Byline Times is an independent, reader-funded investigative newspaper, outside of the system of the established press, reporting on ‘what the papers don’t say’ – without fear or favour.
To support its work, subscribe to the monthly Byline Times print edition, packed with exclusive investigations, news, and analysis.
Keir Starmer’s Government is facing criticism over its opposition to a United Nations tax reform plan aimed at tackling global tax avoidance, as formal negotiations resumed on Monday in New York.
The convention, spearheaded by 54 African nations, has garnered support from 125 UN member states but faces resistance from nine countries, including the UK, US, and Japan.
The proposal seeks to address an estimated $492 billion annual loss from cross-border “tax abuse” by multinational companies and wealthy individuals.
This can involve corporations moving profits from one country to parent companies in tax havens, to show a ‘loss’ and therefore avoid corporation taxes. Wealthy individuals often behave similarly.
High-income countries, including the UK, lose the greatest amounts in absolute terms, because they generate the most revenue for firms. But the losses make up a much higher share of potential tax revenues for lower-income countries.
Critics argue the UK’s position on the tax negotiations contradicts its stated commitment to rebuilding relationships with developing nations.
ENJOYING THIS ARTICLE? HELP US TO PRODUCE MORE
Receive the monthly Byline Times newspaper and help to support fearless, independent journalism that breaks stories, shapes the agenda and holds power to account.
We’re not funded by a billionaire oligarch or an offshore hedge-fund. We rely on our readers to fund our journalism. If you like what we do, please subscribe.
Sandra Martinsone from Bond, the UK network of aid NGOs, said: “Voting ‘No’ sends worrying signals to lower-income country Governments about the UK’s commitments to a fairer, more transparent and integrated global tax system.”
Martinsone added that many lower-income countries are facing a “crippling debt crisis” that the UN tax convention could alleviate.
“[It] would be a gamechanger for lower income countries to finally gain a seat at the table and to fund accessible quality public services, adapt to and mitigate climate change and, in the long-run, rely less on external (and often debt-inducing) finance.”
“We urge the UK Government to engage constructively and collaboratively with the UN process to develop a UN framework convention on international tax cooperation.”
The UK Government maintains that the Organisation for Economic Co-operation and Development (OECD) is currently best placed to handle global tax rules. But development campaigners note that the OECD represents just 38 wealthy nations, primarily from Europe and North America, limiting global participation in decision-making.
Aid organisations view the OECD as a ‘club’ of rich nations lacking legitimacy among developing states.
Bond argues that lower-income countries are disproportionately affected by the current system, with so-called tax losses from international firms estimated to equal almost half of their public health budgets.
Meanwhile, the NGOs point to analysis suggesting that supporting the convention could increase UK tax receipts by an amount equivalent to 20% of the NHS budget.
The UK’s stance has become increasingly isolated within Europe. While the European Union initially opposed the convention, it has since moved to abstaining from votes.
At a vote in November, the UK was among only nine countries who voted No when adopting the terms of reference for the UN Tax convention negotiations. The other opponents were Argentina, Australia, Canada, Israel, Japan, New Zealand, Republic of Korea, and the United States.
The controversy is sensitive for Britain given that the UK and its overseas territories are responsible for approximately one-third of global tax avoidance through firms moving their profits offshore, according to campaigners Tax Justice UK.
Labour’s foreign secretary David Lammy has expressed interest in addressing illicit financial flows and “dirty money.” Aid groups are calling for him to act on it by backing tougher global action.
The UN convention aims to create what it calls an “inclusive, fair, transparent, efficient, equitable, and effective international tax system for sustainable development.”
Negotiations on the proposed UN tax convention will continue through 2027, focusing on establishing mechanisms for international tax cooperation and improving transparency.
The extended timeframe reflects the complexity of the issues and the challenge of building consensus among nations with often wildly varying economic interests. And it is likely to face intense opposition from trade-warmongering US President Trump.
But lower-income countries are among those arguing a more equitable tax system could provide crucial resources for public services and climate change adaptation, reducing dependence on external loans.
An HM Treasury spokesperson said: “We have been an active participant in tax negotiations at the UN, and remain committed to working constructively with all stakeholders to ensure inclusive and effective international tax cooperation.”
The UK appears reluctant to see the United Nations as the place where global tax rules are made, perhaps due to the influence of states such as Russia and China who are not part of the OECD.
UK Treasury officials argue a future UN tax convention could play an important role in supporting the UK’s development objectives – but it would need to be “clear in its aims, avoid duplicating existing initiatives, and seek to secure the broad support and participation of members.”
We’ve corrected a reference to ‘shadow’ Foreign Secretary’. Mr Lammy is of course the Foreign Secretary.