Countries today voted by a landslide majority to adopt an ambitious scoping document for a UN tax convention, after months of negotiation. The document1, referred to as the Terms of Reference, sets out ambitious parameters and a clear roadmap for the next stage of negotiations, to being next year, on a framework convention and early protocols. The parameters secured set a strong enough basis for countries to deliver the biggest shakeup in history to the broken tax system.
Sergio Chaparro Hernández, Tax Justice Network’s International Policy and Advocacy lead, said:
“Our countries are on course to lose nearly $5 trillion to tax havens over the coming decade. Countries at the UN just based open the door to a better future where we avert this, and finally put an end to rampant tax abuse by multinational corporations and the superrich. A door that a few OECD countries tried to bolt shut.”2
110 countries voted in favour of the terms of reference; only 8 voted against; and 44 countries abstained. The vote is a sign of the remarkable steam the UN process is gaining. The last vote in the process, held in November last year, saw 48 countries, mostly OECD countries, vote against proceeding with negotiations. In contrast, most OECD countries abstained today.
The terms of reference published adopted today has retained the key elements that civil society organisations who presented evidence and expert view in the negotiations say are necessary for making sure the final version of the framework convention can protect countries’ taxing rights and claw back billions from tax havens. These foundations include specific references to corporate tax, taxing wealthy individuals, tax avoidance and tax evasion, illicit financial flows, the allocation of taxing rights among countries, and alignment with human rights, sustainable development and the necessary response to environmental challenges.3
This is despite a concerted effort by a few members of the OECD, a small club of rich countries and tax havens that has operated as the de facto global rule maker on tax for over 60 years, to water down and block the terms of reference – including, a last-ditch effort today to torpedo the terms with convention-killer amendments. The negotiations, which began in February this year, have largely played out as a global power struggle with most countries wanting to move leadership on global tax rules away from the OECD to the UN, but a handful of OECD countries pushing back.
The OECD is widely blamed for designing a global tax system that haemorrhages nearly half a trillion dollars to tax havens every year, with non-member countries suffering the most intense damage.4 It’s also criticised for failing to deliver its decade-long promised tax reform package, which UN independent experts have said may in any case be “incompatible” with international human rights commitments, including those against racism.5 The countries who had voted in 2023 against beginning this year’s UN negotiations represented only 15% of the global population, but were responsible for 75% of all tax losses countries suffer to tax havens yearly.6 Some of these sought to weaken the terms of reference.
Next in the process, the terms of reference agreed at the Ad Hoc Tax Committee today will go to the UN General Assembly in late November or early December, where countries will decide whether to proceed to the next and final round of negotiations based on the agreed terms of reference.
Sergio Chaparro Hernández said:
“We commend countries on their decision today to set out an ambitious terms of reference, for the good of their people, their economies and our planet. For too long, tax havens and corporate lobbyists have wielded too much influence on our global tax rules behind the OECD’s closed door. Today, governments made an important step forward in taking back power for their people over the global tax rules that impact us all. Moving global tax rules to the UN would finally require these to be decided transparently and democratically, where governments can be held accountable by their people back home, and progress ensured towards our shared human rights.”
Alex Cobham, chief executive at the Tax Justice Network, said:
“This is a momentous day. More ambition has been secured towards fixing the global tax system in just a few months of negotiations at the UN than we’ve seen in over 60 years from the OECD. For the first time, we have commitments to a fair allocation of taxing rights between countries, and to ensuring that countries do not undermine human rights around the world through selfish, short-sighted tax policies. This just shows how much better a transparent and democratic process can be at fixing our global problems, than the opaque dealmaking we all suffer from in the rich countries’ club at the OECD. Today, the majority of countries voted to move the world forwards towards re-establishing the potential for effective direct taxation – including of multinational companies and the super-rich. While unanimous agreement on the text at the UN today is the ideal scenario, the overwhelming majority of countries who are seeking an ambitious deal must press on with a public vote if needed.”
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Notes to editors
- The final draft of the terms of reference is available here.
- The State of Tax Justice 2023 reported last year that countries are on course to lose US$4.8 trillion to multinational corporations and wealthy individuals using tax havens to underpay tax over the next 10 years.
- In its current version the document provides a solid basis for future negotiations. The document contains commitments on the relevant issues of international tax cooperation that a Framework Convention should address: fair allocation of taxing rights, including equitable taxation of multinational enterprises; addressing tax evasion and avoidance by high-net worth individuals; achievement of sustainable at development in its three dimensions, economic, social and environmental; effective mutual administrative assistance in tax matters, including with respect to transparency and exchange of information for tax purposes; addressing tax-related illicit financial flows, tax avoidance, tax evasion and harmful tax practices; and effective prevention and resolution of tax disputes. It is essential that ambition does not wane in the final stretch.The document also provides a clear list of objectives, principles, early protocols to be prioritised, structural elements of the Framework Convention, and dispositions on timeframe and approaches to negotiation that will guide the next Ad Hoc Committee in the negotiation phase of this instrument.
- Read more about the OECD’s failed stewardship of global tax policy here.
- Read more about the UN experts’ special intervention here.
- Read more about our analysis of 2023’s historic UN vote to begin negotiations on a UN framework convention on tax here.