Image source: International Tax Review - Photo: 2025

United States Quits UN Tax Convention Process

Eurodad

NEW YORK | 5 February 2025 (IDN) — The United States has pulled out of the process to deliver a new UN Framework Convention on International Tax Cooperation. The announcement came during the afternoon on the first day of the Organisational Session, which is taking place at UN Headquarters in New York and runs from 3-6 February.

The US delegation stayed quiet during the morning session on Monday while other countries from around the world stressed their commitment to participating constructively in the negotiations, which are set to deliver a Convention and two early protocols by the end of 2027. However, at the start of the afternoon session, the US delegation took the floor, announcing that they objected to the process and would no longer be participating.

In response to the withdrawal, Tove Maria Ryding, Tax Coordinator at the European Network on Debt and Development (Eurodad) said: “In recent weeks, we have seen the US leave the OECD tax processes and UN processes related to climate and health. As such, it seemed a bit strange when the US showed up at the UN Tax Convention negotiations yesterday. But they had apparently just come to say goodbye. While the US called for other countries to leave the UN Tax Convention negotiations with them, nobody did and they had to walk out alone.

“Ironically, the US is one of many countries with strong economic interests in combatting tax havens, a key focus of the UN Tax Convention negotiations. However, it appears that the US is suffering from severe commitment issues when it comes to multilateral negotiations. If they are fundamentally opposed to international cooperation, they obviously would not have much to offer in the UN Tax Convention negotiations.”

One of the key discussions at the Organisational Session is the question of the decision-making rules. Given that the process originated in the UN General Assembly, the default rules entail majority decision-making. However, many countries from the global north  have called for this to be changed to consensus decision-making.

Ryding said: “The withdrawal of the US became a perfect illustration of why the UN Tax Convention process should not introduce consensus decision-making. With the current rules, the US can stay or go, but they cannot prevent other countries from moving ahead in the negotiations. And that is exactly what will happen now. Every country can decide for themselves whether or not they want to sign the Convention, but it should not be up to one single country to decide whether or not the others are allowed to work together.

“There is important work to be done. International tax abuse by large corporations and wealthy individuals is costing countries around the world several hundreds of billions of dollars in lost tax income every year. This money is desperately needed, including to fund development and climate action.” [IDN-InDepthNews]

Image source: International Tax Review

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