Financial transparency and tax co-operation in 2025

US President Donald Trump has captured much of this year’s attention, but there are key events in 2025 in the multilateral space, and across the Global South, that will directly impact our future. They involve progress around priorities in financing care, climate financing, advancing global tax and financial governance, and tackling natural resource related Illicit Financial Flows. Here are the five things to look out for:

1) The IMF and World Bank are still pushing austerity

Austerity policies are a key feature of what is happening in 2025, with 137 countries expected to contract public spending in 2025. We see that austerity policies tend to include public budget cuts, increases in VAT, and corporate tax cuts with the view of attracting investment, even if the policies have not proven effective in even bringing about growth in the many years after the Global Financial Crisis of 2007-08 that were marked by austerity measures. Instead, austerity has hampered more transformative policies such as bolstering care financing and the green transition.

Alarmingly, the IMF and the World Bank will be still in 2025 pushing austerity policies through their lending and their policy advice. In 2025, the IMF will make numerous loan programmes including to Kenya, and Argentina among many others, with austerity conditions written all over them. In 2025, the World Bank’s Business Ready (B-Ready) is starting to do country rankings that will replace the now discontinued Business Enabling Environment (BEE) reports. Like the BEE, it will still push lower levels of corporate taxes and employer contributions as positive indicators.

But in 2025 there are many alternatives that can bring about lasting change to end austerity. We will look at the continuation of Care 20, an initiative launched last year that aims to improve care systems in G20 countries. This should be built upon in the G20 that will be held in South Africa, where the priorities will be focused on financing the green transition, ending Illicit Financial Flows (IFFs). However, to implement these priorities we need to raise public financing for the green transition, and end secretive company structures, secretive assets and enablers that fuel IFFs linked especially when linked to biodiversity, climate and green transition minerals.

Austerity also especially harms gender equality. This year is also the 30th anniversary of the Beijing Summit and Platform for Action in a context where women’s participation in labour markets and society at large declined in the wake of the COVID-19 pandemic, with recovery policies favouring large companies rather than promoting a feminist and care-led recovery. The fact that there is little in terms of promising international aid to achieve gender equality, the Beijing + 30 process is likely to see a focus on tax justice, debt justice and public financing, but there is a risk that austerity will overshadow this process and shift attention to mobilising private financing with tax incentives and secretive structures.

2) United Nations, at the heart of international tax negotiations

In August 2024, we saw the landmark decision to agree on the Terms of Reference (ToR) for the UN Tax Convention, which was then voted through in December 2024 at the General Assembly. On 3-6 February the first week of intergovernmental tax negotiations will be held at the UN since the 1940s.

It is likely that a Convention of Parties (COP) will be established to govern the work under the convention, much like COPs already exist on climate, biodiversity and other topics at the UN. The ToR mentions a total of nine protocols. Out of these, the first one is considered to be an ‘early protocol’ to be completed in 2027 when negotiations end, together with one other. The other protocols would be negotiated after 2027.

On 4 February we saw the US walking out of the UN Tax Convention process, but everyone else stayed and negotiations will progress as usual. The European Union wanted consensus decision making in the process, safeguards on taxpayers rights, but in the end were content that the second optional protocol addresses the issue of dispute resolution. We look forward to inputting into this protocol the issue of Investor State Dispute Resolution (ISDS) cases that have been particularly costly for Global South states, even if they are won in arbitration the uncertainty and legal costs create a significant cost.

The shift of tax negotiations to the UN means that issues that are commonly discussed in the UN including human rights, gender, environment and climate issues are more likely to be included in topics related to taxation, rather than only relating taxation to growth and austerity as is the case at the OECD, the IMF and the World Bank. Furthermore, negotiation groups at the UN include the Small Island Developing States (SIDS), Least Developed Countries (LDCs), and the G77 of developing countries, and bring their specific issues on the table These are welcome shifts in international tax co-operation, and are likely to lead to mobilising more revenue and addressing financial secrecy gaps to enable mobilising this revenue.

3) The 4th Financing for Development Conference this July can put the SDGs back on track

This year we will also follow the preparatory committee meetings on financing we saw in December the 2nd Prep Com in New York, and the 3rd Prep Com is planned for 10-14 February in New York, leading to the main conference on June 30 – 3 July 2025 in Seville. The Zero Draft shows an important focus on tax related IFFs, including Global Asset Registry (GAR), and on beneficial ownership transparency, automatic tax information exchange, and country by country reporting, and tackling Illicit Financial Flows – but no commitments on public registries apart from the corporate tax reporting.

The Financing for Development Conference (FfD) is a major event, as the previous 3rd International FfD Conference in Addis Ababa in 2015 put in motion the process for defining Illicit Financial Flows. This culminated in the 2021 FACTI panel report, and the 2022 UN Statistical Commission Report on measuring IFFs, and the adoption of the ToR for the UN Tax Convention. The role of the FfD is less about making big decisions, but enabling negotiations to take place between the summits based on normative decisions taken at the FfD Conference. The Seville FfD Conference will involve finance ministers, and possibly heads of states, so they are able to make wider systemic reforms.

Any big decision is prepared often by regional groups, it will be linked to the momentum around the AU/UNECA high-level panel on IFFs, also known as the Mbeki Panel, which is relaunching its work this year, along with our colleagues working on the Stop the Bleeding Campaign to propose pan-African solutions to end IFFs in advancing public access to BO and asset information as a way to end IFFs. In LAC, FTC members will work to defend the aspect of progressive taxation, human rights aligned, and gender just taxation through the LAC Tax Platform (PT-LAC). These issues may then be advocated at the FfD process.

The big decisions lined up are about the global debt architecture, where debt advocacy groups hope for a similar breakthrough as what Addis Ababa saw for the global tax architecture. International development co-operation advocates also foresee the beginning of a process of a UN convention on this issue. Seville could be a sea change to Global Financial Architecture (GFA) if things go well, much like the Rio Earth Summit in 1992 started the process of global multilateral coordination on climate, environment and biodiversity issues. This big moment, however, might also fall flat if countries walk out of the talks, or don’t want to build a new multilateral tax, debt and development co-operation architecture.

4) Financial transparency, a historic opportunity to tackle environmental crimes

The trade in illegally logged timber almost exclusively sourced from Global South countries costs USD 51 – 152 billion annually, representing a major loss in tax revenues, a practice largely driven by commodity agriculture (soy, beef, palm oil) where it is difficult, if not impossible, to uncover those mainly benefitting from this trade. Similarly, we see the issue of illegal, unreported and unregulated (IUU) fishing, an industry worth at least USD 23 – 36 billion annually, being mired in financial secrecy of fishing licences, industrial and semi-industrial vessels not being registered for use, and company beneficial ownership transparency being inadequate. Finally, the Illegal Wildlife Trade (IWT) generates an illicit economy of US$20 billion per year, both via networks linked to illicit poaching and captive breeding enterprises.

What is common in all of these issues is how they thrive in secrecy, whether fishing vessels, forest and agricultural land, company ownership and enablers who set them up. Only a robust system that allows public access to land records and public beneficial ownership information of companies, trusts and other legal entities would allow us to tackle the problem based on public accountability and transparency.

This year could see progress on this major problem. One example is the EU Timber Regulation (EUTR) which foresees deforestation-free supply chains for many deforestation-linked commodities (coffee, cocoa, soy, palm oil, pasture as key products), even if it excluded mineral extractive industries. But this legislation is ineffective without a greater focus on asset transparency on land and crops, and beneficial ownership transparency of companies – none of which are part of the implementation of these rules. The Regulation is now delayed, but the new Commission’s proposal will be applicable on 30 December 2025 for large and medium companies and 30 June 2026 for micro and small enterprises.

In the US, the FOREST Act would extend the existing Lacey Act system (prohibiting the trade of illegally sourced wood products) by also applying the import restrictions to products from illegally harvested land. The US Department of Justice (DOJ) in 2023 launched a Task Force to Fight the Global Illegal Timber Trade. However, the FOREST Act is now delayed as it did not get voted through in 2024, and now due to the incoming Trump administration taking less of an interest in the illicit forestry trade. Trump also ended the Klepto Capture Task Force in the Department of Justice, and is likely to redirect funds to other issues than finding funds of Russian Oligarchs, instead focusing on issues he sees as a risk, such as drug cartels and organised crime.

In fisheries, the US has illegal fishing regulation since 2015, banning the import of illegally sourced fish and also forced labour on fishing vessels. However, the US does not require explicit higher transparency requirements on domestic or foreign fishing fleets selling to its market. Meanwhile, the European Union IUU regulations date back to 2020, and prevent the import of illegally sourced fish. Positively, the EU does require disclosure of real owners of fishing vessels, but it’s implementation is completely lacking of its own rules in reporting the beneficial owners of EU owned fleets. We hope to see the EU Asset Registry progress in 2025, and that would provide then the data needed for the EU fishing registry to be implemented together with making beneficial ownership registries release data on owners of all vessels to the public.

On illegal fisheries, we should be asking for vessel registries in all coastal states, and clear reporting on the catch under each licence to track if fish products are being extracted illicitly. Furthermore, to tackle the ‘dark’ fleets of unregistered vessels that come into marine protected areas, or territorial waters of coastal states, additional tracking of vessels is needed internationally. The issue of ‘dark fleets’ extends beyond fisheries, as unregistered cargo vessels also help to export Russian oil and gas products under the export ban of many countries.

5) Financing the Climate Financing Gap by ending Illicit Financial Flows and Tax Abuses

2024 was the first calendar year when temperature reached more than 1.5°C above the pre-industrial level. We also saw at the COP 29 discussions in Azerbaijan the establishment of the new collective quantified goal (NCQG) on climate finance with a target of USD 300 billion per year by 2035. This is three times higher than the previous goal of USD 100 billion. However, we are nowhere on track to meet the financing needs for this goal, and as a goal it is also inadequate given the vast climate financing needs that go beyond this figure.

To even raise the USD 300 billion, it will be necessary to tackle the illicit financial flows that relate to tax abuses and environmental crimes as urgent priorities. This goal is within reach, but it will require the reconfiguring of international tax rules to make them fit for purpose to mobilise more revenue and allocate a greater share of allocable revenue for Global South countries. FTC will champion a shift from consumption based carbon taxes and levies, to adjusting the international corporate tax rules to tax polluting companies and more highly polluting wealthy people to pay higher taxes – such as a higher global minimum wealth tax on highly polluting companies.

The key opportunities will be both in the UN FfD process and the UN Tax Convention process to create the rules for mobilising adequate revenue, and then this to be linked to the UN climate negotiations as a source of revenue for historical obligations in terms of climate financing. There is a lot of work emerging now on linking tax negotiations and climate change negotiations – not least due to the US administration pulling out from both of them – and ensuring that progress in one table is reflected in the other table and vice versa. The Belem COP 30 could be a key moment for recognising that global tax reform in taxing the most polluting companies is one way of meeting the climate financing obligations of Global North states.