By J Nastranis
NEW YORK | 8 February 2025 (IDN) — The European Network on Debt and Development (Eurodad), a network of 60 European non-governmental organizations (NGOs) in 28 countries, has welcomed “a major breakthrough towards more just and effective international tax rules” in UN Tax Convention negotiations in New York—despite the United States’ withdrawal.
With the conclusion of the first organizational session of the Intergovernmental Negotiating Committee on 7 February, the process had moved to negotiating the substance of the new Convention along with two early protocols, which should be finished by the end of 2027, noted Eurodad. “Despite calls from the US delegation for other countries to follow their example and leave the process, all other UN Member States remain engaged in the negotiation.”
Tove Maria Ryding, Eurodad Tax Coordinator, who attended the Organisational Session in New York said: “The UN Tax Convention process is a major breakthrough towards more just and effective international tax rules. Both developed and developing countries have a strong interest in working together to stop tax havens and promote fair, effective and coherent international tax rules.
Ironically, while the US clearly doesn’t intend to help solve the problems, they actually stand to benefit from the solutions that will be developed under the UN Tax Convention, as do the rest of the world’s countries. This is a truly historic moment for international tax governance, and we are delighted that the process is moving forward.”
Decision-making rules comprised the bulk of discussions at in New York in the organisational session. A last-minute attempt by France, Italy, Malta, the UK, and the Czech Republic to introduce decision-making by consensus—a move that would have effectively given veto power to wealthier nations—was defeated by a vote of 98 to 42.
A compromise
A compromise was found with the adopted rules stipulating that decisions regarding protocols require two-thirds majority, and the convention itself can be decided with simple majority.
Ryding said: “Given the strong rejection of international cooperation shown by the US at the moment, including the UN Tax Convention, it is clear that consensus decision-making is not an option. Such a decision would allow one country to prevent everybody else from moving forward. With that in mind, it was very odd to see a number of European countries continue to call for consensus decision-making. We are happy that this issue is now resolved, so that the process can move forward, and it is very important that the rules will not allow one single country to block process for everybody else.”
Furthermore, while the topic for the first “early protocol” had already been identified as cross-border services in the digitalised economy, the organisational session was tasked with ascertaining the theme of the second early protocol. At the meeting, the countries reached consensus on making “prevention and resolution of tax disputes” the topic of this protocol.
The Center for Economic and Social Rights (CESR) stressed that the adoption of the second protocol on tax dispute prevention and resolution is very relevant, particularly for Global South countries that spend vast resources on costly tax disputes with multinational corporations. While some critical issues—such as illicit financial flows (IFFs) and the taxation of high-net-worth individuals (HNWIs)—were not selected as protocol topics at this stage, Colombia and the Africa Group successfully pushed for language ensuring that these issues remain on the table for future discussions.
“The first protocol, addressing taxation in the digital economy, is also a step forward in modernizing international tax rules. However, for CESR and many civil society organizations, the ultimate goal is a strong and ambitious UN Tax Convention—one that doesn’t just include these issues as optional protocols but enshrines them in its core commitments,” noted CESR, an international NGO that aims to transform the dominant economic system.
“When rights, dignity, and diversity face growing resistance, establishing a strong UN Tax Framework Convention is more critical than ever. Around the world, we see increasing inequality, political retrenchment, and rhetoric that seeks to undermine the rights of disadvantaged communities. However, the global response to these challenges is not passive. By securing a just international tax system, countries can unlock much-needed resources to invest in public services, social protections, and economic justice—foundations for a world that reinforces rights rather than erodes them,” the CESR added.
As Dr. Maria Ron Balsera, CESR’s Executive Director, put it: “The outcomes of the organizational session are a step in the right direction, but we must ensure the final UN Tax Framework Convention delivers real systemic change. That means creating tax rules that actively reduce inequalities, protect human rights, and end the corporate and high-networth individuals’ tax abuse that drains public resources from countries that need them most.” [IDN-InDepthNews]
Image source: Global Alliance for Tax Justice
