UN Tax Convention key to stopping offshore secrecy

 

 Malaysia’s support for a binding UN Tax Convention can no longer be an abstract diplomatic position but a domestic necessity.

Without a global, enforceable framework to curb offshore secrecy and illicit financial flows, Malaysia will continue to lose billions in public revenue while ordinary workers and families shoulder a disproportionate share of the country’s costs.

The Inland Revenue Board has identified 14,858 Malaysian tax residents holding more than RM10 billion in undeclared offshore accounts in jurisdictions such as Luxembourg, Hong Kong, Guernsey, the Cayman Islands, the Bahamas, and Bermuda.

This scale of hidden wealth highlights a systemic failure that no country can fix on its own.

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The lost revenue could have been invested in public services: schools, hospitals, and stronger social protection for families grappling with rising living costs. Instead, they are shielded by secrecy jurisdictions and weak international enforcement.

International rules the answer to domestic limits

Domestic enforcement alone has clear limits. The MACC has documented how dignitaries, politicians and white-collar criminals move illicit funds to West Asian and other offshore centres, later channelling them into luxury homes and commercial properties purchased in cash.

Weak anti-money laundering safeguards continue to allow suspicious funds to enter the economy. While the MACC recovered more than RM8.5 billion in 2025 through asset seizures and enforcement actions, illicit outflows persist.

This is precisely why a binding UN Tax Convention matters. Local crackdowns, data leaks, and unilateral measures cannot keep pace with a global financial system designed to move money quickly, quietly, and across borders with minimal accountability.

The problem is not limited to a handful of tax evaders. It is driven by a sophisticated global wealth management industry that enables the ultra-rich to shift assets through shell companies, trusts, and opaque accounts, draining resources that developing countries like Malaysia need for development and social stability.

Malaysia, therefore, needs to move beyond ad-hoc enforcement and strengthen its automatic exchange of information mechanisms, while actively closing off secrecy jurisdictions as safe routes for hidden wealth. But even these steps will fall short without a binding international framework.

Tax convention can potentially rebalance the scales

A UN Tax Convention offers developing countries a rare opportunity to reshape global tax governance.

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Current rules are largely set by the OECD and wealthy states, where countries like Malaysia are expected to comply but have little influence over agenda-setting, while secrecy jurisdictions and multinational interests continue to shape outcomes.

As long as this imbalance persists, tax havens will remain protected and illicit financial flows will continue to siphon resources from countries that can least afford the loss.

A binding UN Tax Convention would mandate transparency, close loopholes that enable illicit financial flows, and make cross-border enforcement meaningful.

Most importantly, it would place the ultra-wealthy back under the same tax rules that everyone else already lives by and give countries like Malaysia a fair chance to fund their own development. - Mkini

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AISHWARYA VISVANATHAN is a researcher at Monitoring Sustainability of Globalisation, and CHARLES SANTIAGO is former Klang MP, who is at the UN tax convention negotiations in New York City.

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.