EU countries are trying to limit the ambition of a new UN tax convention during negotiations in New York, despite research indicating that the agreement could generate billions of euros in additional tax revenue for them.
Ahead of the two-week negotiating round in New York on the so-called UN Framework Convention on International Tax Cooperation, research by Tax Justice Network, an NGO, and Public Services International, has estimated that the UN’s commitment to switch from “pay-where-you-say” to “pay-where-you-play”, currently contained in Article 5 of the draft convention, would raise $500bn in additional tax revenues.
That would see EU countries collect enough to quadruple spending on climate adaptation in agriculture, energy and transport – including €3.7bn for Spain and €22.4bn for France, according to the research.
The reform would also enable the Global South to collect more in a single year than the entire amount owed by Global South countries to the IMF in outstanding loans.
The new study estimates how much tax countries would bring in under the UN’s commitment to change how countries determine where a multinational corporation pays tax on its profits. Countries currently rely on a 100-year-old “pay-where-you-say” approach set up by the League of Nations, which requires governments to tax multinational corporations’ profits based on where they declare them
