Making the UN Tax Committee more effective for developing countries
By Abdul Muheet Chowdhary
The United Nations Committee of Experts on International Cooperation in Tax Matters (UN Tax Committee) is an important and influential subsidiary body of the Economic and Social Council (ECOSOC) that shapes standards and guidelines on international taxation. These are the rules through which Multinational Enterprises (MNEs) are taxed. Its role post-COVID-19 has become even more important as countries struggle to raise revenue. Despite being under-resourced, it has produced valuable guidance, especially on the crucial question of the digital economy. As a new Membership of the Committee is about to be selected, this Policy Brief provides practical recommendations on how the Committee can be reformed to be made more effective, especially for the interests of developing countries.
Assessment of the Two-Pillar Approach to Address the Tax Challenges Arising from the Digitalization of the Economy
An Outline of Positions Favourable to Developing Countries
Report by the South Centre Tax Initiative’s Developing Country Expert Group
Irene Ovonji-Odida, Veronica Grondona, Samuel Victor Makwe
This report is written primarily for developing country negotiators in the Inclusive Framework and accordingly contains a technical assessment of Pillars One and Two. The aim is to discuss the positions and principles which can inform the negotiations in developing countries’ best interests. However, it is also written for a larger audience, particularly diplomats involved in financing for development discussions and international trade rule making, so as to sensitise them to the nuances of the ongoing discussion on the taxation of the digitized economy. In the midst of the COVID-19 pandemic and a devastating economic downturn, it is more important than ever to ensure that developing countries obtain their due taxing rights. This report is an initial contribution in that direction.
The South Centre Tax Initiative (SCTI) submitted its comments on the Interim Report of the High Level Panel on Financial Accountability Transparency and Integrity for Achieving the 2030 Agenda (FACTI Panel). The Report analyzed the “gaps, vulnerabilities and impediments present in the current international systems related to financial accountability, transparency and integrity issues” and found that “international systems can help countries prevent the drain of resources from development, contributing to achieving the 2030 Agenda, but that they lack co-ordination, leave gaps and may overlap and even conflict with each other. The shortcomings are systemic and require systemic responses.”
Redistributing Taxing Rights to the Global South through the Digitalized Economy
By Carlos Protto
A historic discussion is underway within both the United Nations (UN) and the Organisation for Economic Co-operation and Development (OECD) on redistributing taxing rights to the Global South through proposals on taxing the digitalized economy. An overview of the issues at stake is provided in this SouthViews by Carlos Protto, Member of the UN Committee of Experts on International Cooperation in Tax Matters and Argentina’s representative in the Steering Group of the OECD/Group of Twenty (G20) Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The text is based on his presentation at the international virtual seminar co-organized by the South Centre on “Equity in Global Tax Regimes and Implications for the SDGs” held on 7 October 2020. The recording is available here: https://www.youtube.com/watch?v=3wAESmfvRN4&ab_channel=uomlive.
Virtual training on Taxing the Hard to Tax: High Net Worth Individuals and Informal Sector
The South Centre Tax Initiative in collaboration with the West African Tax Administration Forum (WATAF) is organizing this virtual training on “Taxing the Hard to Tax: High Net Worth Individuals and Informal Sector”.
Webinar: Towards Justice in the International Economic Order: Proposals from the South
This webinar is a collaboration between Afronomicslaw and the South Centre, Geneva, to mark the 25th anniversary of the South Centre. Both the South Centre and Afronomicslaw share a commitment to the protection and promotion of the development interests of countries of the Global South.
The theme of the webinar “Towards Justice in the International Economic Order: Proposals from the South” reflects this shared commitment. In particular, the webinar will focus on selected initiatives proposed by the Global South. An important premise of the webinar presentations will be that the countries of the Global South are not mere spectators in the construction of the global order. Among the issues that the webinar will discuss will be access and a development-oriented approach to the WTO TRIPS Council (including the recent waiver proposal by South Africa and India on TRIPS obligations, and attempts to reframe the e-commerce and IP agenda). It will also reflect on the soon to be launched African Sovereign Debt Justice Network (AfSDJN), relating to issues of sovereign debt that have become particularly germane in light of the COVID-19 pandemic.
Comments on Discussion Draft: Possible Changes to the United Nations Model Double Taxation Convention Between Developed and Developing Countries Concerning Inclusion of software payments in the definition of royalties
The South Centre Tax Initiative (SCTI) offers its comments on the discussion draft on inclusion of software payments in the definition of royalties. As is well known, this is an important issue that developing countries have been fighting for, for a while now. The SCTI supports the proposed change which seeks to insert the phrase “computer software” in article 12(3) of the United Nations Model Double Taxation Convention Between Developed and Developing Countries. The COVID-19 pandemic adds special urgency to resolving this long-pending issue as revenue from software payments made from developing countries continues to increase.
South Centre Statement to the Ministers and Governors Meeting of The Intergovernmental Group of Twenty-Four (G24)
At the G-24 spring meeting, an important part of the discussion was about how COVID-19 could result in a setback to the fragile recovery of the world economy from the global financial crisis. Six months later, the current international discussions are about how long the pandemic will remain unchecked and how deep the world economic recession will be. Developing countries are licking their wounds and alarmed at the big financing gap between their plummeted fiscal revenue and skyrocketing financing needs for the pandemic response. The situation is dire. The world has passed the tragic milestone of losing one million lives to the pandemic. Some of the hard-won achievements made in implementing the Millenium Development Goals (MDGs) and Sustainable Development Goals (SDGs) have been reversed. Poverty and hunger will increase for the first time since the 1990s, the number of people facing starvation may double, gender and income inequality has been further widened as a result of the pandemic.
Política de industrialización de litio, el caso boliviano
Por Hortensia Jimenez Rivera
El litio es un mineral de gran importancia en la industria tecnológica mundial, lo que lo convierte en un recurso estratégico para un país. Por ello, es responsabilidad del Estado asegurar que su explotación sea una oportunidad para el desarrollo y el bienestar, protegiendo los intereses de su población y maximizando sus beneficios de manera que la gestión de su riqueza no lleve a más pobreza y dependencia.
Las políticas que se adopten para el aprovechamiento de los recursos naturales pasan por definir el régimen de propiedad sobre los recursos y el grado de industrialización en el país, lo que implica –de manera directa– ingresos y desarrollo, para luego resolver aspectos de orden tecnológico, financiero, institucional, legal y de mercado.
Este informe describe la experiencia boliviana de la industrialización del litio, las características de su industrialización bajo una política de desarrollo nacional y revela cómo el tipo de política implementada es determinante para la explotación de un recurso natural.
International virtual seminar on Equity in Global Tax Regimes and Implications for the SDGs
The seminar is designed to be an introduction to two topics: (1) key issues faced by developing countries in international taxation (2) redistributing taxing rights to the Global South through the ongoing proposals on taxing the digitalized economy. The speakers will be two Members of the United Nations Committee of Experts on International Cooperation in Tax Matters. The seminar is organized in collaboration with The Sustainability Platform (TSP) Asia, the University of Mysore and the Indian Economic Association.
Base Erosion and Profit Shifting in the Extractive Industries
By Danish and Daniel Uribe
Developing countries with significant natural resources have not fully utilised them for financing their development aspirations. Extractive industries and the revenue generated from their extractive activities need to constitute a larger share of domestic resource mobilisation. However, the sector remains beset with massive tax base erosion and profit shifting by large multinational companies. This policy brief therefore looks at the extractive industries, and the potential impact of their practices on the national policies and regulations in developing countries. It further also considers some current initiatives at the international level for enabling countries to obtain more revenue from natural resource extraction, and offers some observations on the policy options available to developing countries.
Mesures nationales sur l’imposition de l’économie numérique
ParVeronica Grondona, Abdul Muheet Chowdhary, Daniel Uribe
Le Cadre inclusif sur le BEPS de l’Organisation de coopération et de développement économiques (OCDE) envisage une approche fondée sur deux piliers en matière de taxation de l’économie numérique. Les premières estimations concernant l’impact de ses recommandations montrent une modeste augmentation de la collecte de l’impôt sur les sociétés, dont les bénéfices devraient revenir principalement aux pays développés. Dans le même temps, les mesures nationales de taxation de l’économie numérique se multiplient, en conséquence de la pandémie de COVID-19. Le droit international reconnaît pleinement ce droit aux pays, bien que cette approche soit considérée comme une forme d’unilatéralisme. Ce document de recherche met en lumière les mesures de fiscalité directe prises par différents pays et présente les trois approches clés retenues pour taxer l’économie numérique : (1) l’imposition de taxes sur les services numériques ; (2) l’élaboration de règles permettant d’établir un lien fiscal pour les entreprises numériques qui opère par l’intermédiaire d’une présence numérique significative ; (3) des retenues à la source sur les transactions numériques.