Enforcing Secondary Taxing Rights: Subject to Tax Rule in the UN Model Tax Convention
By Abdul Muheet Chowdhary and Sebastien Babou Diasso
The Global Anti Base Erosion (GloBE) Rules under OECD’s Pillar Two recommendations, with a minimum effective tax rate of 15%, are expected to play a significant role to end the ‘race to the bottom’ in corporate taxation, which is one of the main drivers of profit shifting. However, the thrust of these rules is designed in a manner to give priority to the developed countries. In this light, the Subject to Tax Rule (STTR), which is a treaty-based rule that allows source jurisdictions to impose limited source taxation on certain payments that are taxed below a minimum rate in the country of residence, is of extreme significance for the developing countries. Under Pillar Two, application of STTR is restricted to base eroding payments or mobile income between related parties only, which does not address Base Erosion and Profit Shifting (BEPS) concerns in an entirety. That apart, the withholding tax rate of 9% proposed by the OECD may not result in generation of significant resources for the developing countries. In this light, developing countries keenly expect that the UN Tax Committee should devise an STTR that is simple to operate, has a broad scope covering all payments in a tax treaty and imposes a higher withholding tax closer to 15% to bring meaningful revenues for them. Also, developing countries desire that STTR provisions may be introduced at the earliest so as to speedily implement them through the UN Multilateral Instrument under contemplation. This Policy Brief also examines existing average withholding tax rates on interest and royalty payments in existing tax treaties of 48 South Centre and 52 G-77+China Member States and finds that out of a total of 100 developing countries, only 25 would stand to benefit from the STTR in its restricted form in Pillar Two, further strengthening the need for an improved version formulated by the United Nations.
Experiencias internacionales sobre la concesión de licencias obligatorias por razones de salud pública
Por Catalina de la Puente, Gastón Palopoli, Constanza Silvestrini, Juan Correa
El presente estudio tiene como objetivo analizar los regímenes de licencias obligatorias (LOs) en países seleccionados, en particular los elementos económicos de la concesión de las LOs, la determinación y negociación de regalías al titular del derecho. Para ello se realizó un análisis descriptivo y exploratorio de experiencias de concesión de LO en países seleccionados, con foco en las experiencias de los países en vías de desarrollo por su proximidad al caso argentino.
En particular se discuten los ejemplos de experiencias de emisión de medidas de LOs o de UG en países en vías de desarrollo. Con especial foco en Latinoamérica, donde sólo dos países han hecho uso de dichas medidas por razones sanitarias (Ecuador y Brasil). Además se examina la eficacia del empleo de LO o de UG en la reducción de precios donde se evidencian ahorros significativos Como conclusión se propone elaborar una metodología en relación a las regalías para Argentina mediante un rango de pago que tome en consideración criterios de accesibilidad y asequibilidad poblacional a la tecnología licenciada, así como la sustentabilidad de los presupuestos de los agentes financiadores.
Submission by the South Centre to the USITC hearing on Covid-19 diagnostics and therapeutics
India, South Africa and co-sponsors made a proposal for a waiver to certain provisions of the provisions of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) in March 2020. In June 2022, the WTO Ministerial Decision on the TRIPS Agreement provided a partial waiver to obligations in Article 31, namely an exception to the 31.f export restrictions, in relation to patents for Covid-19 vaccines. No decision has yet been made with respect to diagnostics and therapeutics for Covid-19.
In this context, the U.S. Trade Representative (USTR) requested the U.S. International Trade Commission (USITC) to prepare a report on Covid-19 diagnostics and therapeutics.
Read below the submission by the South Centre to the USITC investigation: COVID-19 Diagnostics and Therapeutics: Supply, Demand, and TRIPS Agreement Flexibilities (Inv. No. 332-596).
South Centre Inputs to UN Secretary-General for “Promotion of inclusive and effective tax cooperation at the United Nations”
The South Centre submits the following comments and recommendations to the UN Secretary-General for the report being prepared in response to UN General Assembly resolution 77/244 on “Promotion of inclusive and effective tax cooperation at the United Nations.”
Broadcasting treaty – South Centre statement at SCCR 43
“We note with concern that the proposed text expands beyond the agreed mandate, under the approach of expanding exclusive rights to broadcasters with narrow limitations and exceptions (L&Es)…”
The copyright system must be truly balanced. It means it should enable public interest purposes, particularly access to knowledge and education, a fair reward for creators, and real incentives – and not barriers – for creativity and research…
The Midterm Comprehensive Review of the International Decade for Action on Water for Sustainable Development amid growing tension between a human rights perspective and the commodification and privatization of water
By Luis Fernando Rosales Lozada
Climate change is affecting the availability of water resources in different regions around the world. In addition, some growing trends towards water commodification and privatization could exacerbate the problem since they are guided by profit maximization strategies. The United Nations (UN) will hold the Midterm Comprehensive Review (MCR) of the Implementation of the Objectives of the International Decade for Action, “Water for Sustainable Development”, 2018–2028, from 22 to 24 March 2023. This is an important opportunity for the international community to assess the challenges on access to clean drinking water and sanitation. The MCR debates and outcomes should be guided by a human rights approach towards promoting access to water for all in 2030 in alignment with Sustainable Development Goal (SDG) 6.
Understanding the Functioning of EU Geographical Indications
By Andrea Zappalaglio
This contribution investigates the functioning of the EU sui generis Geographical Indication (GI) system, with a specific focus on the regime for the protection of agricultural products and foodstuffs within the scope of EU Regulation 1151/2012. In particular, based on the results of the recent “Study on the Functioning of the EU Geographical Indications System” of the Max Planck Institute for Innovation and Competition (February 2022), this paper: (1) clarifies the nature of EU GIs as it emerges from an empirical assessment of the specifications of all the products that appear on the EU register; (2) comparatively analyses the national practices of the EU Member States and explores the discrepancies that exist among them to date; (3) provides an in-depth assessment of the structures of the specifications of EU GIs, highlighting the domestic specificities; (4) investigates the contents and functions of the amendments to the specifications of the registered products. It concludes by emphasizing the importance of the present research in light of the current EU international agenda, with a specific focus on the bilateral agreements recently or currently negotiated.
Digital taxation under the OECD Amount A and UN Article 12B mechanisms for market jurisdictions in Africa: a comparative analysis
By Erica Rakotonirina
This Policy Brief examines the need for the evolution and harmonization of international taxation in the face of the digitalization of economic transactions.
Between the OECD proposal for shared taxation of residual profits through the Amount A mechanism and the UN proposal of Article 12B for taxing income from Automated Digital Services on a gross basis through shared but capped taxation, with an optional variant of the taxation of net profits, African States need to make vital political and technical choices.
The strategic negotiations must include regulatory sustainability, the right balance and fiscal fairness between the divergent interests of residence states vs source states (which include almost all African countries), and MNEs in their quest for profit and expansion.
The Policy Brief carries out quantified evaluation of possible revenue estimates using a case study approach. However, such an exercise remains difficult for questions of accessibility and reliability of data relating to the activities of multinational companies.
To be realistic, the scope of the study was restricted to a reference company in the digital sector but targeted economies of different scales. The results of the revenue estimates represent an optimistic case of the impacts on tax revenues of the application of the OECD and UN measures on different types of economies.
The WTO faces an existential crisis, despite a reasonable outcome at the Twelfth Ministerial Conference. The one way by which the WTO can resuscitate itself is to make sure that the negotiating agenda is anchored in the SDGs rather than in the narrow interests of its most powerful members. The changing role of the State must also be factored in by the WTO.
Strengthening United Nations Actions in the Field of Human Rights through the Promotion of International Cooperation
South Centre
Geneva, 24 February 2023
The South Centre submits the following written contribution to the United Nations Secretary General’s Report on ‘Strengthening the United Nations’ action in the field of human rights through the promotion of international cooperation’, in line with the United Nations General Assembly (UNGA) resolution A/RES/76/164, adopted on 16 December 2021. The resolution recognises the need for respecting the political, economic and social realities of each society in compliance with the principles and purposes of the Charter of the United Nations. The report to be presented by the Secretary-General to the UNGA represents an important opportunity to recognise that global challenges do not affect all societies equally, and that they require a broader consideration of policies and innovative solutions that can cater to the unique realities and specific needs of each society.
