INTERNATIONAL TAX: UN to vote on new tax convention proposed by African states.

As published on theguardian.com, Wednesday 23 November, 2022.

Developing nations are hoping to secure greater power over global tax affairs at a critical United Nations vote in New York on Wednesday.

If the body’s members vote in favour of a resolution put forward by the African Group of states, it could pave the way toward fresh intergovernmental talks on global tax policy.

The draft resolution calls on members to decide to lay the groundwork for a new UN convention on tax.

This could shift clout from bodies traditionally dominated by rich countries, such as the Organisation for Economic Co-operation and Development (OECD), towards the UN, where developing nations have a greater say, campaigners claim.

Proposed by the group that represents the 54 African Union member states at the UN, the resolution would give the New York-based body the mandate “to monitor, evaluate and decide global tax rules”, the Tax Justice Network (TJN) said.

This will “open the way for intergovernmental discussions on the negotiation of a UN tax convention and a global tax body”, said Alex Cobham, chief executive at the TJN.

However, there has been considerable opposition from some developed nations. Rich western countries have long fought diplomatic battles over which forum should hold sway over countries’ tax affairs.

Officials with experience of international economic diplomacy told the Guardian that richer nations, including the US, have sought to maintain a tight grip on global tax rules. Preserving the OECD’s position as the lead forum for discussion and development of tax policy was one element of this strategy.

The US has lobbied its allies hard in recent years to ensure debates over digital sales taxes were held within the OECD, for instance.

This was part of Washington’s drive to mitigate a growing consensus that the world’s largest technology companies – many of which are based in Silicon Valley – should pay taxes more in line both with the vast scale of their operations and those paid by firms with more traditional business models.

Still, momentum is building among developing countries at the UN to try to claw greater powers for the body on tax affairs.

Even if the vote is carried, there is a risk that richer UN members could resist granting the funds needed to staff the initiative. However, campaigners believe it may not be blocked in the same way as previous efforts. The UN secretary general has also committed the resources of his office to support the negotiation process.

It has been scheduled for discussion as “Promotion of inclusive and effective international tax cooperation at the United Nations”. With backing from the African Group, it is expected to be given careful consideration by other UN members.

“I understand that the current discussions at the UN general assembly second committee have proceeded well, with only a handful of countries with remaining concerns at the stage prior to adoption,” said Thabo Mbeki, the former president of South Africa, who has called on other UN members to support the resolution.

“While the OECD has played an important role in these areas, it is clear after 10 years of attempts to reform international tax rules that there is no substitute for the globally inclusive and transparent forum provided by the United Nations,” he added.

“I urge countries to remain committed to the development of a UN tax convention and encourage the OECD to play a supportive role in this regard,” Mbeki said.