Growing support for a UN Convention on Tax
On 31 March 2023, the UN held its annual ECOSOC Special Meeting on Tax following the historic approval of a new UN General Assembly resolution in 2022. Here is what happened.
At the end of last month, the annual ECOSOC Special Meeting on Tax was held at the UN. This constituted the first intergovernmental debate on international tax matters following the historic approval of a new UN General Assembly resolution at the end of 2022. The resolution, which was adopted by consensus, includes the decision to “begin intergovernmental discussions in New York at United Nations Headquarters on ways to strengthen the inclusiveness and effectiveness of international tax cooperation”. The Africa Group, which had tabled the resolution, also called for the process to deliver a new UN Convention on Tax.
In a keynote address on 31 March, the Nigerian Federal Minister of Finance, budget and national planning, Dr. Zainab Shamsuna Ahmed, said: “We must address the lack of inclusiveness and equal footing in the development of the taxation frameworks”, and stressed that: “Currently, developing countries are being punished by unilateral declarations and blacklisted by forums and bodies which they have no voice in.”
The minister underlined that the UN has the legitimacy and the convening power to lead an inclusive and holistic tax cooperation process and called for the new process to review existing international tax rules to ensure fair, equitable and implementable outcomes. The minister also underlined that “the framework for the implementation of an inclusive and effective tax cooperation should be modelled with relevant binding instruments such as the UN Framework Convention on Climate Change.”
She emphasised that the goal should be to achieve international tax cooperation at the intergovernmental level, leveraging the UN processes, and with an end result aimed at eradicating tax evasion and illicit financial flows, and achieving fairer equitable, inclusive and administrable international tax rules. She highlighted that: “A binding multilateral convention is the most effective way to deliver international tax reforms that meet the needs and capacities of developing countries. This can only be brought about through legitimate forums where all countries are fully on an equal footing.”.
The finance minister of Colombia, Mr. José Antonio Ocampo, also participated in the meeting and highlighted that: “The UN came before the OECD in this area”, and stressed that he did not believe there would be any duplication issues with respect to the work of the OECD. He also highlighted that “What we need to do is to take another step forward” and stated his support for a UN Convention on Tax. This was echoed by the Colombian delegation at the meeting, which stressed a number of procedural and substantive weaknesses in the current international architecture, including the lack of universal participation, and in particular low-income countries, in global decision making on tax.
The speaker from Colombia concluded that: “We believe that the creation of a multilateral convention and an intergovernmental body are precisely the opportunities we would need to arrive at solutions”. This was the first time that Colombia, which is a member of the OECD, came out in clear support of a UN Convention on Tax, and illustrates the growing support around the world.
During the debate, a very broad group of developing countries also expressed their strong concerns with the OECD’s approach to international tax matters. Despite this, a number of developed countries, including, for example, Canada, Germany and Lichtenstein, still maintained the claim that the OECD’s work on tax was in the interest of developing countries, and at the same time expressed resistance towards new UN measures on tax.
Despite this ongoing debate on what the outcome of the process should be, it remains a fact that consensus has been reached on the creation of an intergovernmental UN tax process, and that the support for a UN Convention on Tax is growing. Speaking on behalf of the Civil Society Financing for Development mechanism, Eurodad participated in the meeting and stressed that: “Civil society organisations and trade unions all around the world have warmly welcomed the adoption of the resolution on international tax cooperation, which marks a truly historic turning point. We commend the Africa Group for its excellent leadership on this issue, and we congratulate all governments on reaching consensus. We now call on you to maintain the spirit of cooperation and adopt modalities for the new UN tax process as a matter of urgency, and to ensure that this process becomes inclusive, transparent and productive.” The adoption of modalities for the process is a necessary next step in the UN process, and the call for urgent progress on this issue was also stressed in a recent joint civil society submission to the UN, which included specific recommendations on what such modalities should look like.
During the UN meeting, the Eurodad representative, Tove Maria Ryding, also underlined that: “The problem that we face is of a quite fundamental nature. When it comes to taxation, we lack the very framework for cooperation, including clear international principles, objectives and key mechanisms and institutions. We believe that the right instrument to solve this problem is a UN Framework Convention on Tax”.
Together with the Global Alliance for Tax Justice, Eurodad has launched a fully fletched proposal for what a new UN Convention on Tax could look like. If adopted, such a convention would constitute a major step forward in the international fight against tax havens and international tax dodging by the world’s wealthiest individuals and corporations, and thus increase tax fairness and mobilise very significant sums of additional tax revenue for both developed and developing countries. At the meeting at UN meeting, Eurodad stressed that “We look forward to discussing this with all governments as we move forward through the new intergovernmental UN tax process”.