Europe Faces Accusations of Sabotaging UN Tax Reform Vital for Nigeria, Ghana, and Developing Nations

Diplomats representing the European Union and the UK are facing allegations of actively impeding proposals aimed at amplifying the voices of developing nations like Nigeria, Ghana, Brazil, and India in global tax negotiations. The ongoing discussions at the United Nations (UN) center around plans to augment the UN’s role in international tax deliberations, a move strongly advocated by low- and middle-income countries.

Traditionally, the Organization for Economic Cooperation and Development (OECD) has been the primary convener of countries on matters of international taxation. However, criticism has arisen from officials in several developing economies who argue that the existing framework does not adequately represent their interests.

In response to frustrations with the OECD process, a coalition of 54 African countries successfully tabled a resolution at the UN General Assembly last year. This resolution called for the UN secretary-general to produce a report evaluating ways to enhance the “inclusiveness and effectiveness” of international tax cooperation, exploring options that would grant the UN a more significant role on the global tax stage.

The resolution was unanimously adopted in November 2022, leading to the publication of a report by the UN secretary-general in the summer, outlining three potential options for increased UN involvement in international tax cooperation – two legally binding and one voluntary.

However, sources reveal that representatives of the EU and the UK have been vocal in opposing any of these options. Critics argue that their stance aims to discredit the report and derail the entire process. A negotiator from a developing country expressed frustration, stating, “We’ve tried to negotiate in good faith. The EU and the UK are not willing to do that and are trying to delay the process.” Another negotiator shared concerns about a broader scheme to maintain the status quo and keep developing countries at the periphery of global tax discussions.

Developing nations, including Nigeria, Ghana, India, and Brazil, have been advocating for a legally binding role for the UN in tax negotiations. European countries, on the other hand, express apprehension that an expanded UN role could undermine established procedures at the OECD and lead to fragmentation within the international tax system.

In 2021, the OECD introduced a groundbreaking tax deal designed to address corporate tax avoidance. However, its implementation has faced delays and doubts over ratification. In September, EU finance ministers suggested that member states “could consider working at the UN on a non-binding multilateral agenda for coordinated actions.” This voluntary option aimed to avoid duplicating existing international tax agreements while delivering concrete benefits to participating countries and facilitating progress at the OECD.

Nevertheless, negotiation documents obtained by the Financial Times indicate that the EU, along with other nations, has sought to distance itself from even supporting the voluntary option proposed by the secretary-general’s report. Instead, they propose the establishment of a new working group tasked with presenting alternative options for a UN role. These options would then be discussed at the 80th UN General Assembly, scheduled to commence in September 2025.

Critics argue that this approach is counterproductive, aimed at deferring decisions and obstructing the process. They accuse the EU and its allies of attempting to talk the issue to death, hindering progress on crucial matters of international tax cooperation.

In response to the allegations, a UK government spokesperson asserted that the UK has a strong track record of collaborating with partners to achieve international cooperation on tax. They emphasized the UK’s commitment to negotiating in good faith, highlighting their belief in the possibility of a UN process that enhances the international tax system without duplicating the OECD’s efforts. In September, the UK announced a £17 million package to assist developing countries in collecting taxes owed to them, reinforcing their dedication to fostering international collaboration on tax matters.