Simon Thomson, JustMoney Movement’s Campaigns Consultant, explores the importance of the UN Tax Convention and how we can all take action for a fairer global tax system.
We may live in a global economy – but we don’t have the global rules to match it.
Big companies, including global tech giants, operate across many countries and borders. But our tax systems remain largely national. That means these companies can move their profits between countries, exploit loopholes and reduce the tax they contribute to our societies.
The result is a global tax system that can favour big multinational companies over the communities and countries in which they operate. And that matters to all of us.
Tax helps pay for the things we rely on – from healthcare and education to public services and action on climate change. When companies reduce their tax bills, governments have less money to invest in the communities they serve.
At JustMoney Movement, we believe money should be used to build a fairer, greener world. That means fixing the rules that shape our global economy.
What does Amazon have to do with it?
We are challenging companies like Amazon to change their ways.
Amazon pays very little corporation tax (a tax on a company’s profits) compared with the enormous scale of its sales. Ethical Consumer has calculated that over half a billion pounds (£575,000,000) could have been lost to the UK public purse from the corporation tax avoidance of Amazon alone, just in 2024.
Most companies make profits and then pay tax on them – Amazon does the opposite. It reinvests heavily in expansion, which can reduce the profits it reports for tax purposes. It also pays its top staff in shares rather than cash. The cost of this share-based compensation is recorded as an expense, reducing reported profits and the amount available to be taxed.
Investors accept this because they are betting on Amazon’s future growth. They expect their shares to be worth more in the future, rather than demanding large profits and dividends today.
Amazon also shifts where its profits appear. If you buy something in Europe, your receipt will usually come from Luxembourg, a low-tax country, rather than your own. Local Amazon companies can be structured to appear barely profitable, with much of their role focused on delivering goods to customers. The result is huge sales where people live, but their profits can appear elsewhere – including in lower-tax countries – making it harder to see where Amazon is really making its money and how much tax it is paying.
Amazon isn’t the only company facing questions like these. The underlying problem is the rules themselves.
An opportunity to fix the rules
That is where the UN Tax Convention comes in.
The UN is bringing all 193 member countries together to agree fairer global tax rules. The aim is to make taxation fairer and more transparent, and give developing countries a stronger voice in shaping those rules.
The latest round of negotiations took place at the UN in New York in August. For the first time, countries worked through the full draft treaty and its accompanying protocols in detail.
Issues that were discussed included:
- how to tackle profit shifting and tax avoidance
- closing loopholes used by multinational companies
- deciding how taxing rights should be allocated between countries
A key question is whether companies should pay tax where they actually do business – including where their customers, markets and economic activity are – rather than relying on old rules based largely on physical presence. But countries still disagree over how far the new rules should go, with the UK being described as a “blocker” in these talks by observers. Negotiations will continue in Nairobi at the end of November. The process is expected to conclude next Autumn.
If you’d like to read more about the negotiations so far, our friends at Tax Justice Network have an in-depth article here.
The UK must act
The UK has an important voice in these negotiations. It is extremely disappointing and frustrating that the UK was “blocking” progress in the last round of negotiations. We need the UK Government to support stronger, fairer and more transparent global tax rules – rules that make it harder for multinational companies to shift their profits and avoid paying their fair share. This isn’t about being anti-business. It’s about making sure big companies contribute their fair share to the societies they depend on.
At JustMoney Movement, we believe that how money is raised and shared is a question of justice. A fairer tax system can help tackle inequality and give governments the resources they need to invest in their communities to make them more hopeful places.
The UN Tax Convention is an opportunity to fix the rules for a global economy. We need the UK Government to make sure those rules work for people and our planet – not simply those with the greatest economic power.
You can take action today by writing to your MP to ask them to call on the UK Government to support fairer global tax rules through the UN Tax Convention.