The Guardian view on a tax war: the world must unite against American obstruction | Editorial

Donald Trump's threats to global tax reform have backfired, leaving the US isolated as nations push ahead with a new UN tax convention

Donald Trump's Oval Office tirade on Friday laid bare his instinct to harangue and bully those - even supposed allies such as Ukraine, fighting for its survival- who dare to disagree. Countries pushing global tax reform at the UN will be watching as US demands for subjugation play out in plain sight. His day-one threat to punish nations taxing US firms is an all-out attack on global fiscal cooperation. If multilateralism in taxation was already on shaky ground, Mr Trump's return could bury it for good.

Under discussion is a new UN tax convention that may permit states to tax economic activity where it actually occurs, rather than allowing multinationals to shift profits to tax havens. The Tax Justice Network (TJN) said last year that nations lose $492bn (390bn) annually due to corporate tax abuse. The global south bears the greatest losses, which undermine public services like health and education. If enacted, the convention would create a legally binding framework requiring multinationals to pay tax where they employ staff and do real business - not where they stash profits. This would replace the outdated arm's-length principle with unitary taxation, ensuring fair profit allocation. It would mean an end to Amazon, Google and Apple putting billions through lower-tax jurisdictions while extracting wealth from higher-tax ones.