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EU, UK under fire for tax influence sabotage

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By Abraham Adekunle

Diplomats accused of undermining efforts of developing countries like Nigeria.

The European Union and British diplomats have faced accusations of attempting to “kill” measures aimed at giving developing nations like Nigeria, Ghana, Brazil, India, and others a stronger role in international tax discussions. Countries are in negotiations at the UN to increase the UN’s influence in global tax debates; low and middle income nations are pushing for this change, as seen in a report issued by the Nigerian media. For many years, the Organisation for Economic Cooperation and Development (OECD) has brought together nations to discuss issues related to international taxation. However, authorities in several emerging economies have criticized the organisation, claiming it does not adequately represent their concerns.

A Financial Times story claims that a group of 54 African nations, who were dissatisfied with the OECD procedure, successfully introduced a resolution before the UN General Assembly in 2022. This suggested that in order to improve the “inclusiveness and effectiveness” of international tax cooperation, the UN secretary-general should prepare a report that included recommendations for increasing the UN’s influence in the global tax arena. The UN secretary-general released a report in the summer outlining three possible solutions that would give the UN more of a role in international tax cooperation: two legally binding and one optional. The proposal was unanimously approved in November 2022.

Negotiators confirmed that the EU and the UK don’t want to discuss it.

However, the media was informed by a developing-nation negotiator that the EU and the UK had been adamantly against supporting any of them. The negotiator said that the resolution called for a report. “They’re rubbishing that report and they’re out to rubbish the entire process and just kill it. They don’t want to bring taxation matters here to the UN,” the negotiator said. Another negotiator also confirmed the same thing, saying that representatives of that country have tried to negotiate in good faith, but the EU and the UK were not willing to do that and are trying to delay the process.

This negotiator added that the ploy is a grand scheme to keep the status quo and keep developing countries at the periphery of global tax discussions. Nigeria, Ghana, India, Brazil, and other developing nations have been advocating for a legally enforceable involvement in UN tax discussions. Nonetheless, European nations fear that an expanded role for the UN will jeopardize current OECD practices and split the global tax system. To combat corporate tax evasion, the OECD presented a ground-breaking tax agreement in 2021.

Experts said new innovative tax cooperation required.

But ratification concerns and delays have plagued its implementation. In September, the EU finance ministers said that EU member states could consider working at the UN on a non-binding multilateral agenda for coordinated actions. Negotiation papers obtained by the media revealed that the EU and other countries had attempted to withdraw their support for even the voluntary alternative put forward in the secretary-general’s report. Rather, they have supported the establishment of a new working group that will put up other possibilities for a UN function and revisit them for consideration at the UN General Assembly, which will convene in September 2025, for the 80th time.

United Nations experts warned in October 2023 that multidimensional macroeconomic crises are stalling or even reversing gains in development and poverty reduction, requiring not only urgent, comprehensive reform of an inequitable global financial system, but also new, innovative international tax cooperation. This is as the Second Committee (Economic and Financial) took up that issue. Sharon Spiegel, director of the Financing for Sustainable Development Office of the Department of Economic and Social Affairs, had introduced the Secretary-General’s report on the Promotion of inclusive and effective international tax cooperation.

Challenges remain as resources are lost to several factors.

Introducing the Secretary-General’s report on International coordination and cooperation to combat illicit financial flows, she acknowledged that despite some progress, many challenges remain. Large volumes of resources continue to be lost due to corruption, tax avoidance and tax evasion. The report recommended improving access to and use of data, allowing authorities to better enforce the law, while respecting privacy rights. Developing countries should not remain outside the information-sharing mechanisms of tax, she affirmed. She cited key developments including the fact that the global financial system is not delivering the stability or the resources needed to achieve the SDGs.

Related Link

UN Press: Website

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