A long-running campaign for the United Nations to have greater influence over international tax rules is expected to fall at the last hurdle in a vote in New York on Wednesday with the US, Brussels and the UK blocking the move.
Anti-poverty campaigners said the UN must have a say on taxing multinational corporations to prevent widespread avoidance that denies poor countries vital revenues to tackle poverty and cope with the climate crisis.
A vote to push ahead with a UN convention to strengthen international tax cooperation, tabled by the Africa group at the UN general assembly, would need widespread agreement, including by the US and rich nations in Europe.
The EU and UK have been accused of blocking the process during intense negotiations over the past month.
London, Brussels and Washington are expected to vote against the move, citing existing arrangements to establish international tax rules by the Organisation for Economic Co-operation and Development (OECD).
The Paris-based organisation, which counts 39 mostly rich countries among its members, has spent decades formulating sophisticated rules and common arrangements governing how multinational corporations pay tax.
But these efforts have attracted criticism from officials in some developing economies who believe large corporations have succeeded in swerving their obligations, mainly by continuing to use low-tax jurisdictions.
Last year, a group of 54 African countries, frustrated at the OECD process, tabled a resolution at the UN general assembly.
Determined to sideline the OECD, it recommended that the UN secretary general, António Guterres, produce a report assessing ways to strengthen the “inclusiveness and effectiveness” of international tax cooperation, including options that gave the UN more of a role on the global tax stage.
Guterres said in a draft report in summer: “Enhancing the UN’s role in setting and shaping global tax rules appears the most viable path for making international tax cooperation fully inclusive and more effective.”
The Africa group issued a strong call for everyone, including the EU and UK, to support a new UN tax convention.
Economists and campaigners in the Independent Commission for the Reform of International Corporate Taxation (ICRICT) said in an open letter this week that “there is both an urgent need and an unprecedented opportunity to bring about significant reform of the international corporate taxation system” under the auspices of the UN.
The economists Joseph Stiglitz and Jayati Ghosh, who co-chair the organisation, said: “It is politically extremely unwise to dismiss the broad support for global negotiations; and simply shortsighted not to take this opportunity to curb the revenue losses that all countries (including rich countries) and their people suffer due to untamed tax abuse.”
Before the vote, an OECD report argued that most tax avoidance by multinational businesses was conducted in rich nations as it urged its members to make more progress ratifying agreements that already had widespread support.
It said an estimated 37.1% of global net profits totalling $6.5tn (£5.1tn) were taxed at rates below 15%, mostly in countries that had much higher headline tax rates.
Many independent tax experts have favoured the negotiations held by OECD, arguing that they offer the best hope of a deal that needs to include rich countries to be effective.
Richard Murphy, the head of Tax Research UK and professor of accounting practice at Sheffield University, said there was much to celebrate about the deals orchestrated by the OECD, which include rules governing the exchange of tax information between jurisdictions. “The UN could not, I very strongly suspect, have delivered anything better. To pretend otherwise is absurd, and does no one any credit,” he said.
The European Network on Debt and Development (Eurodad) was among campaign groups to say the OECD had been given a chance to bring forward tax rules that helped low income countries, but had failed.
Tove Maria Ryding, a tax coordinator at Eurodad, said: “For half a century, global tax standards have been controlled by the OECD – also known as the ‘rich countries’ club’. But now, the Africa group has issued a strong call for all countries to sit down as equals and negotiate a fair, effective and truly global tax deal.
“This would be nothing short of a democratic tax revolution. We sincerely hope that the EU will come to its senses and support the Africa group’s invitation to negotiate a new UN convention on tax.”
A UK government spokesperson said: “We are negotiating in good faith. Our approach reflects that we believe it is possible to have a UN process that enhances the international tax system without duplicating the work of the OECD.
“The UK has long worked with partners to find international cooperation on tax and has a strong record of working with developing countries. As recently as September the deputy prime minister announced a new £17m package to help developing countries collect taxes owed to them,” they added.
