On Wednesday, the United Nations General Assembly (UNGA) adopted a resolution proposing a UN tax convention to foster international tax cooperation. The Africa Group tabled the resolution, which saw 125 member states vote in favor, 48 oppose and 9 abstain.
The resolution details an intergovernmental committee’s establishment to devise procedures and strategies to tackle tax-related illicit financial flows. The committee will consist of no more than 20 members elected to ensure a balanced geographical representation, with the UN’s five regional groups all equally represented. Importantly, the resolution instructs the committee to consider developing countries’ needs.
Tove Ryding, Tax Coordinator at the European Network on Debt and Development, stressed that the resolution granted developing nations “a right to participate on an equal footing in the development of global tax standards.”
Illicit financial activities facilitate cross-border tax evasion, escalating the inequalities between high-income and low-income countries. Last year, the UNGA adopted a resolution advocating for more efficient and inclusive international tax cooperation. Several UN experts who backed the resolution noted that current taxation rules permitting cross-border tax evasion undermine nations’ ability to uphold their human rights commitments. They highlighted that low-income countries are underrepresented in tax-architecture decision-making, while these nations also grapple with exacerbated debt distress, socio-economic inequalities, and worsening climate crises.
As of 2021, multinational corporations and wealthy individuals committing global tax abuse result in countries losing approximately $483 billion in tax each year, according to the Tax Justice Network.
The United Kingdom, one of the countries that voted against the resolution, proposed an amendment to eliminate the term “convention” from the resolution. Ryding criticized the UK and the 47 other opposing countries, suggesting they undermined not only a just and effective global tax system but also facilitated tax evasion at their own citizens’ expense.
This information is derived from a report by Jurist. Please refer to the original article for more details.