Alex Cobham ■ European Parliament backs a UN tax convention


European Parliament backs a UN tax convention

The European Parliament has passed a resolution calling for the European Union to support the negotiation of a UN tax convention.[1] The proposed convention is intended to create a set of tax standards and an intergovernmental tax body under UN auspices. Crucially, these would for the first time be negotiated in a globally inclusive, democratic and transparent process – marking the end of one hundred years in which a small group of rich countries have imposed international rules.

The resolution is significant because it raises the pressure on the European Union and its member states to commit their support for formal negotiations on a UN tax convention at the upcoming 78th session of the UN General Assembly, while also deflating the main talking point used by opponents of the UN tax convention – that is, the “avoiding duplication” message.

The EU has until now tried to play both sides of the international division over UN proposals. On the one hand, EU members were part of the unanimous consensus in November 2022 for the UN resolution 77/244 that began intergovernmental discussions.[2] But the EU also supported the United States’ blocking amendment, which was roundly defeated. And the EU’s submission to the UN Secretary-General’s forthcoming report rejects a UN role, saying that the UN should support the OECD process instead, “avoiding undue duplication”, while the EU and its members “support developing countries” effective participation in decision-making at the level of “the existing multilateral fora” – not a new UN body.[3]

The EU point about not “duplicating” the OECD simply repeats the language of other opponents. These include Switzerland and the United States, the two worst-ranked jurisdictions in the Financial Secrecy Index 2022; and the UK, the head of the world’s biggest network of tax havens, which is often referred to as Britan’s “second empire” and is the biggest single actor in global tax abuse.[4]

The point of disagreement is whether a UN tax convention, and the establishment of an intergovernmental tax body under UN auspices, would duplicate the OECD – the rich countries’ club which has set the rules since the 1960s. Under pressure, the OECD established the Inclusive Framework to bring non-member countries into the Base Erosion and Profit Shifting (BEPS) process – but initial optimism has been dashed by the lack of transparency, the absence of voting and the multiple allegations of coercion of non-members. Unsurprisingly, all assessments of the OECD proposals show non-member countries receiving little significant benefits, while being required to give up substantial policy space if they sign up.[5]

The Africa Group-led resolution at the United Nations reflects the clear view that a UN tax body would not duplicate the OECD process, because the UN version would in contrast be inclusive, transparent and accountable. Complex negotiations involving countries with multiple, competing interests is what the UN was set up for. And as the Indian delegate to the OECD Inclusive Framework noted, “Just because you call something ‘inclusive’, does not make it inclusive.”

The European Parliament’s resolution makes clear that they share this analysis. Specifically, the resolution “highlights the need to introduce transparent and inclusive decision-making where all countries can negotiate as equals” (emphasis added).

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

“As the world faces multiple challenges including conflicts, and the climate and inequality crises, it is more vital than ever that international rule-setting allows every country to combat the tax abuse of multinational companies and rich individuals with offshore assets. Rule-setting by a small group of rich countries at the OECD is not only unjust but has been completely ineffective – leaving people all around the world exposed to nearly half a trillion dollars of tax losses every year.[6] Those funds are crucial to invest in our futures.

“The European Union has, until now, largely sided with the blockers of an effective, democratic response at the United Nations. That is, it has sided with those countries that are most committed to financial secrecy and tax abuse. But now the European Parliament has shaken things up, and demanded that the European Union join fully in the process to negotiate a UN tax convention. The EU has until the next General Assembly session in September to decide which side it is on. Does it stand for effective, inclusive, democratic measures against global tax abuse – or will it continue to defend the failed OECD process?”


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Notes to editor

  1. The European Parliament resolution, which covered a range of important tax justice issues, included the following paragraphs:

    “- Stresses that in 2019, the Africa Group at the United Nations called for a UN convention on tax to help tackle illicit financial flows; believes that a universal intergovernmental body under the auspices of the UN with a mandate to deal with all aspects of IFFs could help to include all developing countries in the decision-making process on tax matters and could be an effective tool for fighting tax avoidance, trade mis-invoicing, profit shifting and all forms of illegal commercial and fiscal activities at global level;
    “- Calls for the EU to support the setting up of a UN framework convention on tax, with the aim of strengthening international cooperation and governance on tax and trade-related illicit financial flows; highlights the need to introduce transparent and inclusive decision-making where all countries can negotiate as equals;”

    The resolution is available here.

  1. Our press release on the UN resolution can be found here. Read more about proposals for a UN tax convention here.
  2. The EU submission to the UN Secretary-General’s call for inputs to his report on the UN convention options, and those of other countries and groups can be found here.
  3. The Financial Secrecy Index is a ranking of jurisdictions most complicit in helping individuals to hide their finances from the rule of law. Financial secrecy facilitates tax abuse, enables money laundering and undermines the human rights of all. The index identifies the world’s biggest suppliers of financial secrecy and spotlights the laws that governments can change to reduce their contribution to financial secrecy. Read more about findings from the 2022 edition of the Financial Secrecy Index here. See the full 2022 ranking here. The dominance in global tax abuse and financial secrecy of the UK’s ‘spider’s web’ is set out here.
  4. Read more about the failure of the OECD’s “two pillar” proposal here and here.
  5. The State of Tax Justice 2021, published by the Tax Justice Network with the Global Alliance for Tax Justice and Public Services International, found that the world loses $483 billion in tax a year to global tax abuse committed by multinational corporations and wealthy individuals. Of this loss, $312 billion is lost to cross-border corporate tax abuse by multinational corporations and $171 billion to offshore tax evasion by wealthy individuals.