The Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation has opened its latest round of negotiations in New York from the 3rd to 13th of August, with Africa and Asia rallying together for better tax rules as the continent loses an estimated $483 billion annually to porous double taxation agreements and transfer pricing abuses.
The process, strongly championed by the Africa Group and civil society organisations, aims to establish an international tax system capable of supporting sustainable development and addressing global inequalities that have persisted since tax rules were largely designed a century ago, for a world dominated by colonial powers.
African countries anticipate favourable outcomes including a clear UN Convention and fair rules on tax dispute resolution, as the continent loses an estimated $483 billion to, among other things, porous double taxation agreements amidst limited arbitration capacity. “If African governments can’t effectively tax the multi-billion-dollar multinational enterprises, they will resort to increasing Pay As You Earn and other taxes,” said Dr Zandile Ndebele, a policy officer at Tax Justice Network Africa.
What the continent lacks is not dynamism but fiscal space: the revenue to close a forty-to-one gap in what is invested in an African child’s education, and to build states strong enough to face the criminal networks that war is feeding.
For decades, international institutions have pushed Asian governments toward tax rules designed by the OECD. Asian negotiators are now aligning around three core priorities: the convention must institute unitary corporate taxation and strengthen source-based tax rights, ensuring profits are taxed where economic activity actually occurs rather than where companies choose to book them.
Charles Santiago, director of Tax and Fiscal Justice Asia, warned that developing countries should not expect wealthy nations or multinational corporations to voluntarily surrender advantages they have accumulated under the existing system. The choice facing developing countries is clear: continue with an entrenched system that has failed to deliver equitable outcomes, or unite behind efforts to reshape the global tax architecture.
Despite many unresolved issues, it became clear during earlier rounds that the negotiations are a historic opportunity to make international tax rules fairer. However, OECD countries have pushed for a high-level convention that covers little in terms of substance and defers all contentious issues to protocols, while African and Asian negotiators want binding commitments on where profits are taxed and how disputes are resolved.
It was the Africa Group that brought this process to the General Assembly in 2022 and carried it forward against formidable resistance from most OECD countries. The wealthiest countries will work to water down any meaningful change to the status quo. The Africa Group and the broader G77 must protect unity as a negotiating asset.
The UN tax convention is expected to be finalised by 2027. The New York talks this month are the last real opportunity to shape it before the final text is locked. Africa and Asia know what is at stake. The OECD countries know it too.
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