UN’s Push for Global Tax Change

Introduction: The Global Tax Landscape

On 7th September 2023, an ambitious report commissioned by the United Nations has proposed that the UN take a more significant role in dictating global tax regulations. These new findings have ignited discussions about the fairness of international tax systems, particularly in terms of benefiting developing nations. The heart of the matter? Whether the UN or the OECD (Organisation for Economic Co-operation and Development) should lead the way.

The UN’s Perspective: A Need for Change

Why the Report was Commissioned

Last December, the UN General Assembly, inspired by African nations, decided to explore the possibility of reshaping the global tax framework. Their primary concern was that the OECD’s regulations seemed to prioritise the interests of developed countries.

Key Findings of the UN Report

The report comes at a crucial time when many believe that the global financial and tax systems have not effectively supported the post-pandemic economic recovery, funding of Sustainable Development Goals (SDGs), or efforts against climate change.

António Guterres, the UN Secretary-General, pointed out that the current tax arrangements aren’t inclusive or effective. He highlighted that several countries find significant obstacles when trying to participate in the OECD’s decision-making processes. Consequently, the decisions often overlook the needs of these developing nations.

Guterres believes the UN is best positioned to make international tax cooperation more inclusive. The report presents three options:

  1. Multilateral Convention on Tax: A legally-binding agreement detailing specific tax rules.
  2. Framework Convention on International Tax Cooperation: Establishing a comprehensive system for global tax governance.
  3. Framework for International Tax Cooperation: A voluntary system promoting coordinated tax actions at various levels, aiming to refine tax norms and build capacity.

Reactions: A Mixed Bag

OECD’s Response

Manal Corwin, director of the OECD’s Centre for Tax Policy and Administration, defended the organisation, citing its successful interventions in the global tax space. She highlighted the automatic exchange of tax information initiative, which recovered nearly €126bn in additional tax since 2009, with €41bn directed to developing countries. While critical of certain aspects of the UN report, Corwin emphasised that rivalry wasn’t the goal, and the two organisations were not in competition.

Business Community’s Take

The business sector seeks clarity. The International Chamber of Commerce emphasised the need for certainty in global tax systems. They hope UN member states consider how each option can cohesively fit into the broader global tax framework. PwC’s Will Morris stated that the potential of a more prominent UN role in international tax matters is a development that should not be taken lightly.

Tax Campaigners’ Viewpoint

Tax advocates, like Tove Maria Ryding from Eurodad, celebrated the UN’s report. They highlighted the severe impact of international tax evasion on public budgets and supported the UN Framework Convention on International Tax Cooperation as the best way forward.

What’s Next?

The UN will spotlight this tax dilemma during an upcoming event on Financing for Development, slated for 20th September in New York. The three options presented in the report will be up for a vote in a General Assembly session later in the year. Depending on the selected option, the next steps will involve establishing advisory expert groups to flesh out the details.

Conclusion: A Global Shift in Tax Dynamics

The UN’s recent report signifies a potential paradigm shift in global tax dynamics. With developing nations seeking a louder voice and the business sector desiring stability, the decision will significantly influence international financial cooperation in the coming years. All eyes will be on the upcoming UN General Assembly for the next chapter in this unfolding narrative.