UN opens global corporate tax talks with $500 billion revenue potential

Developing-world coalition pushes unitary taxation as US stays away

The United Nations opens negotiations on a new global corporate tax framework in New York on Monday, with a Tax Justice Network report estimating that countries could capture an extra $500 billion a year from multinational profits without raising corporate tax rates.

The central mechanism is unitary taxation, which would tax multinational profits where real economic activity occurs rather than where they are booked in tax havens. No new profit would be created; revenue would simply shift from tax havens to the countries where workers produce and customers spend, according to the report. The framework is modelled on the UN climate regime and would create a governing body and procedures, with protocols providing detailed rules. The UN is targeting agreement by late 2027.

The United States under President Donald Trump walked out of the negotiations last year and urged other countries to follow, but none did, according to The Guardian. The US cannot shield American companies from others’ rules even if it sits out, The Guardian reported.

Rich countries stand to gain the most when firms pay tax where people work rather than where profits are booked in havens, because their economies are the largest, according to the report. Britain would collect about £13 billion extra a year in tax receipts — roughly two-thirds of the cost of an NHS-style social care system. EU governments could raise enough to quadruple climate-adaptation spending. The global south would receive $156 billion in one year, according to the report — more than the International Monetary Fund has outstanding in loans to those nations.

The framework would mark the first time in decades that multinationals could be taxed where they actually do business, according to the report. Rules built for the corporate world of the 1920s, when national industrial giants dominated, would confront today’s companies organised around intangible assets and global supply chains. The report notes that in 1929, General Motors made the equivalent of $4.7 billion, while Apple’s profit last year was $112 billion.

Tax havens would be affected differently under the framework. “Diversified” havens such as Switzerland and the Netherlands could offset losses by raising rates, while pure booking centres such as the Cayman Islands could not, according to the report.

Two protocols are under discussion. One would let countries tax digital and other cross-border services without waiting for firms to establish domestic offices. A second could shift tax disputes away from investor-state arbitration, which The Guardian editorial characterizes as secretive, into a publicly accountable UN-led system.

Several countries have already begun preparing. Ireland, which faces an estimated $11 billion annual tax loss, has begun setting aside part of its “windfall corporate tax receipts” in a new fund, according to the report. India and Nigeria have legislated so that companies profiting from their economies should not escape the tax net just because they operate across borders, according to The Guardian.

The talks have largely been driven by African nations insisting on consensus where possible and majority rule where necessary, according to The Guardian. This approach denies the US and any rich-country bloc an effective veto. Backed by India, Brazil and other developing powers, an African-led coalition is pressing the claim that countries should be free to tax value created within their economies. Britain has backed the UN-led shift towards taxing real activity, The Guardian reported.