Amid crises of development and climate change, could the new UN Tax Convention offer a pivotal solution?
- Saïd Skounti
- Apr 29
- 5 min read
Behind the negotiations on the new Convention lies a historic opportunity to overhaul an unjust global tax system and shift the trillions needed.
By mid-2027, United Nations member states will need to agree on the text of the future United Nations Framework Convention on International Tax Cooperation (UNFCITC). This new treaty aims to reform an international tax system inherited from the last century, widely criticized for its undemocratic nature and for the massive losses it enables in tax evasion by multinationals and wealthy individuals.
Led by the African Group in 2023 through the resolution “Promotion of Inclusive and Effective International Tax Cooperation”, this initiative marks a turning point in global tax governance. The terms of reference for the Convention were adopted in 2024 by a vote of 125 to 9 despite opposition from several developed countries, tied to existing tax cooperation frameworks wherein they exercise greater control, such as the OECD and the G20.
The terms of reference (ToR) for the Convention state that the objective is to “establish an inclusive, fair, transparent, effective, and equitable international tax system that genuinely contributes to sustainable development.” The TOR define a threefold objective: ensuring an equitable distribution of taxing rights, combating tax evasion by multinational corporations and high-net-worth individuals, and combating illicit financial flows linked to harmful tax practices.
Why the pressure for such reform? The growing financial needs for development and climate ambitions, as well as the shortcomings of existing systems
For years, developing countries have highlighted the limitations of the current systems. Discussions on international taxation are dominated by non-inclusive fora, notably the OECD and the G20, where the majority of countries in the Global South lack equal decision-making power. These exclusionary spaces have significant consequences: according to estimates, nearly $492 billion in tax revenue is lost each year due to tax abuse, including $200 billion for countries in the Global South. Multinational corporations are said to shift more than 40% of their profits to tax havens or low-tax jurisdictions, according to assessments.
These losses have a direct impact on public budgets. For many African countries, the lost funds represent crucial missing resources for financing health care, education, or climate change adaptation.
During the initial negotiation sessions on the text of the new Convention, Cameroon emphasized the importance of reforms that would enable developing economies to mobilize domestic resources to meet needs related to “climate adaptation, health, and education systems,” which, according to the Cameroonian delegate, constitute “the pillars of sustainable development”. At a time when developing countries are facing multiple crises—debt, climate vulnerability, and social pressures—global tax justice emerges as an important lever for sustainable development.
While initiatives have been launched within the OECD framework, notably the BEPS process, many developing countries consider them insufficient. United Nations Secretary-General António Guterres himself has acknowledged that “OECD initiatives often do not adequately address the needs and priorities of developing countries.” Reform is therefore imperative.
What is the status of negotiations for the new Framework Convention?
Negotiations are currently underway within an intergovernmental committee; initial sessions have revealed persistent divides between developed and developing countries.
One key point of disagreement concerns the legal nature of the Convention. Developed countries favor a non-binding “high-level” instrument that would preserve existing frameworks. On the other hand, the African Group and other countries of the Global South are advocating for a text that would create genuine legal obligations. Behind the apparent consensus on a “high-level” Convention lies a fundamental divergence regarding its normative ambition.
Article 5 on taxation rights is a central point of contention. For the African Group, this is the “heart” of the reform. The current system, based primarily on physical presence, is deemed unsuitable for the digital economy and unfair to the countries where markets and users are located. African countries therefore propose broadening the “nexus” criteria to include the “location of users and data.” The current text aligns with this attempt to broaden the “nexus.”
The draft text also provides for the renegotiation of existing tax treaties to bring them into compliance with the new convention. Developed countries, such as Germany, Norway, Sweden, and others, oppose this, arguing that bilateral treaties are sovereign instruments that should not be subject to mandatory changes under a multilateral framework. A joint proposal by Norway and Sweden calls for the removal of this section of the text.
Another point of contention concerns the method of taxation. Developed countries prefer taxation on net profits, arguing that taxation on a gross basis could lead to double taxation. Several developing countries advocate for withholding tax on a gross basis, which is simpler to administer for tax authorities with limited capacity.
Taxation of high-net-worth individuals is also a point of contention (Article 6). Some countries in the Global South seek firm commitments and coordinated approaches, while several developed countries are reluctant to adopt a universal definition or binding mechanisms. Zambia and Nigeria argue that the commitment to tax high-net-worth individuals must be firm and propose replacing the term “explore” with “adopt” in the initial text proposed by the co-chairs regarding coordinated approaches.
This "explore" language represents a step backward, in the sense that the earlier text presented in October 2025 refers to adoption rather than mere exploration. Indeed, adoption implies concrete action, whereas exploration involves considering possibilities. Brazil and Mexico advocate for a progressive tax system, while Canada and Norway oppose a universal definition of high-net-worth individuals.
Finally, the institutional issue remains sensitive. Developing countries argue that the United Nations must establish its own inclusive tax standards, breaking away from governance dominated by the OECD. Developed countries, for their part, advocate for close coordination with existing frameworks, where their influence is predominant. Article 15, concerning the relationship between the future convention and other international treaties, will therefore be decisive.
The points presented here are not exhaustive; other areas of disagreement, particularly those concerning the protocols, warrant close monitoring in the coming months, starting with the meetings in August.
A historic opportunity contingent on genuine political will
Beyond the technical debates, the issue is fundamentally political. The question is whether the international community is ready to stand with African countries and other nations of the Global South to rebuild global tax governance on a truly inclusive and equitable foundation, under the auspices of the UN.
Against the backdrop of a catastrophic decline in official development assistance (ODA), this reform has become urgent to help save the 2030 Sustainable Development Goals and the Paris Agreement targets. The Paris Agreement, under Article 2.1(c), aims to align financial flows with a development pathway that is low in greenhouse gas emissions and resilient to climate change. However, selective interpretations of this Article — particularly from developed countries — have failed to accord importance to the new Convention for cooperation on fiscal policy, despite the strong support from developing countries.
The success of this Convention will depend not only on the ability of states to move beyond the logic of preserving the status quo, but also on the efforts of all stakeholders, through various fora, to pressure their governments to demonstrate solidarity and commitment to multilateralism, with a view to building a more effective and equitable global tax governance system that can meet the needs of the coming decades.
