The United Nations launched negotiations on Monday for a global tax framework aimed at addressing tax evasion by wealthy individuals and multinational corporations. However, the United States announced its immediate withdrawal from the discussions, citing concerns about compatibility with its national interests.
A Call for Fairness and Transparency
Egyptian official Ramy Youssef, chair of the UN negotiating committee, emphasized the importance of the initiative, stating, “Our mandate is clear; we must craft a framework convention that redefines fairness, transparency, and equity in the international tax system.” He highlighted the moral obligation to combat the billions lost annually due to profit shifting, harmful tax competition, and illicit financial flows, funds that could otherwise support global development goals.
Youssef stressed that this effort is “not merely a technical exercise but a moral imperative.” The negotiations are expected to run until 2027.
Demand for Inclusion by Developing Nations
Currently, global tax policies are primarily shaped by wealthy member nations of the Paris-based Organization for Economic Cooperation and Development (OECD). Developing nations have long criticized their exclusion from this decision-making process and are now advocating for broader reforms of international financial systems.
The UN General Assembly’s decision in 2023 to advance a new tax framework was largely driven by pressure from African countries. This move represents a significant step toward addressing concerns about equitable taxation.
Guiding Principles for the Accord
In late 2024, the UN adopted formal guiding principles for the proposed tax accord. These principles include the equitable taxation of multinational enterprises and measures to combat tax evasion and avoidance by high-net-worth individuals.
According to the NGO Tax Justice Network, governments lose an estimated $492 billion annually due to tax havens. Almost half of these losses are attributed to tax policies in eight countries, including the United States, Canada, Britain, and Japan.
Despite the initiative’s goals, the United States, under President Donald Trump, announced its withdrawal from the negotiating process. The US representative stated that the proposed accord’s objectives were “inconsistent with US priorities” and would “unacceptably hamper nations’ ability to enact tax policies that serve the interests of their citizens, businesses, and workers.”
This decision followed opposition from the US and other countries to the “terms of reference” adopted in 2024. These guidelines outlined the accord’s focus on addressing tax avoidance and ensuring equitable taxation.
Voting Mechanism Debate
A key issue at the inaugural negotiations is whether decisions will be made by majority vote or consensus. The latter approach would grant each member a de facto veto power. The European Union advocated for consensus, warning that its 27 member states might not participate otherwise.
However, Ryad Salmani of the French NGO CCFD-Terre Solidaire criticized this approach, stating, “It would be heresy to give Donald Trump’s United States the power to block the whole process.”
Despite the US withdrawal, the UN committee remains committed to advancing negotiations. The aim is to develop a comprehensive framework that ensures a fair and transparent international tax system, benefiting global economic development and fostering greater financial equity.
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