26/03/24

INTERNATIONAL TAX: UN agrees to framework to tax the rich

As published on: bvinews.com, Tuesday 26 March, 2024. 

After many months of debate, discussion and disapproval from some countries, the United Nations (UN) has agreed by consensus to design a new framework to tax wealthy persons and corporations around the world.

The UN framework will provide countries with a blueprint to implement their own laws at home, giving nations both the technical know-how and political backing to tax the wealth of the richest members of society. This is something that most rich countries have shied away from even amid fierce lobbying pressure.

It is estimated that there is more than twice as much wealth hidden in offshore tax jurisdictions than there are printed dollars and euros in circulation today. As such, this new UN framework could affect top jurisdictions like the BVI that do business with wealthy individuals and corporations.

The tax laws could affect how much money wealthy people have to invest and do business in the BVI and this could reduce profits for the territory’s thriving financial services industry.

The approval of the UN framework was briefly delayed following requests from some countries for minor changes. Nonetheless, the agreement signals a historic shift in global consensus on taxing extreme wealth and is the latest demonstration of the UN’s ability to push the needle on tax reform at a globally inclusive scale.

Contrary to expectations, rich countries from the Organisation for Economic Co-operation and Development (OECD) and other objectors who had voiced opposition to the framework did not make an intervention when it was being adopted.

Analysts at global lobby group Tax Justice Network see this as a positive sign.

“This is another victory on tax secured at the UN through the leadership of global South countries, but for the benefit of people everywhere. Enhancing the technical and political space for national governments to pursue progressive tax measures will, over time, allow countries to generate greater revenues to invest in inclusive public services, while at the same time tackling the extreme wealth inequalities that damage all of our societies,” Alex Cobham, chief executive at the Tax Justice Network said.

Tags

International Tax UN Wealth tax