DARYL SWANEPOEL: Equitable tax regime absent for very rich and multinationals

As the world grapples with widening inequality and diminishing state capacity, one of the most glaring injustices in the international economic order is the absence of an enforceable and equitable tax regime for multinationals and the ultra-wealthy. The vast fortunes accumulated by global corporations and the richest individuals often escape meaningful taxation, exploiting legal loopholes, shell structures and permissive jurisdictions. 

For developing countries, the implications are severe. With urgent needs to fund public services, meet sustainable development goals and build climate-resilient infrastructure, the loss of about $200bn annually through tax avoidance and illicit flows is not just unjust, it is a humanitarian crisis in slow motion. 

A just alternative

The Independent Commission for the Reform of International Corporate Taxation (ICRICT) has laid out a compelling and achievable alternative. Its proposals include the following: 

• A global minimum effective corporate tax rate of at least 25%, to curtail the “race to the bottom”; 
• The adoption of unitary taxation, where multinationals are taxed based on where their real economic activity occurs, not where they shift paper profits; 
• Public country-by-country reporting, so that profits, revenues and tax paid are transparent to all; and 
• A strengthened role for the UN in global tax governance, moving power away from exclusive clubs such as the Organisation for Economic Co-operation and Development (OECD) and into truly representative forums.

These proposals are not radical; they are rational, timely and rooted in a vision of fairness. Yet progress is being actively obstructed by a handful of powerful states who benefit from the current system. 

Held hostage by the powerful 

The moral paradox is stark: developing countries urgently need tax reform, but are held hostage by some of the very nations that shape global rules. Countries such as Ireland, Luxembourg, the Netherlands and even US states such as Delaware have created attractive havens for capital, eroding the tax base of poorer countries while shielding multinationals from contributing fairly.

Worse still, many developed nations resist any shift of tax governance away from institutions like the OECD, where they dominate, towards the UN, where developing countries have a stronger voice. In this context, developing nations face a double bind: economically constrained and politically sidelined. 

Idealism with realism 

The way forward requires a strategy of duality, one that boldly advances a progressive tax agenda internationally, while adopting pragmatic, temporary measures at the national level to remain competitive. 

Internationally, developing countries must work together to:

• Call for a UN Tax Convention; 
• Push for the establishment of a permanent UN intergovernmental tax body; 
• Launch a Global South tax solidarity pact; and 
• Leverage trade and investment forums to demand transparency and reciprocal accountability.

Nationally, governments must adopt elements of neoliberal orthodoxy such as competitive tax regimes and investor confidence measures, not as ideological choices but as tactical necessities in a system that punishes divergence. This should remain a holding pattern only, while countries strengthen domestic tax administrations, introduce moderate wealth and capital gains taxes, pilot digital and extractive industry taxes and improve public financial transparency.

A UN-led programme of action

At the multilateral level, the Global South must translate its moral clarity into actionable momentum. A UN programme of action on global tax justice should include: 

• A resolution for a UN framework convention on tax co-operation; 
• A world tax summit, co-hosted with ICRICT and civil society; 
• A South-South tax capacity initiative housed under the UN Development Programme or the UN Economic Commission for Africa (UNECA); 
• A UN corporate tax transparency database; and 
• An snnual global tax equity review published by the UN's Economic and Social Council (Ecosoc) or the UN Conference on Trade & Development.

A rare and urgent opportunity 

It is precisely in this context that the upcoming UN Finance for Development Summit, to be held later this month in Seville, presents a rare and urgent opportunity. For developing nations and reform advocates, it is a strategic moment to place tax justice squarely at the centre of global economic reform. 

The Seville summit, convened under the auspices of the UN General Assembly and Ecosoc, is intended to shape a new consensus on international financial architecture. This includes global taxation, debt sustainability, climate finance and development co-operation. As such, it offers a platform to: 

• Demand the inclusion of ICRICT principles in the summit’s outcome document; 
• Push for binding language on the creation of a UN tax convention; 
• Form a coalition of like-minded states, backed by civil society and global economists, to advocate for immediate interim reforms and longer-term structural overhaul; and 
• Expose and challenge the contradiction of rich nations that promote good governance abroad while enabling tax avoidance at home.

If developing countries arrive at Seville united, coherent and assertive, the summit could serve as the turning point in reclaiming fiscal sovereignty and global economic fairness. 

The horizon and the path 

Some may say this vision is too idealistic. But it was idealism that created the Bretton Woods institutions, the UN and the Universal Declaration of Human Rights. The same energy must now be directed towards building a fair global tax order. 

Still, we cannot afford naiveté. The current world order will not change overnight. But it can be changed, step by step, through solidarity, strategy and a dual approach that walks with one foot in the world that is and the other towards the world that must be. 

The Seville summit gives us a window, perhaps a once-in-a-generation chance, to begin that walk with renewed urgency. The choice is not between idealism and realism; it is between drift and direction. And the time to choose is now.

• Swanepoel is CEO of the Inclusive Society Institute, which is preparing position papers in preparation for the FFD4 Summit in Seville.