Fresh attempts to resist UN law that taxes the wealthy

Efforts by the United Nations to create its new global rules to tax the rich are moving forward, despite resistance from several wealthy countries, international watchdog Tax Justice Network (TJN) reports.

At recent UN negotiations in New York, countries moved closer to a first full draft of a proposed UN tax convention. The aim is to rebalance global tax rules so multinational companies and wealthy individuals pay more taxes in their home countries.

However, while the convention is advancing, several rich countries in a group known as the Organisation for Economic Co-operation and Development (OECD) have been crafting resistance behind closed doors. The group has 38 members, including US, Japan, Germany, France, and the UK.

TJN reports that they have been negotiating side agreements that would exempt some major multinational companies, particularly US-based firms, from parts of the global minimum tax that the UN wants to impose. 

Alex Cobham of the Tax Justice Network said the contradiction is clear. “OECD countries have already given up billions in tax revenue by exempting large multinationals,” he said, adding that many are still resisting ambitious UN rules even though “almost every country stands to gain” from fairer taxation.

TJN reports that there was also heavy lobbying by corporate groups, including the International Chamber of Commerce, which opposed proposals allowing countries to tax cross-border services more effectively. Supporters of the UN process argue these measures are needed to stop profit shifting and protect national tax bases.

Why this matters to the BVI

If adopted, the UN tax convention would affect the British Virgin Islands and other international financial centres by changing how cross-border income and services are taxed. While this could require adjustments to existing financial structures, most UN member states believe the changes would benefit people by increasing fairness, transparency and government revenues.

With a first draft now being prepared, negotiations will continue ahead of a major August session. Supporters say the next phase will test whether wealthy countries commit to open, inclusive tax reform at the UN, or continue to rely on exemptions and side deals that critics warn would leave the current unequal system largely intact.