UN to vote on new tax convention proposed by African states

Developing nations hope draft resolution will pave way for fresh talks on global tax policy

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.


Anna Isaac

The GuardianTramp

Related Content

Article image
Global corporations ‘cheating public out of billions in tax’, say campaigners
Tax Justice Network says countries lose $89bn a year by allowing anonymity over use of tax havens

Larry Elliott Economics editor

15, Nov, 2022 @12:01 AM

Sean Jacobs: Brokering a deal in Zimbabwe is Mbeki's swansong

Sean Jacobs: Thabo Mbeki may regard the power-sharing talks in Zimbabwe a personal vindication. But, like Mugabe's, his authority is waning

Sean Jacobs

22, Jul, 2008 @8:00 PM

EU must help Central African Republic | @guardianletters
Letters: I very much hope that William Hague will respond positively before the terrible predictions of genocide are realised

19, Jan, 2014 @9:00 PM

Article image
Most people want higher taxes on rich to support poor – OECD
‘Deeply troubling’ survey of 21 countries finds 60% believe they are not getting ‘fair share’

Rupert Neate Wealth correspondent

19, Mar, 2019 @8:02 PM

Article image
OECD deal imposes global minimum corporate tax of 15%
Accord signed by 136 countries will enable them to raise tax on sales made by multinationals within their borders

Richard Partington Economics correspondent

08, Oct, 2021 @6:06 PM

Article image
UK borrows more as energy support begins and economy slows
Losses on government bonds and higher debt interest caused by rising inflation add to October figure

Larry Elliott Economics editor

22, Nov, 2022 @8:55 AM

Article image
OECD: UK economic recovery will lag behind all rivals bar Argentina
Thinktank says Brexit represents double threat to UK growth

Richard Partington Economics correspondent

01, Dec, 2020 @7:05 PM

Article image
European banks storing €20bn a year in tax havens
Barclays and HSBC among banks booking money equivalent to 14% of annual profits in offshore entities

Daniel Boffey

06, Sep, 2021 @5:00 AM

Article image
Global tax reform: 130 countries commit to minimum corporate rate
Landmark moment for world economy with OECD plan that also covers prevention of profit-shifting

Richard Partington Economics correspondent

01, Jul, 2021 @6:47 PM

Article image
An overhaul of the global tax system can wait no longer
The Covid-ravaged global economy is at a crossroads: we can commit to greater tax cooperation or risk a tax-driven trade war

Angel Gurria

29, Apr, 2021 @11:00 AM