Economists, civil society organisations and activists from around the world are calling on countries to support the ambitious framework document for a UN tax convention, which was presented yesterday at the United Nations after months of negotiations. The document¹The so-called Terms of Reference lay down the principles and protocols underlying the Framework Convention and, according to the Tax Justice Network, have retained enough of their original intent to bring about the greatest upheaval in history in the broken global tax system.

Sergio Chaparro HernándezDirector of International Policy and Advocacy at the Tax Justice Network, said:

“Our countries will lose nearly $5 trillion to tax havens over the next decade. The UN tax convention is our best chance to avert this and put an end to rampant tax abuse by multinational corporations and the super-rich.”²

The guidelines published yesterday contain the fundamentals that activists say are necessary to ensure that the final version of the framework agreement, which is due to be negotiated from January 2025, can protect countries’ taxing rights and reclaim billions from tax havens. These fundamentals include specific references to corporate tax, taxation of wealthy individuals, tax avoidance and evasion, illicit financial flows, the allocation of taxing rights between countries, as well as compliance with human rights, sustainable development and the necessary responses to environmental problems.³

This is despite concerted efforts by some OECD members – a small club of rich countries and tax havens that has acted as the de facto global tax regulator for over 60 years – to weaken and block the rules. The negotiations, which began in February this year, have largely emerged as a global power struggle, with most countries wanting to transfer leadership on global tax rules from the OECD to the UN, but a handful of OECD countries resisting the move.

The OECD is widely accused of designing a global tax system that causes nearly half a trillion dollars to flow into tax havens every year, with non-member countries suffering the most damage.⁴ The country has also been criticized for failing to implement the tax reform package it has promised for a decade. Independent UN experts believe that this could in any case be “incompatible” with international human rights obligations, including those to combat racism.⁵ The countries that voted against the start of this year’s UN negotiations in 2023 represented only 15 percent of the world’s population, but were responsible for 75 percent of all tax losses that countries incur each year through tax havens.⁶ Some of them continue to try to weaken the scope of their duties.

The final round of negotiations on the terms of the UN Framework Convention on International Tax Cooperation, which took place in New York over the past three weeks, will conclude today. Countries are expected to present the terms in a public live stream.⁷ by 3 p.m. EDT if they cannot agree on the few remaining differences by morning. That means the task at hand is not out of the woods yet, as blockers could still try to water down their ambitions in the home stretch, the Tax Justice Network warns.

Sergio Chaparro Hernández said:

“We call on countries to support ambitious targets 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 over our global tax rules behind closed doors at the OECD. Today, governments can take back power over the global tax rules that affect us all for their people. Shifting global tax rules to the UN would finally require transparent and democratic decisions, where governments can be held to account by their citizens at home and ensure progress on 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 avoid any meaningful compromise. All countries have had the opportunity in this process to present their views on the proposed text and have had sufficient time to reach an agreement. If countries are truly ready for fully inclusive and effective tax cooperation, they should support this roadmap for future negotiations.”

Alex CobhamExecutive Director of the Tax Justice Network, said:

“In just a few months of negotiations at the UN, more ambition has been achieved in fixing the global tax system than we have seen from the OECD in over 60 years. 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 in solving our global problems than the opaque deals we all suffer from in the rich country club at the OECD. Today, our governments have the opportunity to take an important step towards restoring the potential for effective direct taxation – including for multinational corporations and the super-rich. While unanimous agreement on the text at the United Nations is the ideal scenario today, the overwhelming majority of countries seeking an ambitious agreement must push for a public vote if necessary and not allow a handful of OECD members, including tax havens, to block the change our world desperately wants and needs.”

-END-

Notes for editors

1. The final draft of the service description can be found here.
2. Last year, the State of Tax Justice 2023 study reported that countries are expected to lose $4.8 trillion over the next decade to multinational corporations and wealthy individuals who use tax havens to underpay taxes.
3. In its current form, the document provides a solid basis for future negotiations. It contains commitments on the relevant issues of international tax cooperation that should be addressed in a framework agreement: fair allocation of taxing rights, including fair taxation of multinational companies; combating tax evasion and avoidance by high net worth individuals; achieving sustainable development in its three dimensions, economic, social and environmental; effective mutual administrative assistance in tax matters, including on transparency and exchange of information for tax purposes; combating tax-related illicit financial flows, tax avoidance, tax evasion and harmful tax practices; and effective prevention and resolution of tax disputes. It is important that ambition does not wane in the home stretch. The document also contains a clear list of objectives, principles, priority early protocols, structural elements of the Framework Convention, as well as provisions on timeframes and negotiating approaches that will guide the next Ad Hoc Committee in the negotiating phase of this instrument.

   For further analysis, see the commentary by Tove Maria Ryding of the Global Alliance for Tax Justice.

4. You can read more about the OECD’s failed handling of global tax policy here.
5. You can read more about the UN experts’ special mission here.
6. Read more about our analysis of the historic UN vote in 2023 to start negotiations on a UN framework convention on taxation here.
7. The final sessions of the UN negotiations on the terms of reference can be followed live here today on UN Web TV.