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UN Tax Convention Negotiations Begin in New York City
This week, representatives from around the world are gathering to begin formal negotiations on what could become the most significant reform of the global tax system in decades: the United Nations Framework Convention on International Tax Cooperation.
The launch of these negotiations follows the adoption of Resolution 78/230 by the UN General Assembly in December 2023. The resolution, backed by 125 countries, primarily from the Global South, marked a turning point in the fight for a more equitable international tax order. It responded to mounting evidence that the current system, heavily influenced by the OECD and its member states, is failing to curb massive tax abuses by multinational corporations and the ultra-wealthy, costing countries an estimated $480 billion annually.
In August 2024, after months of intense debate, countries agreed on the Terms of Reference (ToR) that will guide the drafting of the Convention. The ToR establish the scope, goals, and structure of what eventually will comprise a legally binding global treaty providing much-needed governance to international tax cooperation.
The significance of this process cannot be overstated. For the first time, tax rules that impact every corner of the planet are being discussed in a space where all countries have an equal voice within the UN. This shift away from the OECD marks an unprecedented opportunity to rebalance power in international financial governance. But the road ahead is far from smooth.
Negotiations leading up to the ToR exposed deep divides between blocs. While OECD countries essentially pushed for a narrow, procedural focus and consensus-based decision-making to preserve their influence, Global South countries, led by the African Group and Latin America, fought for a broader and bolder agenda. Developing world demands included that the Convention explicitly link taxation with human rights, inequalities within and between states, tackle issues like environmental taxation and wealth inequality, and ensure fair allocation of taxing rights across countries, avoiding a ‘race to the bottom’ and ensuring compliance with extraterritorial obligations.
We consider the UN Tax Convention a powerful tool for equality and human rights. We believe that a fair global tax system is about justice. It’s about mobilising the resources necessary to fund public services, combat inequality, and meet states’ obligations to uphold the rights of their populations. To transform rights from provisions only set on paper, into actual, material realities that improve the daily lives of global majorities.
The stakes are high. At a time when inequality is soaring and the legitimacy of global governance is under pressure, the UN Tax Convention could be a game-changer if states are willing to rise to the occasion.
