This policy brief examines what the emerging United Nations Framework Convention on International Taxation means for Small Island Developing States at a pivotal moment in reform of the international financial system. The Convention aims to shift global tax governance from the OECD to the United Nations — where developing countries have more equal representation. For SIDS, whose small size, economic concentration, limited administrative capacity and exposure to external shocks create structural disadvantages, these negotiations are especially consequential.
Designed to support SIDS negotiators and policymakers, the brief outlines concrete priorities, practical “asks” and strategic approaches tailored to their development realities. It addresses key issues under negotiation, including cross-border services and tax dispute resolution, while recognising the asymmetrical power dynamics and capacity constraints that can limit SIDS’ effective participation. It also highlights the need to preserve policy space for those SIDS that rely on financial services and tax incentives, while strengthening safeguards against tax abuse.
This issue is both urgent and timely. As development assistance shrinks, borrowing costs rise and climate-related disasters intensify, many SIDS face mounting and unsustainable debt. Strengthening taxing rights and improving domestic revenue mobilisation are critical to financing climate resilience, reducing dependence on external finance and advancing the Sustainable Development Goals. The UN Tax Convention represents a significant opportunity for SIDS to help shape a more equitable and inclusive international tax system that better reflects their interests and development needs.