United Nations headquarters in New York. LEHTIKUVA / AFP

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In a dramatic turn of events at the United Nations in New York, a critical vote was held on Wednesday evening to advance a new international tax agreement. Despite the African nations' hope for unanimity, the result highlighted a global divide. Developing countries, losing tens of billions of dollars annually to tax evasion, remain marginalized in negotiating international tax rules.

The world’s nations split into blocs during the vote. Countries voted on a proposal by African nations to bring international tax negotiations under the UN's umbrella. The proposal to advance the new tax agreement won decisively with a 125–48 vote, following weeks of intense negotiations. The vote not only tested the agreement’s passage but also the global consensus on the issue.

Support for the agreement primarily came from Asian and Latin American countries, standing with the African nations. Finland, like all other EU countries, voted against the proposal. The Western bloc wasn't entirely united, however, as countries like Norway and Iceland abstained.

Outi Hakkarainen, a sustainable economy expert from Fingo, expressed disappointment at the outcome. “Finland and almost all other Western countries sided with international tax evaders and avoiders, not with the Global South. This clearly shows what’s wrong with the world: Western countries misuse their power and are not ready for democratic decision-making with equal participation for all countries,” she said.

Currently, international tax cooperation is led by the OECD, primarily a forum for wealthy countries. Members include countries known as tax havens like the Netherlands and Luxembourg, while half of the African states are not part of the OECD’s extended group dealing with taxes.

This means Western countries wield significantly more power in international tax matters than developing nations. Developing countries suffer most from corporate and individual tax evasion, losing tens of billions of dollars in tax revenue each year.

Hakkarainen pointed out that Russia and China voted in favor of the proposal, positioning themselves as supporters of the Global South against the West. “Finland must now support the creation of the new tax agreement and later the commitment of Western countries to the agreement. Developing countries aim to effectively seal tax leaks, particularly targeting proper taxation of international companies and individuals operating in their countries. Western countries, including Finland, would also benefit from the reforms pushed by developing nations,” she noted.

The vote signifies the formation of a UN member task force to draft a UN-based international tax cooperation agreement. The proposal will be discussed at the UN General Assembly next year. Following the vote, Nigeria's representative, coordinating the African proposal, emphasized that all countries are welcome to help prepare the new agreement.

HT

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