Global leaders call for United Nations tax reforms to tackle climate crisis

Civil society groups and tax justice advocates have called for sweeping reforms to global tax rules ahead of next week’s United Nations tax convention negotiations, arguing that curbing corporate tax abuse and making major polluters pay could unlock billions of dollars needed to combat climate change.

The negotiations, scheduled for Aug. 3-13 at the United Nations, are expected to shape a new international tax framework that supporters say could strengthen developing countries’ taxing rights, improve transparency and generate new funding for climate action.

During an online media briefing on Thursday, campaigners said governments lose an estimated USD500 billion annually through global tax abuse by multinational corporations and wealthy individuals, limiting resources available for climate adaptation, mitigation and compensation for climate-related losses.

Jeannie Manipon, senior programme manager for development finance at the Asian Peoples’ Movement on Debt and Development, said countries on the front lines of climate change continue to face severe funding shortages despite contributing little to global emissions.

She urged negotiators to incorporate the “polluter pays” principle into the proposed convention by introducing taxes on the profits of large fossil fuel companies, arguing that such a measure could mobilise substantial resources for climate finance.

According to Manipon, a surtax on the profits of the world’s largest oil and gas companies could have raised more than USD1 trillion for climate finance since the 2015 Paris Agreement.

Environmental groups also criticised the latest draft negotiating text, saying it does not go far enough in holding major polluters and wealthy individuals accountable.

Rebecca Newsom, global political lead at Greenpeace International, said the current draft omits the polluter pays principle and weakens provisions relating to the taxation of high-net-worth individuals despite worsening climate impacts worldwide.

She said record fossil fuel profits contrasted sharply with growing climate-related disasters, citing recent heatwaves and wildfires as evidence of the increasing economic and human cost of global warming.

Campaigners also called for tougher measures against corporate tax avoidance, particularly transfer pricing practices that allow multinational companies to shift profits to low-tax jurisdictions.

Vincent Kiezebrink, a researcher at Dutch-based think tank SOMO, said multinational corporations continue to exploit weaknesses in international tax rules through internal pricing arrangements that reduce taxable profits in countries where economic activity occurs.

He called for the adoption of unitary taxation, under which multinational firms would be taxed based on their global profits and the location of their real economic activities, rather than transactions between subsidiaries.

Advocates also urged negotiators to establish a Global Asset Registry to improve transparency over the ownership of offshore wealth.

Klelia Guerrero García, a tax justice specialist at LATINDADD, said many governments cannot effectively tax wealthy individuals because assets are hidden behind offshore companies and trusts.

She argued that greater transparency would help countries mobilise domestic resources for climate action while reducing inequality.

The talks are also expected to highlight long-standing divisions between developed and developing countries over international tax governance.

Tove Maria Ryding, tax coordinator at Tax Justice Europe, said the convention offers an opportunity to replace what she described as an outdated international tax system with one that better reflects the interests of developing nations.

Supporters of the negotiations say a successful agreement could reshape global tax cooperation, reduce illicit financial flows and provide new sources of climate finance for countries most vulnerable to the effects of climate change.