Reforming Global Tax Governance: OECD and UN Paths to Effective and Participatory Tax Reform

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Global tax governance has long struggled with ineffectiveness, as reflected in rising corporate tax avoidance that costs governments hundreds of billions of dollars annually. In response, the Organisation for Economic Co-operation and Development (OECD)/G20 advanced the most ambitious initiative to date — the global minimum tax under its Two-Pillar Solution. It was agreed by 139 countries, which together cover 90 percent of global gross domestic product, and was implemented in the European Union and six other developed countries in 2024. This represents both a major innovation in international taxation and a rare case of multilateral consensus.

In line with the ENSURED project’s conceptual framework (Choi et al. 2024) — which focuses on robustness (rule stability), effectiveness (ability to deliver results), and democracy (participation and inclusivity) — the key purpose of the global minimum tax was to provide an effective solution to tax avoidance while building on the democracy dimension derived from the participatory nature of the Inclusive Framework. Nevertheless, growing dissatisfaction among developing countries regarding both the effectiveness and the equality of participation in the OECD-led process prompted a parallel initiative under the United Nations, led by the African Group. These efforts culminated on November 27, 2024, when the UN General Assembly adopted a mandate to draft a Framework Convention on International Tax Cooperation (hereafter the UN Tax Convention) to combat multinational tax abuse, with nine developed countries voting against there solution (UN 2024b).

This report traces the evolution of global tax governance within two key policy arenas: the OECD/G20 Inclusive Framework and the emerging UN-based process. It draws on 13 semi-structured interviews, three background discussions, and an analysis of relevant documents, assessing these initiatives through the lenses of effectiveness, robustness, and democracy.

We argue that the OECD/G20 reform has faced two central challenges. First, the United States, although closely involved in the initial negotiations, insisted on the recognition of its unilateral global minimum tax (Global Intangible Low Tax Income or GILTI) — a demand which was accommodated in June 2025 by means of a “side-by-side” arrangement with OECD members (US Department of the Treasury 2025). Under this arrangement, the US existing minimum tax regime for its multinational enterprises (MNEs) is effectively treated as equivalent to the OECD’s Pillar Two (or global minimum tax) rules. Second, developing-country participation remains constrained, despite the Inclusive Framework’s promise of “equal footing” (Christensen et al. 2020; Interview 10). Several African countries, including Kenya and Nigeria, withdrew from the process, citing limited benefits and excessive administrative burdens (Goni and Lucystar 2021). This discontent, which was intensified by post-pandemic fiscal pressures and the effects of the war in Ukraine, increased the momentum behind the UN Tax Convention.

Since the launch of both of these initiatives, the positions of key actors have diverged. Under the second Trump administration, the US has stepped back from both the OECD and the UN processes in favour of unilateral measures. A small group of developed countries continues to oppose the UN initiative, while EU member states have shifted from opposition to abstention. Most African, Asian, and Latin American countries — which together make up the largest group — support abroad UN Tax Convention. These divisions raise questions about whether the UN process will evolve into a lasting foundation for global tax governance or remain primarily a political declaration by the Global South. Developing countries alone have sufficient votes to approve new protocols by the required two-thirds majority (as established by Decision A/AC.298/CRP.9). Yet the decision to focus the second of the two agreed protocols on less contentious topics — a measure which is intended to keep developed countries, particularly the EU, engaged — suggests that developing countries are open to substantiveoutcomes over symbolic agreement.

This report finds:

• The evolution of global tax governance has been primarily an effectiveness-driven process, aiming to curb tax avoidance by means of increasingly coordinated international frameworks.
• As political dynamics have fluctuated, the OECD has shifted its focus towards retaining US engagement by implementing carve-outs. In doing so, its approach has increasingly prioritised robustness over ambition, gradually eroding the reform’s effectiveness.
• In contrast, the emerging UN process represents a shift towards greater equality and inclusiveness, even at the expense of lower immediate effectiveness.
• Neither forum currently ensures a reform process that is both effective and participatory, and future progress will depend on addressing this trade-off.

Citation Recommendation:

Boukal, Tomáš, Petr Janský, Miroslav Palanský, and Michal Parízek. 2025.“Reforming Global Tax Governance: OECD and UN Paths to Effective and Participatory Tax Reform.” ENSURED Research Report, no. 16 November: 1-18. https://www.ensuredeurope.eu.

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