PRESS STATEMENT
Country-Level Revenue Estimates – A Comparative Analysis of UN and OECD Subject to Tax Rules for 65 Member States of the G-24 and South Centre
Washington and Geneva, 23 July 2025
The South Centre & Group of Twenty-four today jointly released country-level revenue estimates of the UN & OECD Subject to Tax Rule (STTR) for their 65 combined Member States.
Results show higher revenues from UN STTR, and reinforce benefits of a UN Tax Convention.
Comparison of Tax Revenue Effects of United Nations and OECD Subject to Tax Rule for G-24 and South Centre Member States
By Faith Amaro and Sol Picciotto
The Subject to Tax Rule (STTR) seeks to address the historical imbalance in the allocation of taxing rights under international tax treaties by introducing within existing treaties a new article which makes the restrictions on source taxation conditional on the residence jurisdiction imposing a minimum level of tax on foreign-derived income. This paper presents a methodology for analysing the respective benefits of the STTRs developed by the Organisation of Economic Co-operation and Development (OECD) and the United Nations (UN). Applying this model to publicly available data for 2021, it also provides estimates of the possible revenue impact for the 65 Member States of the South Centre (SC) and the Intergovernmental Group of 24 (G-24). Our analysis indicates that the OECD STTR would have no impact on any OECD country treaty with a SC/G-24 Member State. Applying the prescribed 9% minimum rate to covered payments, only 100 treaties across 28 SC/G-24 Member States would qualify for improvement under the OECD STTR, with an estimated combined revenue gain of USD 55.6 million, 71% of which is concentrated in just five treaties. In contrast, the UN STTR, which does not specify a minimum rate, was modelled using rates of 9%, 10% and 15%. This resulted in estimated revenue gains of USD 212 million, USD 325 million, and USD 1,165 million across 171, 210 and 317 treaties, respectively. Given its complexity and restrictive scope, it seems pointless for any SC/G-24 Member State to join the OECD STTR. Instead, countries should focus on identifying treaties that cause unjustifiable revenue losses and consider revising them – either by adopting the simpler and broader UN STTR or implementing other measures such as active anti-abuse provisions to combat treaty shopping and tax avoidance.
Analysing the Impact of UN and OECD Subject to Tax Rule for G-24 and South Centre Member States
By Suranjali Tandon and Chetan Rao
The Subject to Tax Rule (STTR) is meant to address base erosion and profit shifting in cross –border transactions. The United Nations (UN) and Organisation for Economic Co-operation and Development (OECD)/Group of Twenty (G20) Inclusive Framework have developed models of the STTR that countries may choose to adopt in their treaties. This paper provides a review of these designs of two STTR models and proceeds to estimate the revenue gains for the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G-24) and South Centre Member States that may arise from a STTR that covers different kinds of payments. The OECD STTR is limited to related-party payments and imposes thresholds based on mark-up and materiality, reducing its applicability in practice. In contrast, the UN STTR offers broader coverage, applies to both related and unrelated parties, and does not impose restrictive thresholds, making it more administratively feasible for developing countries. Although the estimated gains from the OECD STTR appear modest due to its narrow scope, the UN STTR shows greater potential. The analysis also highlights data limitations and the need for access to microdata for accurate country-level assessments.
South Centre Inputs on the Draft Issues Notes on the UN Framework Convention on International Tax Cooperation
11 July 2025
In preparation for the First and Second Sessions of the Intergovernmental Negotiating Committee (INC) on the United Nations Framework Convention on International Tax Cooperation (UNFCITC) to be held in August 2025, the Co-Leads of each of the three Workstreams have released Draft Issues Notes for public comments. The Issues Notes are meant to provide direction on the content of the UNFCITC and its two early protocols on services and dispute prevention and resolution.
There are three Issues Notes:
1. Workstream I on the framework convention
2. Workstream II on the taxation of services
3. Workstream III on dispute prevention and resolution
The South Centre submitted inputs on all three Issues Notes on 11 July 2025 which are reproduced below:
South Centre Statement on the Fourth International Conference on Financing for Development
Seville, Spain, 30 June – 3 July 2025
The international financial architecture continues to reflect a global order that existed eight decades ago. An urgent, comprehensive reform is needed to make such order responsive to the financing needs of developing countries in the 21st century.
Book Review: What Do We Know and What Should We Do About Tax Justice
By Abdul Muheet Chowdhary
The book What Do We Know and What Should We Do About Tax Justice, written by Alex Cobham, CEO of the Tax Justice Network, is an excellent summary of the state of knowledge on tax justice and provides a clear direction on what should be the goals of the tax justice movement going forward.
Harnessing Open Account Trade — A Major Enabler for Illicit Financial Flows from Developing Countries
Can blockchain technology come to the rescue? Will the African Continental Free Trade Area leverage its Digital Trade Protocol?
By Yuefen Li
The current geopolitical landscape has made domestic resource mobilization an even more important imperative for developing countries. In this context, it is more urgent than ever to combat illicit financial flows (IFFs) whose staggering amount from developing countries has outstripped the combined sum of official development assistance (ODA) and foreign direct investment (FDI) going into the developing world. The IFFs from the financial channel is significant, but the greater proportion of IFFs actually stems from trade channels rather than from financial channels. It is particularly concerning that the flexibility and legitimacy of international trade have been exploited to cover IFFs. Trade mis-invoicing is the largest component of IFFs from developing countries. A major reason for trade being used to undertake illicit, fraudulent or criminal activities is because 80%-85% of the more than US$ 24 trillion international trade is conducted via open account trade (OAT), which has minimum scrutiny as it is conducted on a bilateral basis between the importer and exporter, not transparent and with minimal involvement of the financial institutions and customs authorities. OAT payment does not require documents to prove quality, quantity and other information about the product being shipped and is made through automatic payment systems which lack the oversight provided by any third party. OAT gives trade mis-invoicing great ease, flexibility, minimal cost and minimal risk. Therefore, if the world is serious about combatting IFFs, it is urgent and imperative to close loopholes in the OAT for IFFs, making it transparent, trackable and involving third party monitoring and scrutiny. The functionalities and features of Blockchain technology (BCT), though its implementation is still nascent, can be a good candidate to make OAT more modern, transparent to regulators, traceable, more efficient and above all minimize IFFs. The goals of the African Continental Free Trade Area (AfCFTA)’s Digital Trade Protocol (DTP) include boosting intra-African trade through unifying and harmonizing regulatory framework for Africa’s digital economy and regional trade, promoting cross-border data flows and paperless trade, and enhancing cybersecurity measures. The exploration of Blockchain adoption to reduce OAT’s risks for IFFs and make trade more effective aligns well with DTP’s goals.
Reducing the Cost of Remittances – A Priority for the Global South
By Danish
Remittances are a lifeline for many households in low and middle income countries (LMICs), and have emerged as an important source of external financing for sustainable development. With over 800 million people dependent on remittances worldwide, their importance for developing and least developed countries is well established. However, the high cost of remittances remains a significant challenge, and despite global commitments to reduce these costs, progress has slowed down.
This paper thus provides an assessment of the current drivers of remittance costs and explores the relevant policy discussions and initiatives at the United Nations (UN) and Group of Twenty (G20). It further highlights the continuing challenges as well as the innovative solutions such as increasing digitalisation and development of cross-border fast payment systems in different regions of the global South. The upcoming Fourth International Conference on Financing for Development (FfD4) and G20 initiatives under South Africa’s Presidency present important opportunities for the international community to redouble its efforts and make concrete, ambitious commitments to lower the cost of remittances. Finally, the paper provides some relevant policy considerations and recommendations, especially to accelerate the implementation of existing commitments, leverage digital public infrastructure and to discourage levying of taxes on remittance flows to developing countries.
Reform of the International Debt Architecture: A Developing Country Perspective on Credit Rating Agencies and Financing for Sustainable Development
FfD4 Side Event Co-Organized by IDEAs and South Centre
2 July 2025, 12:30 – 14:00, Room Side Event 17,
FIBES Sevilla Exhibition & Conference Centre, Seville, Spain
Impact of Global Trade Tensions on Developing Countries: How to respond to a reset of the global economic system
By Yuefen Li
The recent unilateral, significant and broad-ranging tariff hikes by the new United States administration have triggered unprecedented trade tension in the world and led to significant downward revisions of the world’s economic and trade growth projections for 2025 and beyond. The main aims of the U.S.’ trade policies are complex and strategic, not only about reducing the trade and fiscal deficits, but also addressing the dollar overvaluation problem, “reconfigur(ing) the global trading and financial systems to America’s benefit”, promoting economic “fairness” and “making America great again”. As what has frequently happened before, the poor countries are disproportionally affected by the negative repercussions of these policies, owing to their financial and capacity constraints and weaknesses to absorb the impact. This short paper analyses through which channels and to what degree trade tension would introduce economic, financial and political stability risks for developing countries, particularly in financially distressed developing countries. A few policy recommendations are also briefly mentioned.
Statement of President Mbeki under the Council Agenda Item 5
8 May 2025
Mali’s Mining Shake-Up: Tax audits reveal massive revenue loss and lead to stringent policy changes
By Anne Wanyagathi Maina and Kolawole Omole
Mali’s recent regulatory changes and tax dispute settlements highlight the government’s determination to secure a greater share of economic benefits from its natural resources. Mali’s approach presents a lesson for resource-rich developing countries. The article explores the country’s mining tax reforms, ensuing tax disputes and settlements, and implications on revenue mobilization.
