Under the motto “Building a Just World and a Sustainable Planet”, Brazil assumed the presidency of the G20 in 2024, setting three priorities: fighting hunger, poverty, and inequality; addressing the three dimensions of sustainable development (economic, social and environmental); and reforming international governance . The context is challenging: the G20 arrives in Brazil in the midst of a crisis of hegemony in the international landscape. The world is facing wars, economic disputes, and climate and social emergencies. In addition, there is a profound crisis of values characterized by the rise of far-right forces that challenge the principles established in the post-World War II era, such as human rights, multilateralism and international cooperation. Hegemony should be understood as the capacity for moral and intellectual leadership to guide the resolution of a systemic crisis. At present, both the United States and China show difficulties in mediating conflicts and steering the world towards peace. Thus, Brazil takes the helm of the group of the world’s 20 largest economies during a period that can be characterized as a ‘hegemonic transition,’ with tensions and uncertainties reflected in the group’s internal dynamics.
To identify themes that may foster consensus amid the current challenging scenario, the Financial Track of the G20 in Brazil proposed an ambitious initiative that has garnered increasing support: the establishment of an international norm ensuring the taxation of individuals with ultra-high net worth (“super-rich”). According to a report commissioned by the Brazilian government and presented in negotiations with G20 members, individuals with a net worth exceeding USD 1 billion (including assets, real estate, shares, and business equity) would be required to pay a minimum annual tax of 2% on their total wealth. The choice to tax wealth rather than income stems from the greater difficulty in manipulating assets compared to earnings. The standard would be implemented flexibly by participating countries, which would adapt the measure to their national legislations. It is estimated that this minimum 2% tax on billionaires could generate annual revenue between USD 200 and 250 billion, derived from approximately 3,000 individuals, contributing to the financing of public goods and services and investments to combat the climate crisis.
It is estimated that this minimum 2% tax on billionaires could generate annual revenue between USD 200 and 250 billion, derived from approximately 3,000 individuals, contributing to the financing of public goods and services and investments to combat the climate crisis.
This proposal complements the agreement already established by the OECD, promoted within the G20 framework, regarding the erosion of the tax base and profit shifting (BEPS). The objective of the agreement is to ensure that multinational corporations are taxed at a minimum rate of 15% on their global profits. In 2016, the OECD and the G20 created an ‘Inclusive Framework’ for BEPS, allowing countries interested in cooperation to join the agreement, which initially included 100 nations. In 2021, the rules were simplified to facilitate implementation. According to the OECD, more than 140 countries have already committed to adopting 15 measures aimed at combating tax evasion. These measures are designed to equip governments with tools to ensure that profits are taxed where economic activity occurs, as well as to address the challenges posed by the digitalization of the economy and reduce disputes over the application of international tax rules.
Although the OECD/G20 agreement is widely regarded as a significant advancement in the attempt to correct distortions and combat tax evasion, its rules are complex, and implementation faces substantial challenges. Critics argue that the agreement has not been sufficiently effective, particularly because multinationals often do not pay the minimum tax in developing countries. In this context, the proposal for a minimum tax on high-net-worth individuals has gained increasing support from non-governmental organizations, activist networks, influential figures, and countries such as France, South Africa, Germany, and Spain.
The Positions of Social Actors and the (Lack of) Progress in the Financial Track
The proposal has sparked intense debates and varying positions. Notably, civil society organizations presented their recommendations to the Financial Track in May 2024, while think tanks and research centers involved in the T20 (Think20) submitted their recommendations to the G20 in July 2024.
There is a convergence among non-governmental organizations and think tanks that the G20 should support the creation and implementation of the United Nations Framework Convention on International Tax Cooperation (UNFCITC).
A central point of debate concerns the most appropriate international forum for discussing tax cooperation. There is a convergence among non-governmental organizations and think tanks that the G20 should support the creation and implementation of the United Nations Framework Convention on International Tax Cooperation (UNFCITC). For these actors, the UN—not the OECD or the G20—represents the most just, inclusive, and democratic forum capable of giving voice to poorer countries. Both the T20 and civil society organizations argue that the G20 should ensure that the UNFCITC adopts a democratic and inclusive governance structure, guaranteeing civil society participation in discussions and decision-making regarding tax issues.
Thus, there is a consensus among non-governmental organizations and think tanks that negotiations and implementation for the establishment of a global minimum tax on high-net-worth individuals should occur within the UNFCITC, ensuring that the resources generated are directed toward promoting human rights, particularly in impoverished countries in the Global South.
For the T20, the UNFCITC must address global tax challenges, with an emphasis on taxing international transactions, aiming to make tax rules fairer and simpler. G20 members should intensify efforts for information exchange and enhance tax transparency, particularly through detailed country-by-country public reporting. Advancing the implementation of information-sharing mechanisms regarding different classes of assets and creating a public Global Asset Register under the supervision of the UNFCITC is crucial.
Furthermore, the resources raised through these mechanisms, as well as those resulting from the redirection of fossil fuel subsidies, should be utilized to strengthen redistributive policies, enhance universal social protection systems, generate decent jobs, and support initiatives for climate change adaptation and mitigation, with a particular focus on developing economies.
Civil society organizations and networks, in turn, argue that tax negotiations should incorporate human rights, as well as socio-environmental and climate obligations, as guiding principles for decision-making.
Civil society organizations and networks, in turn, argue that tax negotiations should incorporate human rights, as well as socio-environmental and climate obligations, as guiding principles for decision-making. They also emphasize the need to decolonize tax standards by adopting an intersectional approach to gender and race/ethnicity in fiscal policies to combat inequalities. Among the proposals for the UNFCITC, the creation of a tax on financial transactions and the promotion of tax cooperation that facilitates a fair and equitable climate transition stand out.
Similar to think tanks, civil society organizations argue that the G20 should support the implementation of multilateral taxes to redirect tax incentives intended for fossil fuels toward addressing hunger, climate change, poverty, and inequalities, while simultaneously promoting climate justice and a just energy transition. These organizations also reinforce the recommendation, also advocated by the T20, to intensify information exchange efforts and increase tax transparency, as well as to work toward creating a Global Asset Register within the UNFCITC.
Unfortunately, these recommendations remain distant from the negotiations of the G20 Financial Track. However, some progress was observed during the technical meeting in July, which resulted in a preliminary document that will be presented in the final declaration of the heads of state in November this year. The resolutions document from the finance ministers recognizes that progressive taxation is one of the main tools for reducing inequalities, strengthening fiscal sustainability, facilitating budget consolidation, and promoting inclusive growth, in addition to contributing to the achievement of the Millennium Development Goals.
Simultaneously, it was reaffirmed that taxation constitutes an inherent right of state sovereignty. International tax cooperation, which is inclusive and consensus-oriented, should aim solely to enhance the capacity of jurisdictions to exercise their tax rights more effectively.
From the perspective of the Financial Track, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) has demonstrated the potential of international tax cooperation, with G20 countries reaffirming their commitment to swiftly conclude and implement the Two-Pillar Solution*. This solution seeks to stabilize the global tax landscape, reduce profit shifting, and curb harmful tax competition, limiting the trend of a ‘race to the bottom’ in corporate tax rates. The document also highlights that the implementation of Automatic Exchange of Information (AEOI) on financial accounts represents a historic milestone in promoting tax transparency, complicating financial secrecy, combating offshore tax evasion, and strengthening tax enforcement.
In line with the positions advocated by T20 experts and civil society, the Financial Track also emphasizes that negotiations within the UNFCITC present an additional opportunity to foster inclusive and effective international tax cooperation. However, negotiators stress the importance of avoiding ‘unnecessary duplication of efforts,’ leveraging existing achievements and processes, as well as ongoing work by other international organizations, such as the OECD. It is anticipated that UN Member States will engage in discussions with a spirit of cooperation, considering the aspirations of both developing and developed countries to strengthen global tax cooperation. The issues to be prioritized should be those capable of achieving consensus among nations and that can be implemented effectively.
It is anticipated that UN Member States will engage in discussions with a spirit of cooperation, considering the aspirations of both developing and developed countries to strengthen global tax cooperation.
In other words, while the T20 and civil society organizations advocate for prioritizing the poorest and developing countries, which have historically been affected by unjust tax policies, negotiators in the Financial Track reiterate the need for a consensus that, in practice, tends to reflect the positions of wealthy countries. It is relevant to recall an observation made by a T20 expert during a discussion on international taxation in response to a representative from the OECD: “the consensus is, in this case, non-democratic, as it does not represent the interests of the majority of the population and countries of the world.”
The Financial Track document further acknowledges that the international mobility of high-net-worth individuals poses significant challenges to ensuring adequate taxation levels, which undermines the progressivity of the tax system. In this context, the text states that, in respect of tax sovereignty, G20 countries will engage in cooperative efforts to ensure that ultra-high-net-worth individuals are effectively taxed. This collaboration may involve the exchange of best practices, the promotion of dialogues on tax principles, and the creation of mechanisms aimed at combating tax evasion.
What Lies Ahead?
The consensus reached thus far in the G20 Financial Track remains limited and insufficient. However, the formulations presented in the document indicate that the finance ministers and central bank governors of the G20 recognize two primary demands from low-income countries, as well as from a broad spectrum of civil society and think tanks: the implementation of the United Nations Framework Convention on International Tax Cooperation (UNFCITC) and the proposal for taxing ultra-high-net-worth individuals.
In parallel with the G20, a significant advancement has occurred within the United Nations: in September 2024, the Ad Hoc Committee approved the Terms of Reference (ToR) for the UNFCITC, which will now be submitted to the General Assembly for approval by the end of the year. According to a forthcoming publication by Grondona et. al, the intergovernmental negotiation committee session is expected to take place by February 2025. At that time, the committee should present the final text of the UNFCITC and its first two protocols to the General Assembly for consideration during its 82nd session.
Among the two protocols, the first theme has already been defined and pertains to cross-border services. However, the second theme still needs to be decided from a list that includes the proposal to “address tax evasion and avoidance by high-net-worth individuals and ensure their effective taxation in the relevant Member States.” Therefore, it is essential to intensify pressures from civil society, think tanks, and other relevant stakeholders to ensure that countries support this choice as the second protocol.
Therefore, it is essential to intensify pressures from civil society, think tanks, and other relevant stakeholders to ensure that countries support this choice as the second protocol.
Regarding the G20, the summit in November 2024 in Rio de Janeiro is unlikely to make significant advancements beyond the results obtained in July. The proposal for taxing ultra-high-net-worth individuals is still recent and has only now been officially presented to the group. This proposal must be further developed and negotiated, particularly to gain the adherence of key world leaders, such as the United States and China. Thus, we should not expect concrete decisions in this regard during the Rio summit. Nevertheless, the idea has been introduced, discussions are ongoing, and Brazil stands out as the country that has brought this proposal to the G20.
Now, it will be up to South Africa, which will assume the G20 presidency in 2025, to continue the negotiations and strive to increase support for the proposal.
Now, it will be up to South Africa, which will assume the G20 presidency in 2025, to continue the negotiations and strive to increase support for the proposal. For an African country facing one of the highest rates of inequality in the world, this agenda is crucial and should be integrated into efforts to alleviate external debt. In this context, negotiations within both the UN and the G20 occur in a parallel but coordinated manner, expanding opportunities for pressure and negotiation in favor of the adoption of a new coordinated international norm that ensures the taxation of high-net-worth individuals. Social mobilization, involving broad segments of society, will be critical to strengthening this process.
* In general terms, Pillar 1 of the OECD agreement established that large multinationals (with global revenues of more than €20 billion) should allocate taxable income to the jurisdictions in the market where the goods or services are used or consumed. Pillar 2, negotiated in 2021 with the Global Anti-Base Erosion Model (GloBE), establishes a “common approach” to a global minimum tax of 15% for multinationals with revenues of more than 750 million euros. See here.
