Countries to vote today on ambitious scope for UN tax convention after months of negotiations

Economists, civil society organisations and campaigners from around the world are calling on countries to back the ambitious scoping document for a UN tax convention that emerged yesterday after months of negotiations at the UN. The document¹, referred to as the Terms of Reference, sets out the principles and protocols that will inform the framework convention, and has retained enough of its original ambition to deliver the biggest shakeup in history to the broken global tax system, the Tax Justice Network says.

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. The UN tax convention is our best shot to avert this, and to put an end to rampant tax abuse by multinational corporations and the superrich.”²

The terms of reference published yesterday has retained the foundations that campaigners say are necessary for making sure the final version of the framework convention, to be negotiated from January 2025, 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. 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 continue to seek to weaken the terms of reference.

The final round of negotiations on the terms of reference for the UN framework convention on international tax cooperation, which took place over the past three weeks in Ney York, will conclude today. Countries are expected to put the terms of reference to a public live-streamed⁷ vote by 3pm EDT, if they are unable to reach agreement in the morning on the few remaining points of differences. This means the terms of reference are still not out of the woods, as blocker countries may still seek to water down ambition in the home stretch, the Tax Justice Network warns.

Sergio Chaparro Hernández said:

“We urge countries to back ambitious terms of reference today, 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 can take 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.

“While a commonly agreed text would be desirable, a majority of countries that understand the urgency of the problem should not accept the delaying tactics of other countries seeking to evade any meaningful compromise. All countries have had the opportunity in this process to put forward their views on the proposed text and have had sufficient time to reach agreement. If countries are truly committed to fully inclusive and effective tax cooperation, they should endorse this roadmap for future negotiations.”

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

“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 the prospect of 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, our governments have the opportunity to take a major step 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, and refuse to allow a handful of OECD members including tax havens to block the change our world urgently wants and needs.”

-ENDS-

Notes to editors

1. The final draft of the terms of reference is available here.
2. 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.
3. 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.

   For more analysis, see the Global Alliance for Tax Justice’s Tove Maria Ryding’s commentary.

4. Read more about the OECD’s failed stewardship of global tax policy here.
5. Read more about the UN experts’ special intervention here.
6. Read more about our analysis of 2023’s historic UN vote to begin negotiations on a UN framework convention on tax here.
7. The final sessions of UN negotiations on the terms of reference can be watched live today on UN Web TV here.