Posted on November 22, 2023 by AIDC
Today, the members of the United Nations voted to approve a resolution, tabled by the Africa Group, calling for the establishment of a United Nations framework convention on taxation. This is a landmark moment, marking possibly the biggest shift in international tax since the time of the League of Nations a century ago. This is the first hopeful step on a difficult road to reaching a true international agreement on measures to claw back the $311bn stashed on tax havens each year by corporations and wealthy individuals.
In a report produced with international partners last year, the AIDC noted that the outdated international tax framework is at the root of enabling the trillions of Rand in corporate illicit financial flows each year. As the South African delegation noted in their statement ahead of the vote, the global tax reform process currently underway has been led by the OECD, a so-called “rich countries’ club” that is not transparent or democratic and instead prioritises the interests of the Global North. This is why the current OECD proposal for a global minimum tax will not meaningfully address the scale of the problem for countries in the Global South, and why a new approach is desperately needed.
The UN resolution, under the title Promotion of Inclusive and Effective International Tax Cooperation at the United Nations, builds on the report produced by the United Nations Secretary-General first released in August. The Secretary General’s report noted the state of play with regards to international taxation, and put forward three options for states. Of these, the strongest option was the establishment of a United Nations convention on taxation – similar to the United Nations Framework Convention on Climate Change which means at the yearly Conference of Parties (COP). This is the option supported by the resolution, and it marks a fundamental shift from the OECD to the UN as the rule-making body on tax matters.
We caution that this is only the beginning of a long and difficult struggle. In the statements following the vote, the representatives of wealthy countries have expressed their displeasure and stated that this initiative must be limited to one that is only complementary to the work already done by the OECD. Implicit in this is that the process may be obstructed should it attempt to replace the OECD.
However, we believe that this nonetheless constitutes a victory. One reason for optimism is that the United Nations Expert Committee on Taxation has already produced excellent work that highlights the particular needs and challenges of countries such as those in Africa facing a ‘resource curse’, demonstrating the immense technical expertise that already exists in this space. Secondly, the success of this resolution has demonstrated the immense potential of a united Global South, particularly the Africa Group, which has demonstrated remarkable leadership and strength in its diplomacy at the UN. The task will now be to build a united front against the lobbying and influence of the ultra-rich, to fight corporate power and pressure our governments to not let this once-in-a-century opportunity go to waste.
–ENDS–
For more information, contact:
Jaco Oelofsen: 084 376 9019
Dominic Brown: 081 309 4973
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