t require invention. It requires political will.
Every year, governments lose nearly US$500 billion to tax abuse by multinationals and the super-rich. At the same time, they spend trillions on fossil fuel subsidies — more than US$600 billion in 2023 on consumer subsidies alone, and close to US$7 trillion globally when you include the wider costs of pollution and climate damage. These are political choices, not inevitabilities, and the imbalance could not be sharper. As of April 2025, the Fund for Responding to Loss and Damage — established under the United Nations Framework Convention on Climate Change (UNFCCC) to support vulnerable countries in rebuilding after climate disasters — has attracted just US$768 million in pledges from 27 contributors, with only part of that delivered. Set against the hundreds of billions needed each year, it is a token sum in the face of a mounting catastrophe. By comparison, ExxonMobil alone made over US$55 billion in profits in 2022, the highest ever for a Western oil company. One corporation’s windfall dwarfed what the entire world offered to frontline communities struggling to rebuild.
Against this backdrop, governments and civil society are advancing new proposals for fair and reliable sources of finance. Global solidarity levies are one of the most powerful ideas now on the table — modest taxes on undertaxed activities that drive emissions and inequality. At COP29, the Task Force on Solidarity Levies set out options including charges on fossil fuel extraction, aviation, shipping, plastics, cryptocurrency, financial transactions, and billionaire wealth, with the potential to raise over $500 billion a year for climate and development while also strengthening domestic resource mobilisation. Building on this, eight countries launched a premium flyers coalition at the UN Financing for Development conference in Seville in June 2025, arguing that it is indefensible for the wealthiest flyers and dirtiest industries to escape taxation while frontline communities are left to pay the price of the climate crisis.
Where solidarity levies could help rebalance the scales, their absence is felt most sharply in the Global South, where fiscal systems remain anchored in extractive revenues. Heavy reliance on natural resource rents makes government revenues dangerously volatile: they collapse when commodity prices fall, and when prices rise they deepen dependence on fossil rents instead of building broader, fairer tax bases. With corporate profits and elite wealth slipping offshore, governments are left with few reliable options and often fall back on regressive taxes like VAT — easy to collect, but hardest on ordinary citizens. This dependence on extraction also slows diversification, keeping economies tied to fossil rents instead of investing in renewable energy, green industries, and value-added industrial sectors that could build resilience. At the same time, rising debt service is eating up a growing share of public budgets, leaving governments with little fiscal space for a just energy transition.
The lesson is clear: the money exists, but it flows the wrong way. Instead of subsidising polluters and enabling tax abuse, governments could reclaim resources to fund resilience, renewables, and care systems. Redirecting even a fraction could transform climate finance overnight.
Think about climate finance like your home’s water supply. Would you rather wait on rainwater that may or may not come, or draw from a well you can rely on every day? Loans pile up. Donations dry up. But tax is steady, fair, and accountable.
And just as no home can function without a steady water supply, countries need the right to raise and govern their own revenues. This is the essence of tax sovereignty: deciding who is taxed, on what terms, and in whose interests. Without it, governments remain trapped in manufactured scarcity, bound by debt and external dictates. With it, they can chart climate transitions that reflect their priorities and protect their people.
Tax justice isn’t only about raising money. It’s about shaping the political economy of the transition itself — deciding whose interests are prioritised, who pays, who benefits, and who is left absorbing the costs on the path to sustainable futures.
In the Global South, the stakes come into sharpest focus: the reckoning is not only about finance gaps but about climate debt. According to a 2025 report by ActionAid, rich polluting countries owe Africa at least US$36 trillion in climate debt. This is the unpaid bill of historic responsibility — a legal obligation under international agreements and a material debt for the real damages and adaptation costs African countries now face. This debt is far greater than the total foreign debt owed by African countries, and it represents services like healthcare, education, and climate action that are being forgone to repay foreign creditors.
It is this debt that gives rise to demands for climate reparations. Too often, those demands are brushed aside as impossible, dismissed as utopian. But reparations are not charity — they are accountability: recognising that the climate crisis is the result of deliberate choices that enriched some while pushing those least responsible yet most affected into vulnerability. Unlike loss and damage finance, which covers only present impacts while avoiding liability, reparations demand responsibility for past harms and the moral obligation to repair them.
Tax justice shows how these demands can be made real. A windfall tax on unearned profits — the billions energy companies pocketed during the global price crisis, not through innovation but from sheer price spikes — would be a start. Windfall taxes in Europe offer an example: when energy providers made “abnormally high” profits during the energy crisis, some governments acted — imposing temporary taxes to redirect surplus profits toward households suffering from sky-high bills and toward stabilising energy systems. These measures show what’s possible when tax systems are used to reclaim money that was never meant to go unchecked.
Alongside this, taxing extreme wealth and shutting down loopholes that let the richest shift profits offshore would raise the resources needed to recognise historic responsibility and fund just transitions. Far from utopian, these actionable steps show how those most responsible for climate breakdown can — and must — pay their fair share.
As host of COP30 and co-leader of the Baku-to-Belém Roadmap, Brazil stands at the centre of a historic turning point. The roadmap’s headline figure — to mobilise US$1.3 trillion a year by 2035 — signals ambition. But the real test will be in the design: will this money come from yet more debt and speculative financial instruments, or will it be anchored in fair taxation, subsidy reform, and new international tax rules that shift power away from polluters and towards people?
Brazil itself embodies the paradox. On one hand, it is home to the Amazon — a living system vital to stabilising the planet’s climate. On the other, Petrobras — Brazil’s state-controlled oil giant — is central to national plans to raise oil and gas production by about 20% by 2030, accounting for more than half of the increase. This expansion deepens the dependence that drives both climate and fiscal vulnerability, even as the government continues to pour tax breaks and financing into fossil projects while presenting a green development agenda on the global stage.
That contradiction matters far beyond Brazil’s borders. If the world’s largest tropical forest is treated as collateral for more fossil expansion, the credibility of global climate commitments crumbles. But calling for Brazil to turn away from fossil extraction cannot mean ignoring its developmental needs. The alternative must be tangible — harnessing tax revenues to fund just transitions that create genuine economic pathways for communities, rather than entrenching new structural traps. And if Brazil chooses this path — redirecting subsidies, closing loopholes, and championing international tax cooperation in the UN negotiations in Nairobi — it could turn contradiction into precedent. It would prove that a country can meet development needs while advancing climate justice, and that finance can be built not on charity or debt, but on justice and sovereignty.
This is also Brazil’s chance to connect climate leadership with the politics of equity. By linking tax sovereignty to the repayment of climate debt, it could strengthen its moral authority at COP30 and show how domestic reforms — taxing windfalls, phasing out fossil incentives, investing in renewable industries — can reinforce global ones. In doing so, Brazil would turn the abstract numbers of the roadmap into real, durable gains for people and the planet.
In short: the Amazon will be the backdrop, but tax justice will be the litmus test. Brazil can show that climate finance done right is not about volatile private finance or false solutions that serve as dangerous distractions, but rather about reclaiming resources from the structures that created the crisis in the first place.
This October, A Climate for Change: Towards Just Taxation for Climate Finance will bring together policymakers, researchers, and grassroots leaders at UNICAMP in Campinas. Here in Brazil, ahead of COP30, we will break down silos and forge strategies, focusing on how reclaiming tax sovereignty can unlock the trillions needed for a just, people-centred transition.
Across two days, we will take on three urgent questions at the heart of that struggle:
These questions point to concrete measures — from closing corporate tax loopholes and taxing extreme wealth and fossil fuel windfalls, to ending destructive subsidies and anchoring the Baku-to-Belém roadmap in just taxation rather than new debt. They also demand reimagining power itself: reshaping taxation through feminist, decolonial, and reparatory visions led by those at the nexus of extraction, inequality, and climate breakdown.
Taken together, these steps are not just about closing a finance gap; they form the foundations of tax sovereignty, creating revenues that are steady, fair, and accountable to citizens rather than external lenders. But sovereignty cannot be secured in isolation. It rests on multilateral cooperation — which is why advancing a UN Framework on International Tax Cooperation is so critical. For the first time, all countries — not just the richest — have the chance to rewrite the global rules on a truly democratic footing. What is needed now is not another empty pledge, but tax justice: the lever that can turn climate debt into reparations, redirect obscene fossil fuel profits into renewables, and give nations the fiscal power to plan just transitions on their own terms.
Register now to attend the conference online or in person on 13–14 October 2025. The two-day conference will be held at UNICAMP in Campinas, Brazil and will start at 9:30am local time. More information about the event, speakers and panels is available here.
The conference is co-hosted by Instituto de Economia, University of Campinas (UNICAMP), Inesc, Observatório Brasileiro do Sistema Tributário, Red de Justicia Fiscal de América Latina y el Caribe, Transforma, and the Tax Justice Network, the two-day conference will take place at the University of Campinas in Brazil on 13-14 October 2025.
This October, climate and tax justice movements will gather in Brazil for A Climate for Change: Towards Just Taxation for Climate Finance. The two-day conference at UNICAMP (13–14 October 2025) comes at a pivotal moment: just weeks before COP30 in Belém and in the first year of negotiations towards a UN tax convention. It is an opportunity to connect two agendas too often treated in isolation — climate and taxation — and to show why bridging them is essential for a just transition.
Every year, countries lose around US $500 billion to cross-border tax abuse by multinational corporations and superrich individuals. That is money that should be funding hospitals, schools, renewable energy, and climate resilience — but instead is siphoned away into tax havens and hidden behind financial secrecy.
Outdated global tax rules — shaped with little input from most countries — together with the grip of corporate interests, strip governments of their tax sovereignty: the right to decide who is taxed, on what terms, and in whose interests. Stripped of this power, governments are pushed into manufactured scarcity — trapped in the myth that there is “no money” for climate action or public services, even as billions drain away through loopholes, profit shifting, and harmful incentives.
The Tax Justice Network’s recent research shows that reasserting tax sovereignty would cover most countries’ climate finance needs and leave most with billions to spare towards other public services — yet this potential remains out of reach, with 80% of countries’ tax sovereignty already “endangered” or “negated.”
Today’s global economic architecture entrenches that reality. It protects wealth while constraining governments — especially in the Global South — from mobilising their own resources. The result is dependence on debt, austerity, and volatile private flows, where creditors and corporations hold more sway over policy than citizens. What we face is not a climate finance gap, but a tax sovereignty gap — one that robs governments of the fiscal space to raise and use revenues for the transitions their people and planet urgently need.
Brazil is not only hosting COP30 — it is also co-leading, with Azerbaijan, the Baku-to-Belém Roadmap, the flagship process tasked with mobilising US $1.3 trillion a year in climate finance by 2035. For Brazil, this is more than diplomacy: it is a political choice to step onto the global stage as a broker between North and South, and as a country whose own development depends on whether the world can finance a just transition.
The roadmap underscores both urgency and risk. Mobilising US $1.3 trillion annually is essential — but how that money is raised matters as much as the figure itself. Will it come as new loans, tightening the debt trap that already consumes much of the Global South’s revenue? Will it rely on false climate solutions like carbon markets that mask inaction, fuel land grabs, and fail to cut emissions? Without tax sovereignty, these targets risk joining the long trail of broken pledges that have stalled climate action for decades.
This is why Brazil matters now. With COP30 in Belém, in the heart of the Amazon, the world’s eyes will be on a country that reflects the contradictions of today’s global economy: a rising power with vast natural wealth and climate leadership ambitions, yet pouring billions into new oil and gas expansion that risks locking the region into decades of carbon dependence. These contradictions give Brazil both the credibility and the urgency to demand climate finance anchored in public revenues, not in debt or extractivism.
A Climate for Change will spotlight this debate. It argues that tax is not only the most reliable and fastest source of climate finance, but also the most democratic — unlike aid, debt, or private capital, which shift power from citizens to creditors and corporations. For Brazil, advancing tax justice is both a domestic necessity and a global responsibility: reclaiming the revenues needed to protect its people, preserve the Amazon, break its reliance on fossil fuel rents, and prove that another model of climate finance is possible.
The conference will bring together advocates, policymakers, researchers, and grassroots movements from across the world to build common strategies and narratives. Together, we will set out a vision where countries can exercise their rights to tax fairly, reclaim the resources lost each year to tax abuse, and direct them towards development and climate priorities defined by their people.
In doing so, we will make clear that tax justice and climate justice are inseparable — and that reclaiming tax sovereignty is central to transforming the global economic order that has entrenched inequality, empowered corporate interests, and delayed climate action for far too long.
Register now to attend the conference online or in person on 13–14 October 2025. The two-day conference will be held at UNICAMP in Campinas, Brazil and will start at 9:30am local time. More information about the event, speakers and panels is available here.
The conference is co-hosted by Instituto de Economia, University of Campinas (UNICAMP), Inesc, Observatório Brasileiro do Sistema Tributário, Red de Justicia Fiscal de América Latina y el Caribe, Transforma, and the Tax Justice Network, the two-day conference will take place at the University of Campinas in Brazil on 13-14 October 2025.