Analysis of Imbalanced Tax Treaties of Developing Countries
Insights From the Tax Treaties Explorer Database
By Aiwei Feng, Shristi Joshi and Quinn McGannon
This report will start from exploring the historical background, theoretical frameworks, and practical implications of tax treaties, with a specific focus on their impact on developing countries. Utilizing diverse literature and datasets, including the Tax Treaties Explorer (TTE) from the International Centre for Tax and Development, it aims to identify restrictive tax treaties and provisions disadvantageous to developing nations. The methodology involves desk reviews, data analysis, and case studies to offer insights into challenges faced by developing countries in international taxation. By scrutinizing key provisions like those concerning permanent establishment and withholding taxes, it aims to highlight how treaties affect revenue generation, economic sovereignty, and development outcomes of South Centre Member States. South Centre Member States have been chosen for the purpose of this study due to their status as developing countries with much to gain from renegotiating their existing tax treaties.
Ultimately, this study intends to fill the gap in terms of treaty research and development of tax treaties of South Centre Member States by identifying their restrictive tax treaties and provisions therein with Organisation for Economic Co-operation and Development (OECD) countries. The choice of OECD countries reflects their status as mostly developed countries. At the same time, the study also intends to supplement tax treaties literature so far dominated by legal and economic analyses by focusing specifically on identifying specific restrictive provisions.
Statement by the South Centre at the 57th Session of the Human Rights Council on “Realizing the right to development: The case for a United Nations framework convention on international tax cooperation”
September 2024
At the 57th session of the Human Rights Council, South Centre outlined the possible content of protocols to the United Nations Tax Convention for taxing Illicit Financial Flows & Digital Services.
Review: Taxation and Inequality in Latin America: New Perspectives on Political Economy and Tax Regimes (2023)
By Abdul Muheet Chowdhary
The volume Taxation and Inequality in Latin America: New Perspectives on Political Economy and Tax Regimes is an insightful collection of articles about the patterns of inequality in Latin America and detailing the nature of tax avoidance and evasion in the region, with lessons from political attempts to bring about progressive reforms and tax considerations for policymakers about the future of the region’s development.
Statement by the South Centre on the Adoption of the Draft Terms of Reference for a UN Framework Convention on International Tax Cooperation
August 2024
The South Centre welcomes the adoption of the draft Terms of Reference for a United Nations Framework Convention on International Tax Cooperation (UNFCITC). The UNFCITC can establish a fair and equitable international tax system for developing countries.
UNCTAD at 60: Reflections on six decades of promoting economic development for the Global South
By Yuefen Li and Danish
The United Nations Trade and Development (UNCTAD) celebrated its 60th anniversary in June 2024 in Geneva, holding a high-level Global Leaders Forum that brought together ministers, officials and experts to discuss the multidimensional challenges facing countries, and strategies for advancing the UN 2030 Agenda for Sustainable Development. It highlighted the need for innovative solutions to address current global crises that can promote resilience, economic growth and sustainable development.
Honduras’ Tax Justice Law: Increasing tax collection to achieve the SDGs without increasing tax rates
By Abdul Muheet Chowdhary, Kuldeep Sharma and Kolawole Omole
In April 2023, the government of Honduras submitted a tax reform bill called the “Tax Justice Law” to the National Congress through which it intends to reform the Honduran tax system with potential for improved revenue collection, that too, without introducing new taxes or increasing tax rates. The law aims at Constitutional recognition that tax collection must be progressive, change the principle of taxation from territorial to worldwide taxation of income, introduce Ultimate Beneficial Ownership requirements that inter alia aim to repeal bearer shares, facilitate exchange of information with other jurisdictions, eliminate banking secrecy for tax purposes, implement credit method in domestic legislation to eliminate double taxation, amend the Constitution so as to limit tax exemptions to a maximum period of 10 years, restore transfer pricing audits to check abusive claim of tax incentives and eliminate the possibility of forgiving tax debts. The provisions contained in the Tax Justice Law are timely and welcome, particularly in light of the Global Minimum Tax. They can improve government revenues, reduce public debt and create the fiscal space for achieving the Sustainable Development Goals.
South Centre Inputs on “Zero Draft Terms of Reference for a UN Framework Convention on International Tax Cooperation”
20 June 2024
The South Centre submits the following inputs to the Chair of the Ad Hoc Committee to Draft Terms of Reference for a United Nations Framework Convention on International Tax Cooperation.
A Toss Up? Comparing Tax Revenues from the Amount A and Digital Service Tax Regimes for Developing Countries
By Vladimir Starkov and Alexis Jin
In this paper, we attempt to estimate the tax revenues to be gained by the Member States of ATAF, WATAF, AU and the South Centre under the Amount A and an alternative stylized DST taxation regime. Our research demonstrates that the comparative revenue effects of the Amount A and DST taxation regimes largely depend on (a) the mix of relevant domestic economic activities at market jurisdictions (i.e., revenues sourced to the country as a market jurisdiction under Amount A and the level of revenues from automated digital services generated in the country), (b) design details of the DST regime such as the DST tax rate and the nature of activities to be taxed and (c) the relief from double taxation, if any, countries will grant to domestic and foreign taxpayers under DST. This paper contains analysis relying on sources of information available to private sector researchers and it does not involve review of any information that individual taxpayers provided to tax authorities.
The Design of a UN Framework Convention on International Tax Cooperation
By Sol Picciotto
The creation of a UN-led framework for international tax cooperation is an opportunity for an institutional and conceptual reset, to re-establish a global perspective that has been disrupted by the assumption of an increasingly dominant role in international tax by the OECD. The OECD’s expansive proselytisation of its approach, aiming to encourage foreign investment by restricting taxation of income at source where it derives, has paradoxically taken place in counterpoint with growing concerns about the evident dysfunctionality of that approach. The current process should learn from the past to design a global framework fit for the future, by embodying the aims and general principles that have come to be recognised especially in the recent period as essential guideposts for effective international tax reform.
G-24 South Centre Call For Papers: Comparing tax revenues to be generated from United Nations and OECD Subject To Tax Rule (STTR)
Deadline – 1 July 2024
The G-24 and the South Centre have launched this Call For Papers providing funding for studies which can produce country level comparative revenue estimates of the UN and OECD STTR on the 65 combined Member States of the South Centre (available here) and the G-24 (available here). The data should clearly provide how much revenue each Member State will get if they opt for the UN STTR vs the OECD STTR. The objective is to help Member States of both intergovernmental organizations make informed decisions on adopting the version of the STTR which is more beneficial to them.
Member States of the G-24 and the South Centre are advised to wait till the publication of the results of this study before taking a decision on whether or not to sign the OECD STTR MLI.
2023 ANNUAL REPORT ON THE ACTIVITIES CARRIED OUT BY THE SOUTH CENTRE TAX INITIATIVE
The South Centre’s interventions have had a significant impact in helping developing countries bring about major reforms to the international tax system in 2023. Key achievements include the passage of the historic resolution in the United Nations General Assembly for the initiation of a UN Framework Convention on International Tax Cooperation, the successful end of a twenty year long negotiation in the UN Tax Committee for taxing computer software, the passage of an enhanced version of the Subject to Tax Rule in the UN Tax Committee for ending non-taxation in tax treaties, country level revenue estimates on the OECD digital tax solution vs Digital Services Taxes for the 85 combined Member States of the South Centre and the African Union, and extensive in-country capacity building for several South Centre Member States for taxing the digital economy and tax treaty negotiations.
