Critical times for international tax reform

Ongoing negotiations on the UN Framework Convention on International Tax Cooperation represent a critical opportunity to reassess long-standing features of the international tax system that have failed to keep pace with the reality of modern multinational business models. Central among these are transfer pricing rules, which have enabled large multinational enterprises to shift profits away from the jurisdictions where economic activity, employment and value creation actually occur.

As negotiations move into a more technical phase, discussions under Protocol I on the taxation of cross-border services will be especially consequential.

In August 2025, PSI, ITUC, the Network of Unions for Tax Justice, and FES had convened a first labour–UN dialogue in New York, attended by the Chair of the INC, workstream co-chairs and a wide group of government representatives. The exchange highlighted a clear gap in the negotiation space: while transfer pricing is often treated as a technical or administrative issue, its real impact on wages, investment decisions, and corporate behaviour is far less understood.

Unmasking transfer pricing: how current international tax standards shift wealth from labour to capital

On 6 February 2026, PSI, ITUC, and NUTJ organised a briefing for UN delegations. The gathering brought together about 40 people, including international tax experts and representatives from various countries involved in the negotiations (including the European Commission, Germany, Italy, Cyprus, Greece, Kenya, Ghana, Nigeria etc).

Mathieu Fert, transfer pricing expert at accountant firm Syndex, outlined the most frequent ways in which transfer pricing rules are manipulated - reducing tax liabilities while also depressing wages and limiting employment.

Examples included the use of management fees, royalty fees, and intellectual property ownership - charged by group headquarters in low‑tax jurisdictions to subsidiaries in high‑tax countries. This is done with a view to artificially reduce workplace profits to zero. In one cited example, employee profit‑sharing schemes could not be triggered and poor financial results were used to justify cutting 200 jobs.

Another common manipulation is imposing an artificially low profit margin on a subsidiary located in a high‑tax jurisdiction, in violation of the applicable rules. In the cited example, the artificially low margin caused employment to stagnate at low salary levels despite the entity’s actual business growth.

Livi Gerbase from the research center CICTAR provided further case studies.
In its Starbucks report, CICTAR shows how enormous profits are shifted out of coffee‑producing countries into Switzerland under the label of an “ethical coffee‑sourcing program.” The investigation reveals that the Swiss entity “purchases” coffee beans on paper (the beans never travel to Switzerland) from producing countries and resells them at significantly higher prices to roasting facilities around the world. Only a tiny share of these sales reaches the coffee‑producing countries - if any at all. Meanwhile, dividend payouts continue to rise and Starbucks faces accusations of human‑rights abuses in its supply chain.

Another example concerns Brookfield’s operations in Colombia. The CICTAR report shows how Brookfield increased internal debt owed by its company Isagen to another entity in the same group based in Bermuda, a well‑known tax haven. Before Brookfield's purchase, Isagen invested 50–60% of its revenue in capital expenditure, expanding its infrastructure. After the acquisition, most revenue was instead used to repay debt owed to its own group. This shift severely reduced taxes paid in Colombia and had a significant negative impact on employment and salaries.

Séverine Picard, NUTJ coordinator, presented groundbreaking research on the revenue implications of a global shift to unitary taxation. All tested scenarios show dramatic losses for tax havens. The findings challenge the narrative that reform would harm major economies. In fact, countries such as the US, Germany, the UK and Australia would gain significantly from ending profit shifting.

Results are more mixed for lower‑income countries and depend on the chosen apportionment formula. Including employment in the formula favours labour‑intensive economies, while a formula heavily based on sales can be counterproductive for export‑dependent sectors such as extractives and primary agricultural products.

Overall, the findings show that for all countries, and particularly in Global South, it is essential to combine formulary apportionment with higher effective tax rates. Indeed, unitary taxation curbs tax competition and thus the incentive to use tax breaks to attract foreign capital.

Make change at home – a labour proposal for a Corporate Alternative Minimum Tax

Although UN negotiations toward a more inclusive and effective international tax framework are advancing, it will likely take years before benefits reach workers and communities. Meanwhile, the need for progressive tax revenues has never been more urgent, especially in countries like Nigeria, Ghana and Senegal facing increasing debt pressures.

In response, trade unions have developed a comprehensive proposal for a Corporate Alternative Minimum Tax (CAMT) to ensure large multinationals pay their fair share where economic activity occurs.

A delegation of trade union leaders from Africa met with their government representatives in New York to discuss the drivers and challenges of adopting a CAMT immediately. PSI presented the proposal, which builds on multilateral developments - particularly the G20/OECD Pillar Two model rules - while allowing countries to tailor the approach to their local context. The CAMT acts both as a safety net and an anti‑abuse rule, ensuring that a minimum tax is paid locally even as global rules are implemented by benefiting jurisdictions.

The discussion highlighted technical considerations and local adjustments needed for domestic implementation. Unions stressed that increasing tax rates on multinational enterprises is essential not only for domestic resource mobilisation but also for creating more and better jobs in Africa.

What’s next

The discussions revealed some discomfort among several European delegations, who appeared wary of changing existing standards. We hope our research - evidencing how keeping the current system overwhelmingly benefits tax‑haven economies - will help shift perspectives. Several participants emphasised that what is considered “acceptable” in international tax forums is experienced as particularly harmful by workers and communities in source countries.

We now hope to move away from ideological resistance toward a practical, evidence‑based discussion. There is no single silver bullet, but a qualitative conversation between countries on whether formulary apportionment is the way forward is sorely missing. By releasing data showing that capital‑exporting countries stand to gain considerably, we aim to help ease some of this resistance.

UN negotiations are progressing rapidly, with a final text expected in 2027. Global labour will continue to engage.

Domestically, conversations have begun in several African countries. Unions aim to identify one pioneering country whose leadership could spark a regional snowball effect. Active country‑level work will continue in Ghana, Senegal, and Nigeria.