Receive free Global Economy updates
We’ll send you a myFT Daily Digest email rounding up the latest Global Economy news every morning.
The head of the United Nations has called for a bigger role in shaping global tax policy, setting up a potential clash with the OECD, the Paris-based organisation that has led discussions for decades.
UN secretary-general António Guterres said in a draft report published yesterday: “Enhancing the UN’s role in setting and shaping global tax rules appears the most viable path for making international tax co-operation fully inclusive and more effective.”
The remarks follow criticisms from several developing countries that the OECD, which in 2021 unveiled a global deal aimed at forcing companies to pay their fair share of tax where they do business, was designed with its member countries in mind.
Most of the OECD’s members are prosperous advanced economies and leading developing countries, including India and Nigeria, have said elements of the deal risk having a negative impact on their economies.
The draft report analysing existing global tax procedures backed those concerns, saying many non-OECD members “find that there are significant barriers to meaningful engagement in agenda-setting and decision making”.
The draft report, the final version of which is set to appear in the coming weeks, noted that the OECD had introduced several initiatives to engage and include non-OECD members in its work. However, it said more ought to be done to address the needs of developing countries.
“The substantive rules developed through these OECD initiatives often do not adequately address the needs and priorities of developing countries and/or are beyond their capacities to implement,” the report said.
On specific concerns developing countries have about the impact of the global tax deal, the report noted that there was a perception among developing countries that “the expected benefit from the proposed reforms will be minimal, especially when compared to the cost of implementation”.
Tax campaigners welcomed the news.
“The OECD process has never been global,” said Tove Maria Ryding, tax co-ordinator at the European Network on Debt and Development.
“Developing countries have not been able to participate on an equal footing and the negotiations have been deeply opaque and closed to the public. We need global tax negotiations to be transparent, fair and lead by a body where all countries participate as equals. The UN is the only place that can deliver that.”
However, some business groups warned the development could risk destabilising the international tax system unless handled carefully.
“For the business community certainty and stability of the international tax system is ultimately key,” said the International Chamber of Commerce.
“It is vital that new initiatives are not developed in a vacuum. Rather, we encourage UN member states to examine carefully how each of the option can usefully fit into the broader global tax ecosystem — and ideally enhance better co-ordination among multilateral institutions working on tax policy issues”.
Guterres proposed three potential options to beef up the UN’s existing work on tax including two legally binding instruments and one voluntary framework for international tax co-operation. Member states will discuss the options during the UN’s next assembly session in September.
The report was commissioned following a resolution adopted by the UN general assembly, at the request of African nations.
The OECD has been approached for comment.
Comments are closed, but trackbacks and pingbacks are open.