Luke Holland ■ OECD tax reforms risk violating human rights law, UN experts warn in special intervention

OECD podium

OECD tax reforms risk violating human rights law, UN experts warn in special intervention

A group of top-level UN experts with special mandates to investigate human rights violations have issued a formal communication to the OECD demanding answers for its failure to abide by human rights standards in its leadership of international tax policy. In their communication, the mandate holders warn that the OECD’s controversial “two pillar” reforms, if implemented, could significantly reduce the amount of tax Global South countries can collect from multinational corporations and “could have a discriminatory impact on the grounds of gender, ethnicity and race.” The formal communication calls on the OECD to demonstrate that it has assessed the human rights impacts of their proposals.1

Previous interventions by UN independent experts under the Special Procedures of the UN Human Rights Council have brought about the release of journalists, lawyers and human rights defenders from prisons in several countries, including Saudi Arabia, Iran and Guatemala; the banning of the death penalty for individuals with mental health conditions in Pakistan; the halting of an EU-funded project that would have forcibly evicted indigenous people from their lands in Kenya; and action by Facebook to curtail the use of its apps in enabling modern slavery.2

The letter comes as negotiations move forward on plans for a new tax convention at the United Nations, a development that would effectively break the OECD’s 60-year domination over international taxation. On 22 November 2023 countries voted by a landslide majority to approve a resolution brought forward by the Africa Group to begin working towards the new framework convention – despite a concerted effort to block the vote by the US, UK and EU, who were publicly accused of negotiating in bad faith.3 The resolution was adopted with 125 votes in favour, 48 against and nine abstentions. Notably, the countries seeking to block the move, largely OECD member states, are responsible for 75 per cent of revenue losses to crossborder tax abuse, while those countries that voted in favour represent 80 per cent of the global population.4 The formal communication calls on all OECD members to “constructively engage in good faith” on work on the framework convention, and asks the OECD to produce information on how it plans to engage in support of the UN process.

In the letter, the UN independent experts conclude that the OECD’s two-pillar proposal would “significantly undermine the revenue collection and taxing rights of low and middle income countries” and assert that the OECD “is not an inclusive or representative forum for global negotiations on tax cooperation” – backing similar criticisms made by a range of countries, global bodies, regional blocs, prominent economists, researchers and NGOs.5 The formal communication raises concerns about the failure of the OECD to take the concerns of low and middle income countries into consideration – something for which the OECD was harshly criticised in a report by the UN Secretary General last year.6

Two-pillars may be “incompatible” with anti-racism and anti-sexism laws

The UN independent experts lay bare the pernicious human rights impacts that would result from the OECD proposals if implemented, and specifically warn that the proposals may be incompatible with international law against racial discrimination and against discrimination against women. They point out that “Lower levels of revenue collection in developing countries would weaken the States’ capacity to fulfil their human rights obligations due to their inability to adequately fund social policies and public services essential for human rights…. disproportionately affecting the most vulnerable segments of the population.”

As a result, the UN independent experts warn, implementation of the OECD’s two-pillar reforms “may constitute a retrogressive step in the implementation of the International Covenant on Economic, Social and Cultural Rights” and “may also be incompatible with the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD); and the International Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW).” The mandate holders also identify four other UN human rights principles and declarations with which the two-pillar reforms may be failing to comply.

The letter asks whether the OECD has conducted any human rights impact assessment on its two pillar reform proposal. In light of independent analyses that show the OECD proposals would do little to address the ongoing economic extraction of the Global South, it also highlights the racialised and neocolonial character of the agreement it is determined to implement.

The special mandate holders write: “In reifying patterns of economic extraction with historical origins in systems of colonialism and slavery, the [two pillar] deal has the potential to prejudice the predominantly non-white nations of the Global South. The negotiations related to the newly adopted resolution on the UN Convention on International Tax Cooperation, and the positions that some OECD member states under the aegis of the UN could undermine the development of more effective multilateral standards for strengthening international tax cooperation.”

Global tax policy inseparable from human rights

The issue of international tax abuse has become a focus of increasing concern to those within the UN human rights architecture and the broader human rights movement because it syphons huge sums of revenue away from government coffers and thereby impedes the funding of public services that are crucial for the progressive realisation of human rights. Research by the University of St Andrews provides data on the real-world human rights impacts of international tax abuse. Were it not for the US $480 billion that is lost to abusive international tax practices each year:7

  • 15 million people would have access to water.
  • 32 million would have access to basic sanitation.
  • 2 million additional children would attend school each year.
  • The lives of 36,900 children would be saved through reductions in child mortality.
  • Some 4000 mothers’ lives would be saved though reductions in maternal mortality.

As the UN representative from South Africa said during the recent vote to begin work on a framework convention: “For many Africans, fulfilling the UN Sustainable Development Goals is a matter of life and death. Unfortunately, their ability to meet these aims is hobbled by illicit and hidden movements of capital that amounts to vast billions each year. It is high time that the international community addresses this injustice in global taxing rights that is impoverishing millions, which goes back to the days of the League of Nations, when most member states were colonies and which has been perpetuated by the monopoly that rich country clubs have held over international tax rulemaking.”8

In recent years, tax haven countries including Ireland,9 Switzerland,10 the Netherlands11 and the United Kingdom12 have all been challenged by UN human rights treaty bodies over their facilitation of crossborder tax abuse. These countries, all of which are OECD members and none of which are included in the OECD’s tax haven blacklist, are among the countries seeking to block progress towards the framework convention at the UN.13

Luke Holland, Network and Partner Relations Manager at Tax Justice Network, said:

“This is a significant moment. The OECD has sought to undermine the UN in recent years, questioning its suitability to host international tax discussions. But there has been surprisingly little official scrutiny of the OECD itself. Following the UN Secretary-General’s report earlier this year highlighting the exclusionary nature of the OECD’s tax work, however, we now see a most welcome formal challenge.

“The OECD has long refused to publish country-level estimates of the impact of its proposals, despite having preferential access to data that non-member countries are denied. That leaves us all in the dark about the extent to which people may suffer from the systematically biased character of the OECD’s proposals. Now the UN special mandate holders are demanding that the OECD, at a minimum, demonstrate that they have assessed the human rights implications of their proposals, and explain the continuing exclusion of non-member countries.

“This challenge illustrates clearly the inappropriateness of the OECD for any global role in tax. With the anticipated progress in UN negotiations, however, the OECD may be able to revert to a more appropriate role in providing expert support to its members.”

Dr Maria Ron Balsera, Director of Program at the Center for Economic and Social Rights (CESR), said:

“Tax abuse leads to human rights abuse. It is time to revamp the biased economic system maintained by the OECD which continues the colonial extraction of wealth and resources from the Global South. We need a rights-based economy, an economy that works for the people and the planet. We need transparent, democratic and rights-aligned tax reforms to unlock the maximum available resources for the full realisation of human rights. The two-pillar solution is far from redressing base erosion and profit shifting. Without a human rights impact analysis, international financial institutions, like the OECD, will carry on protecting the interests of corporations and the wealthy, creating and exacerbating gender, racial and social inequalities within and between countries”.

Ohene Yaw Ampofo-Anti, Program Associate at Center for Economic and Social Rights, said:

“This communication comes at a historic juncture to finally transform the global financial architecture from a system which operates to benefit political elites, and rich countries to a human rights aligned global economy which secures a dignified life for all within planetary boundaries. The necessity of global tax reforms to address the poly-crisis we face and its impact on human rights has never been clearer. Moreover, this communication is a poignant reminder of how the current international tax system is a colonial hangover with racially discriminatory impacts both within and between countries”


Notes to editor

  1. The formal communication is available here.
  2. The term ‘special procedures’ refers to the list of mechanisms established by the UN Human Rights Council to report and advise on human rights from a thematic and country-specific perspective. Special procedures cover all human rights: civil, cultural, economic, political and social as well as issues relating to specific groups. Special procedures mandate-holders are either an individual (called a Special Rapporteur (SR) or Independent Expert (IE)) or a Working Group (WG) of five members. Mandate holders are appointed by the Human Rights Council and their work is supported by the OHCHR. More information on the special procedures and mandate holders is available here. More information on the impact of mandate holders is available here.
  3. More information on last year’s historic UN vote is available here.
  4. The analysis of countries by voting position and contribution to global tax abuse is available here.
  5. The EU parliament, in a resolutionadopted in 2023 that backed a legally-binding UN tax convention, reaffirmed global criticism that the OECD has not meaningfully include non-members in decision-making. Research by the BEPS Monitoring Group, published in 2023, found the OECD’s proposals to be “fundamentally flawed”. A study by the South Centre and the Coalition for Dialogue with similar conclusions can be found here. A EU Tax Observatory report, which finds lower income countries would lose tax revenue under OECD proposals, can be found here. IMF research on the revenue returns to the OECD proposals supports findings by other bodies that the OECD proposal will make little to no impact on current levels of losses to cross-border tax abuse (see Figure 1 and Figure 5 on Pillar 1 and broader revenue impact here and a comparison of Pillar 1 with digital sales taxes for Asian countries here here). The UN General Secretary published unusually blunt and comprehensive criticism in his report in 2023 on the “limited effectiveness” of the OECD’s rules and its lack of inclusivity. The OECD’s poor leadership of international tax is also criticised in the G77 countries many statements, in this public letter by renowned economists and in this public letter signed by 200+ NGOs and unions from around the world, all of whom call for the UN to take over on international tax from the OECD. An account of how the OECD’s country by country reporting standard was watered down to keep corporate profit shifters anonymous is available here. An account of how the OECD’s global minimum tax rate was contorted to reward rather than restrain corporate tax havens is available here. An account of how the OECD’s pillar reform minimised the application and impact of unitary tax is available here.
  6. More information on the UN Secretary General’s 2023 report, in which he published unusually blunt and comprehensive criticism on the “limited effectiveness” of the OECD’s rules and its lack of inclusivity, is available here.
  7. The ‘GRADE’ research by the University of St Andrew is available here.
  8. A summary of comments made by country representatives at the UN on the framework convention on tax is available here.
  9. Read the Committee on the Rights of the Child’s concluding observations on Ireland here.
  10. Read the Committee on the Elimination of Discrimination Against Women’s concluding observations on Switzerland here.
  11. Read the Committee on the Rights of the Child’s concluding observations on the Netherlands here.
  12. Read the Committee on the Elimination of Discrimination Against Women’s concluding observations on the UK here.
  13. For real-time tracking of countries’ public positions on the UN tax convention, see the Tax Justice Network’s Policy Tracker.