The main obstacle during the three-day summit in Addis Ababa in July was the friction between developing countries (G77) and the rich countries (OECD) on how to tackle tax evasion and avoidance by multinational corporations.
An estimated US$114 billion in tax revenue is lost every year because of money hidden in tax havens and poor countries lose more cash to tax avoidance than they receive in development aid, according to the international aid agency Oxfam.
Other headlines and report findings show:
- To achieve future Sustainable Development Goals, the UN estimates that it needs up to 4 trillion US dollars annually, an amount that far exceeds all global aid.
- Due to tax evasion developing countries face a 2.5 trillion USD annual investment gap, which need to be filled, according to a report from UN Conference on Trade and Development
- If multinationals were taxed fairly, revenues in some developing countries could increase by more than 100%, according to a report from Oxfam.
G77 were hence pushing for reforming the global tax system, a move which came to dominate the three-day conference. OECD opposed the proposal of a new tax body and instead pledged to strengthen the work of the already existing UN Committee of Experts on International Cooperation in Tax Matters.
After three days of negotiations a compromise agreement was reached. The outcome document – the Addis Ababa Action Agenda - states that efforts will be made to combat tax evasion; to make sure that all companies, including multinationals, pay taxes to the governments of countries where economic activity occurs and value is created.
Despite the agreement, G77s was not entirely satisfied. Critics argue that G77 might use this leverage in the December’s climate change negotiations in Paris.