Countries to gain $500bn more tax a year under UN ‘pay-where-you-play’ plan

UN tax convention commitment to scrap 100-year-old corporate tax approach will unleash new economic era without increasing taxes, experts say

Countries can collect US$500 billion more in corporate tax a year from multinational corporations without increasing taxes by following through on the UN tax convention’s commitment to change where multinational corporations pay tax, according to research by the global union federation Public Services International (PSI) and the Tax Justice Network.¹

The tax boost would see²:

• EU countries collect enough to quadruple spending on climate adaptation in agriculture, energy and transport – including €3.7 billion for Spain and €22.4 billion for France currently fighting wildfires;
• the Global South collect more in a single year than the entire amount owed by Global South countries to the IMF in outstanding loans;
• the UK collect enough to cover the cost-of-living measures newly announced by Prime Minister Andy Burnham six times over, or more than two-thirds of the estimated cost of an NHS-style social care system;
• and the US collect enough to increase its current spending on renewable energy 45 times over, creating over 265,000 new jobs.

As governments meet tomorrow in New York to firm up the latest draft of the UN tax convention³, PSI General Secretary Daniel Bertossa said:

“Multinational corporations have been robbing countries of billions in corporate tax every year by running circles around a tax rule written before most households had electricity. The UN tax convention can finally modernise our global tax system by requiring multinationals to pay tax where they actually create profit, instead of where they pretend to on paper. If this sounds like a low bar to meet, you’re getting a picture of how catastrophically mismanaged our global tax rules have been and why countries moved them to the UN. The only losers under this plan are tax havens and tax dodgers, and that’s a big win for workers and public services everywhere.”

The new study estimates how much tax countries would bring in under the UN’s commitment to change how countries determine where a multinational corporation pays tax on its profits. Countries currently rely on a 100-year-old “pay-where-you-say” approach set up by the League of Nations, which requires governments to tax multinational corporations’ profits based on where they declare them.⁴ Multinational corporations have long gamed this approach by moving their profits into tax havens before declaring them.

The UN tax convention’s commitment would replace this with a “pay-where-you-play” approach which taxes multinational corporations’ profits based on where they genuinely do business – ie, where they employ their workers, and make and sell their goods and services.⁵ This makes shifting profits into tax havens useless, since multinational corporations tend to employ little to no workers in tax havens, and almost all their goods and services are made and sold elsewhere.

The study finds that countries altogether would collect 24% more corporate tax from multinational corporations without increasing their tax rates by modernising from “pay-where-you-say” to “pay-where-you-play”. The change would mean multinational corporations would have to abide by the tax laws of countries they do business in for the first time in decades, and so the amount of tax countries collect from multinational corporations would effectively fast-forward several decades to catch up with and accurately reflect the higher levels of profits modern multinational corporations make today.

For comparison, General Motors reported a profit of US$248million in 1929, or US$4.7 billion in today’s dollars. Apple recorded a profit 24 times greater in 2025, standing at US$112 billion.⁶

The biggest sums would be gained in higher-income countries while the biggest impacts would be felt in lower-income countries, where the smaller sums would increase the amount of corporate tax the countries collect annually from multinational corporations several times over.

High-income countries would increase the corporate tax they collect from multinationals a year by 21%, bringing in at least US$140 billion more in tax a year; upper-middle income countries would increase by 31%, bringing in at least US$112 billion more. Meanwhile, lower-middle income countries would triple the amount they collect, bringing in at least $61 billion more; low income countries would quintuple the amount they collect, bringing in at least $3.6 billion more a year.⁷

To further put the scale of tax revenue into perspective, countries that received grants from the US under the Marshall Plan to help rebuild post-war Europe, including the UK, would collect the inflation-adjusted equivalent of what they received at the time every two years.⁸

India would collect $43 billion more a year, increasing its tax revenues from multinationals by 194%; Brazil $17 billion (+62%); South Africa $8.9 billion (+85%); Nigeria $2.5 billion (+641%); Kenya $1.3 billion (+406%); Jamaica $0.31 billion (+587%).

Alison Schultz, one of the study’s authors and research fellow at the Tax Justice Network, said:

“We’re not changing multinational corporations’ tax rates, just where they should pay them and the result is huge, with almost every country benefiting, precisely because these corporations have been taking profits out of countries and into accounting ‘no-where’ zones for decades now. Multinationals make us all economically insecure when they extract economic wealth out of our countries and fuel billionaire-backed authoritarianism preying on that insecurity. The UN tax convention is taking a stand by simply asserting that the ‘where’ matters – our shops, offices and factories and the people working in them, where global profit is locally made, matter. Trump and his ilk might not like it, but democracy started with a fight for just taxes – no taxation without representation – and the UN is carrying on that torch today by demanding local representation on global taxation.”

Countries agreed to move decision-making on global tax rules to the UN and away from the OECD, a small club of rich countries and tax havens, after two decades of failed attempts by the OECD to reform the global tax system it built. While reform attempts by the OECD refused to move away from the “pay-where-you-say” approach and instead focused on adding guardrails to the obsolete approach, the UN tax talks have made more progress in just 3 years of negotiations than the 20-year OECD process was allowed to entertain. The UN tax convention is scheduled to go to a final vote next year.

The study identifies a handful of countries – tax havens and a few countries with an “HQ bias” – that would collect less tax under “pay-where-you-play”, but simply increasing their corporate tax rates to moderate levels like those of other countries would offset these losses, the study finds. These jurisdictions that have operated as tax havens for decades – and have cost the world $3 to $18 in lost tax revenue for every dollar they collected⁹ – would no longer be able to tax the billions in profits shifted into their borders from around the world, but nonetheless would bring in the same amount of tax revenue by moderately taxing only the profits genuinely made within their borders, just like the rest of the world. This shows how inefficient and wasteful the tax haven model is, the Tax Justice Network says.

PSI General Secretary Daniel Bertossa added:

“Under the archaic rules that exist we have seen the cycle repeated a thousand times: a multinational wins a government contract, immediately diverts public money offshore through internal loans, related-party transactions and other profit shifting tricks, and then turns around to plead poverty when it comes time to pay decent wages and invest in the workforce capacity needed to actually deliver quality public services.”

-ENDS-

Read the report
Explore the tax revenue results

How we calculate the change in tax revenue in four steps

1. For each multinational corporation, we sum up all the profits it reports around the world.
2. We allocate a slice of this total profit to each country where the multinational corporation genuinely does business. The more business the multinational corporation genuinely does in the country, the bigger the slice the country gets to tax.
3. We check the difference between the slice of profit the country would get and the amount of profit the country currently gets to see if the country gets more or less profit to tax under the new approach.
4. If the country gets more profit, we calculate how much extra tax the country would collect from this extra profit if it were to tax it the way it normally taxes profit. If the country gets less profit, we calculate how much less tax the country would collect as a result of the reduction in profit.

Good to know

• In step 1, we treat resource rights prior to taxing rights. This means that we leave out of the total sum of profit any profit that a multinational corporation makes by extracting a country’s natural resources – like minerals and oil – and that is already being captured by the resource-rich country. We do this to make sure that resource-rich countries continue to get their fair share of the profits made by extracting their natural resources, ensuring that the right to tax that profit is not “allocated away” by unitary taxation. This is an original contribution our study makes to the literature.
• There are different ways to measure genuine business activity in step 2, all of which can change the size of the slice a country gets. Our study models four prominent formulas for doing this, showing how much tax each country would collect under each formula. Our headline formula, which we used for the numbers in this press release, uses two factors and gives them equal weight: where a multinational corporation employs workers and where it sells goods and services. This formula sees the most countries (almost all) collect more tax.
• In step 2, we record where a multinational corporation sells goods and services based on where the customer is located not where the sales are reported. Multinational corporations often report their sales in tax havens instead of the places where they make sales to underpay tax, so our approach here makes sure profit gets taxed in the countries where sales are genuinely made. This is another original contribution our study makes to the literature.
• There are some additional assumptions and steps for dealing with data gaps that can change the final results, based on how these are handled. The final results we present in our study and this press release are based on a conservative approach to these assumptions and steps. Using less conservative approaches for handling these more than doubles the $500 billion final result we present up to $1.1 trillion. The full range of results possible is shared in our study, and the methodology discusses these assumptions and steps in more detail.

For more details, see our methodology.

Notes to editors

1. The new report is available here. The $500 billion in additional tax revenue sits on the conservative side of the report’s modelling, based on impact-narrowing assumptions and the most restrictive treatments where data gaps arise. Using less conservative approaches more than doubles the $500 billion result to $1.1 trillion. The full range of results possible is shared in thestudy. A short summary of the methodology is shared above. The full methodology is available here.
2. EU countries would collect €57 billion more a year in corporate tax under ‘pay-where-you-play’, which is 4 times than the €15 billion to €16 billion EU countries have currently committed to climate adaptation in agriculture, energy and transport, according to the European Energy Agency. The total the Global South would collect in a single year under ‘pay-where-you-play’ is greater than the total currently loaned by the IMF to the Global South. G77 countries are currently US$150 billion in credit to the IMF, and would collectively collect US$155.5 billion more a year under ‘pay-where-you-play’. This number however includes G77 countries with large gains but little or no IMF debts. If we calculate the number of years each individual G77 member will need to collect enough under ‘pay-where-you-play’ to repay its IMF loans, the typical country (median) will need 5 years and 8 months. The UK would collect 71% more from multinational corporations, bringing in an additional £12.8 billion a year. The new UK government recently announced a £2 bus fare cap, reported to cost £400 million in additional funding; business rate cuts for pubs, clubs and music venues, costing £100 million a year; and the removal of VAT from household electricity bills, which is reported to cost £850 million for 2026–27, covering the six months from 1 October 2026. We have doubled this cost to arrive at annual figure of £1.7 billion, recognising that this likely an overestimate of cost given the lower heating demands of the summer period. Altogether, these measures come to an annual cost of £2.2 billion a year. The £12.8 billion the UK would additionally bring in under ‘pay-where-you-play is 5.8 times greater. The US would increase the corporate tax revenue it collects from multinationals by 12%, gaining at least an additional $35.5 billion a year in corporate tax under ‘pay-where-you-play’. This is almost 45 times the US$795 million that US Congress appropriated in 2025 for the Department of Energy’s core solar, wind, water, geothermal and renewable-energy grid-integration programmes. Every US$1 million spent on renewables is estimated to create 49 FTE jobs, so spending an additional 35,500 on renewables could create 265,895 new jobs.
3. Negotiations on the UN tax convention will resume on Monday 3 Aug 2026 in New York. The fifth session of talks is the penultimate session of negotiations and expected to be the most crucial, where most of the conventions details and texts will be firmed up. A final review will follow later this year ahead of a vote on whether to adopt the convention or not next year. You can follow the Tax Justice Network’s rolling updates on the negotiations here, and watch the negotiations live here. The UN tax convention 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. More information is available on the UN website here.
4. ‘Pay-where-you-say’ vs ‘Pay-where-you-play’
   The ‘pay-where-you-say’ approach taxes multinational corporations where they declare their profits, which multinational corporations have long gamed by shifting their profits into tax havens before declaring them. In contrast, the ‘pay-where-you-play’ approach taxes multinational corporations where they genuinely do business – ie, employ workers, and make and sell goods and services. Under pay-where-you-play, the location where profit is declared on paper is irrelevant to where it gets taxed, which makes shifting profit into tax havens useless. Pay-where-you-say is primarily based on the 100-year-old “arms’ length principle” which requires governments to pretend that the local parts of a multinational corporation – its subsidiaries, headquarters and holding companies – are completely disconnected from one another and therefore ought to be taxed separately. It’s a legal fiction that pretends Apple Ireland deals and negotiates with Apple France as though they were unrelated companies, and even in competition with one another. Each country can only tax the profit made by the parts within its borders. Multinational corporations exploit this by shifting profit into their parts in tax havens to underpay tax – with over a trillion US dollars shifted offshore every year. The “pay-where-you-play” approach replaces the arm’s length principle with two components: “unitary tax” with “formulary apportionment”. Unitary tax does away with the charade and treats the multinational corporation as one entity, as a multinational corporate group made up of all its local parts. The question then is who gets to tax this unified profit? This is addressed with formulary apportionment, which allocates to each country where the multinational operates a portion of the profit to tax. The apportioning is based on a formula that takes into account things like how much of the corporation’s workforce, assets and sales are in the country – the bigger the presence of these, the bigger the portion. The calibration of the formula can have big impacts on which countries get a slice of the profit to tax and how big their slice is, hence there tends to be debate on this. Our study models four different formulas, showing how much tax revenue each version would raise. Our headline version, on which we base the numbers in this press release, gives equal weight to the location of the number of employees and the location of the sales of goods of services. This formula proves to be the most beneficial to the biggest number of countries – that is, almost all countries with the exception of a handful of tax havens and ‘HQ bias’ countries, all of whom would still benefit by increasing (or introducing) their corporate tax rates to the normal rates used by other countries. Together, unitary tax with formulary apportionment sees multinational corporations get taxed in the places where they genuinely do business.
5. See note 5.
6. Source for General Motors 1929 profit available here. Source for Apple’s 2025 profit available here.
7. Our study estimates how much more tax countries would collect under ‘pay-where-you-play’ both in terms of a percentage change in the amount countries currently collect and in terms of a monetary amount in US dollars. It is worth noting that the latter – the monetary amount in US dollars – is a lower bound to the true value. This is because currently available country by country data – ie, tax transparency data that reveals where multinational corporations make and move their profits to – only covers about 65% of multinational corporations’ profits. All our country and regionally reported dollar estimates are therefore only based on these 65% of observed profits. To gauge the tax implications at a global level, we scale the estimates based on the observed profits up by assuming that the non-reported 35% of profits behave “similarly” like the part we observe. This results in our headline estimate that multinational corporations would pay $500 billion more in tax on their profits. However, we cannot confidently complete the picture in the same way at the country level, since the missing multinationals might use other structures that would affect countries differently. Therefore, the monetary amounts we report countries will gain would very likely be larger in practice.
8. The Marshall Plan transferred US$13.3 billion to 16 countries over the course of 4 years, which is US$141 billion today adjusted for inflation. The 16 countries would collectively collect US$68.2 billion more a year under “pay-where-you-play”, which would lead the countries to collect the full $141 billion amount in 2.07 years. Dividing the $141 billion figure over the Marshall Plan’s four-year period, the countries would annually collect roughly double (194%) the amount they annual collected under the Marshall Plan.
9. See note 1.

About PSI

PSI is the Global Union Federation for public service workers, uniting more than 700 trade unions representing 30 million workers in 154 countries. We bring their voices to the UN, ILO, WHO and other regional and global organisations. We defend trade union and workers’ rights and fight for universal access to quality public services.

About the Tax Justice Network

The Tax Justice Network believes our tax and financial systems are our most powerful tools for creating a just society that gives equal weight to the needs of everyone. But under pressure from corporate giants and the super-rich, our governments have programmed these systems to prioritise the wealthiest over everybody else, wiring financial secrecy and tax havens into the core of our global economy. This fuels inequality, fosters corruption and undermines democracy. We work to repair these injustices by inspiring and equipping people and governments to reprogramme their tax and financial systems.