MUMBAI: A long-awaited draft UN resolution to formally begin negotiations on establishing a legally binding UN tax convention has now been published, marking the latest milestone in a UN process that could potentially deliver the biggest shakeup in history to the global tax system.
TOI in its edition of November 22, 2022, had covered the first step – a unanimous adoption by the UN General Assembly for developing an international tax co-operation framework or instrument that is developed and agreed upon through a UN intergovernmental process. This resolution was submitted for consideration by Nigeria on behalf of a consortium of 54 African countries.

The draft resolution was tabled mid-last week but only made public on the UN website late yesterday evening. It follows September’s high-level debate over the Secretary-General’s report on tackling rampant global tax abuse. The report laid out three options for UN Member States to consider. An emerging consensus was identified at the high-level debate in favour of the second option, a legally-binding UN convention on tax (broadly equivalent to the UNFCCC on climate change). This could include binding protocols to bolster key aspects of the fight against tax abuse, and the creation of a body to set tax rules in future.

The final stage of deliberations starts today among countries to determine the process that will be used to negotiate the intricacies of a UN tax convention – negotiations that will begin early next year if the draft resolution is adopted at an upcoming vote at the UN General Assembly this November.
The draft resolution specifies that any possible UN tax convention ought to consider the impact of international tax rules on inequality, gender and the environment. Some countries have indicated a more cautious view. Finance ministers in the European Union have suggested that their governments should consider the third option put forward by the Secretary-General, which would create a globally inclusive forum to discuss tax matters but without the power to agree legally-binding decisions. Others have argued this would divert resources to a ‘talking shop’ and fail to address the urgent need for enhanced international cooperation.
The European Parliament, in contrast, has called on the EU to follow the Africa Group’s leadership and pursue an ambitious UN tax convention. The exact nature of any new convention will form part of the negotiations. Differences in initial stances are expected, and the process to be agreed will aim to resolve these along with addressing a range of technical and political issues.
Tax Justice Network, an advocacy group, which strongly supports a UN tax convention, had in its earlier report pointed out that countries across the world are on to lose nearly US$5 trillion to tax havens over the next decade. The annual loss owing to global tax abuse is US$472 billion, of which S$301 billion is lost to multinational corporations shifting profit into tax havens and US$171 billion is lost to wealthy individuals hiding wealth offshore. It has urged countries in the UN to vote this winter in favour of beginning negotiations on a UN tax convention.
Amelia Evans, New-York based advocacy consultant at Tax Justice Network, said, “For the first time, the countries of the world are engaged in discussions about the value of a UN tax convention. The question in New York now is how the negotiations about a UN tax convention will take place, not if.”
Alex Cobham, chief executive of Tax Justice Network, added: “Almost every country in the world stands to gain from agreement on an ambitious UN framework convention on tax, because almost every country suffers significant revenue losses due to international tax abuse.”
Republished. Link to Original Article: https://timesofindia.indiatimes.com/business/international-business/draft-resolution-is-a-key-step-towards-creating-a-un-tax-convention/articleshow/104524340.cms