Date
Since the 1950s, the Organisation for Economic Co-operation and Development (OECD) has been setting the international tax agenda without the effective participation of Global South states. This system, in essence, has favoured the rich countries and left the Global South to deal with an ineffective and non-inclusive system that has orchestrated huge losses in their domestic revenue. As early as the 1940s Global South countries have been calling for reforms of the international architecture.
In Africa, when the report of the High-Level Panel on Illicit Financial Flows from Africa that was chaired by His Excellency Thabo Mbeki was released, they estimated a loss of USD 50 billion annually, on the back of the over one trillion dollars that the continent had lost in the three decades prior. Estimates indicate that since the report, illicit financial flows have almost doubled to USD 90 billion.
The importance of reform of the global tax system is that while countries have a sovereign right to collect taxes, illicit financial flows through tax evasion and avoidance prevent the effective exercise of this right. Therefore, an ineffective international tax system limits the sovereign rights of the Global South states. This forms the basis for African countries’ long-standing demand to shift the tax conversation to the United Nations where each country will have a seat at the table.
On the 30th of December 2022, the United Nations General Assembly adopted Resolution 77/244, emphatically advocating the advancement of inclusive and effective cooperation on tax matters.
In September 2023, the UN Secretary-General released a comprehensive report outlining three potential pathways for international cooperation on tax matters: a UN multilateral instrument on tax, a framework convention, and a framework for international cooperation. TJNA, alongside various organizations including the Global Alliance for Tax Justice, held the position that option 2, a framework convention, was the most viable solution. This option provided for a framework convention that would be legally binding on member states and cover a wide range of crucial international tax cooperation issues.
Recently, at a pivotal session at the United Nations General Assembly Second Committee in November 2023, a resolution on the commencement of the process towards a UN framework convention on international tax cooperation garnered resounding support from member states.
The resolution as tabled by Nigeria on behalf of the Africa Group was put to a vote, where 125 countries endorsed the resolution, 48 countries voted against it, and 9 countries abstained. Notably, all African countries, supported by members of the G77 plus China, voted in favour, showcasing strong regional cooperation and unity of purpose.
The resolution is rooted in the longstanding calls by Global South countries for a UN intergovernmental tax body and represents a significant stride towards democratising the global tax system. It marks a historic moment to correct the imbalances that currently exist in the global tax system.
The adopted resolution in favour of a framework convention outlined the subsequent procedural steps as follows:
-
The establishment of an ad-hoc intergovernmental committee to negotiate terms of reference for a UN framework convention on international tax cooperation.
-
Proposed timelines for the meetings of the ad-hoc intergovernmental committee to convene in New York and finalise its work by August 2024.
-
The inclusion of the participation of international organisations and civil society in the negotiation process.
-
The submission of the ad-hoc intergovernmental committee’s report to the General Assembly at the 79th session.
The process towards the UN tax convention has kicked off with successful negotiations to secure budget approval at the United Nations General Assembly Fifth Committee taking place. The nomination of members of the Adhoc Intergovernmental Committee by the different UN regional groups has also taken place in January 2024. The committee is mandated with developing the Terms of Reference (TORs) for the UN tax convention and will be concluding their work by August 2024 in time for the 79th General Assembly (GA) session.
TJNA remains committed to fostering international cooperation on tax matters and believes that the proposed framework convention represents a significant step forward in creating a fair and just global tax system.
In unpacking the impact of this achievement and outlining the way forward at the UN and within civil society, Tax Justice Network Africa (TJNA) is organising a webinar titled “The impact of the UN General Assembly's adoption of a Resolution Towards the UN Tax Convention” on 27 February 2024 from 3 -5 pm Nairobi / 1-3 pm EST/ 2-4 pm SAT.
This webinar unpacks the recent pivotal session at the United Nations General Assembly Second Committee on November 22 2023, whereby a resolution on the commencement of the process towards a UN framework convention on international tax cooperation garnered resounding support from member states.
The webinar will also create a platform to outline the way forward at the UN, provide clarity on the viability of a framework convention and discuss the role of civil society in mobilisation.
The featured topics are:
-
Background history of the push for reforms of the international financial architecture and why this matters so much for Africa by Francis Kairu, TJNA.
-
The impact of this achievement on the reforms of the international financial architecture by Dr Dereje Alemayehu Global Alliance for Tax Justice.
-
Why a framework convention remains the most viable option for reforms of the international financial architecture by Tove Ryding, Eurodad.
-
The way forward at the UN, what to expect and strategies for staying ahead of the technical bits of the UN tax convention. Irene Ovonji - Odida, ICRICT.
To participate in the webinar, interested parties are encouraged to register via this link: https://tjna.me/3UF87oG