Tax experts slam ICC for “shameless” facts-for-hire report on UN tax proposal

Leading tax experts have slammed the International Chamber of Commerce (ICC) over a “shameless” report in which the ICC claims that a UN tax proposal would result in global South countries losing more tax revenue than they gain.[1]

The ICC report was authored by advisory firm Oxford Economics, which has received public scrutiny in the past over its flawed reports funded by the tobacco industry.[2]

A review of the ICC report published yesterday evening by the Tax Justice Network concludes the report relies on a model so deeply flawed that “the results are meaningless at best – if not deliberate distortions to serve a lobbying agenda.”

José Antonio Ocampo, a commissioner of the International Commission for the Reform of International Corporate Taxation (ICRICT) and the former Finance Minister of Colombia, said:

“It is disappointing to see such a flawed analysis being used to justify lobbying at the UN negotiations. And it is disturbing to see that so many OECD countries appear to want to endorse this report, apparently without any kind of due diligence.”

The ICC report attempts to evaluate how a proposed UN article on withholding taxes – exit taxes used to disincentive profit shifting – would impact services that are conducted across countries’ borders. Several studies, including the primary study cited by the ICC’s report, conclude that withholding taxes do not result in a reduction of these services and at the same time increase governments tax revenues, which in turn can boost GDP.[3]

Alex Cobham, chief executive at the Tax Justice Network, said:

“The ICC’s report is a shameless attempt to muddy the debates at the UN. The report’s deeply flawed claims are unfit for this level of international negotiations and disrespectful to the time and intelligence of countries’ delegations. These kinds of facts-for-hire tactics might have passed in the closed-doors haggling at the OECD, but now that global tax rules are being publicly negotiated at the UN, we can better separate fact from fiction.”

Countries are currently negotiating the biggest shakeup in history to global tax rules at the UN. The negotiations will establish a world-first UN tax convention purposefully designed to tackle rampant tax abuse by multinational corporations and superrich.

The Tax Justice Network identifies the following flaws in the ICC report:

1. The ICC sample does not include most global South countries, despite the claims.
   The ICC study includes just 12 out of 54 African Group members – a glaring omission considering that the current negotiations are taking place following the leadership of the African Group of UN member states.

2. The ICC model is based on a single study which directly contradicts the ICC claims.

• The ICC report’s central claim is that cross-border services activity declines when it is taxed more heavily. But the ICC’s model relies on an IMF study that directly contradicts this claim. The IMF study concludes: “We find little evidence that higher WHTs reduce aggregate service payments at the importer level, consistent with service rerouting”.
• The IMF study shows that the bilateral pattern of crossborder services is changed by bilateral tax changes – but crucially, there is little or no overall reduction in crossborder services. It is difficult to understand how the ICC report could in good faith have based its finding of a major drop in crossborder services upon this study.
• In addition, the IMF result reflects bilateral tax changes between two countries, which might be expected to change bilateral services flows between those countries. But the ICC is looking at global implementation of a tax change, and so the results of looking at bilateral changes are of questionable relevance, comparing apples and oranges – even if they did not directly contradict the ICC claims.

3. The study claims that the global South as a group will be worse off, but the claimed total losses for the group are driven by China and India. Looking at the data at a country level suggests that nearly all other countries would stand to benefit – even under the ICC’s flawed model.
4. The ICC model fails to account for additional revenues raised by countries in the first instance that in turn feed into higher GDP or other gains – despite the copious evidence on this.
   
5. The report reveals a deep misunderstanding of what Article 12AA is about in its discussion of Foreign Direct Investment (FDI). There is no plausible mechanism that may deter FDI. If anything, implementing Article 12AA may make FDI more competitive relative to remote service provision without a local presence.

-ENDS-

Read the review

Notes to editor

1. The Tax Justice Networks’ review of the ICC report can be found here.
2. The Oxford Economics/ICC report, ‘Economic impact of Article 12AA: New UN tax model provision on cross-border services’, can be found here. A summary and criticisms of Oxford Economics’ work for tobacco companies can be found at the University of Bath’s Tobacco Tactics platform.
3. The main study that the ICC report depends upon is Liu, Li, Alexander Klemm, Parijat Lal (2025). Shaping Services Trade: the Heterogenous Effects of Withholding Taxes, International Monetary Fund, available here. In stark contradiction of the Oxford Economics/ICC claims, these authors conclude that there is “little evidence that higher WHTs reduce aggregate service payments at the importer level, consistent with service rerouting. These results highlight the role of WHTs as a policy tool for limiting base-eroding payments in global services trade.”