The UN General Assembly Resolutions on COVID-19: Solemn Assurances for Access to Health Technologies without an Action Plan
By Nirmalya Syam
The United Nations (UN) has the mandate under the Charter of the United Nations to promote solutions to international health problems, such as the global COVID-19 pandemic. While the UN secretariat, led by the Secretary-General, has undertaken a number of initiatives in response to COVID-19, member State initiatives in the UN has so far been limited to two resolutions adopted by the UN General Assembly. Member States are currently negotiating an omnibus resolution of the General Assembly on COVID-19. This policy brief analyzes the extent to which the General Assembly addresses the issue of timely, equitable and affordable access to health technologies, particularly for developing countries who have greater vulnerability to COVID-19. The adopted resolutions make very broad pledges for global solidarity but lack specific commitments to guide actions by member States. The omnibus resolution currently under negotiation should provide specific guidance to member States on actions to be taken based on the principles of solidarity and multilateral cooperation in diverse aspects impacted by COVID-19.
The weakness of multilateral cooperation was evident at the meetings of the Group of 20 and the Bretton Woods institutions in Washington. The limited international cooperation contrasts with the ambitious domestic policies adopted by some developed countries, and in particular the United States, to manage their crisis. The big losers will be the emerging countries, for whom cooperation has so far been minimal.
Comments on Session Paper relating to tax consequences of the digitalized economy – issues of relevance for developing countries
The SCTI offers its comments on the Session Paper on “Tax consequences of the digitalized economy – issues of relevance for developing countries” (E/C.18/2020/CRP.25) to be discussed at the 20th Session of the UN Committee of Experts on International Cooperation on Tax Matters. The comments examine key issues for developing countries in the Unified Approach (UA) to Pillar One and explore alternative solutions at the international level as discussed in the Paper.
Comments to the FACTI Panel on improving cooperation in tax matters
The South Centre Tax Initiative (SCTI) would like to draw the attention of the Financial Accountability Transparency and Integrity (FACTI) Panel to the following aspects of improving international tax cooperation:
(1) legal procedure to upgrade the UN Tax Committee into an intergovernmental body;
(2) Right of even Inclusive Framework Members to take unilateral measures;
(3) Need for comprehensive scope of Pillar One;
(4) Primacy of Undertaxed Payments and Subject to Tax rules in Pillar Two;
(5) Need for clear and administrable rules for dispute prevention.
The Role of South-South Cooperation in Combatting Illicit Financial Flows
By Manuel F Montes
Developing countries bear the brunt of costs from illicit financial flows (IFFs). These losses are the result of the facilities that the global system provides transnational companies, operating in multiple tax jurisdictions, to move their profits to favorable locations. International cooperation has been seen to be a key ingredient in restricting IFFs. However, a difference in interests in the treatment of many types of transactions between developed and developing countries is an obstacle to a fast solution of the problem. Developing countries must seek to seize the initiative to restrict their losses from IFFs. They can deploy various joint and concerted actions, within the umbrella of the principles of South-South cooperation for this purpose.
Third Annual Developing Country Forum on South-South Cooperation in International Tax Matters (Report)
The South Centre organized, in cooperation with the Research and Information System for Developing Countries (RIS), the Ministry of External Affairs and the Ministry of Finance of India, the Third Annual Developing Country Forum on South-South Cooperation in International Tax Matters (the Forum). The Forum is an activity of the South Centre Tax Initiative (SCTI) which serves as a platform owned by developing countries to facilitate the networking and access to their officials to technical and academic resources, as well as to provide a venue for discussion among developing countries to identify collective efforts towards their participation in international tax fora and negotiations on matters of global economic governance. Discussions during the forum addressed the most relevant tax issues that may impact developing countries currently being discussed at the international level, especially in the OECD. The Forum also allowed the exchange of expertise among developing countries coming from Asia and the Pacific, Latin America and the Caribbean, and Africa, which consolidated this space as a necessary mechanism to identify coordinated positions among developing countries towards the consolidation of a network of tax officials from developing countries and strengthening their voice in the international fora.
Comments on the OECD Secretariat Proposal for a “Unified Approach” under Pillar One
The South Centre Tax Initiative (SCTI), the South Centre’s flagship program for promoting cooperation among developing countries on international tax matters, submitted its comments in November 2019 to the OECD Secretariat’s Proposal for a “Unified Approach” under Pillar One. This proposal is the key solution proposed by the OECD to address the challenge of taxation in the digital economy. In today’s world, it is a common occurrence that large multinational enterprises pay little or no taxes on their global profits by exploiting gaps in international tax rules. Approximately $500 billion is estimated to be lost globally due to corporate tax avoidance each year. This number is five times the annual requirement for funding the Paris Agreement ($100 billion) and around 20% of the funding requirement for achieving the Sustainable Development Goals in developing countries ($2.5 trillion). Hence, revenue lost to corporate tax avoidance could go a long way in financing sustainable development and actions regarding climate change.
Developing National Ecosystems for South-South and Triangular Cooperation to Achieve Agenda 2030 for Sustainable Development
To maximize the benefits of South-South and Triangular Cooperation (SSTrC), it would be imperative to have an effective “national ecosystem” – an institutional framework at national level. Over the years, the pace of institutional improvements in conducting SSTrC by Southern countries has lagged far behind the fast expansion of SSTrC in size, making it a constraint for unleashing the full potential of SSTrC. On 26 September 2019, the Islamic Development Bank (IsDB), the South Centre and the United Nations Office for South-South Cooperation (UNOSSC) launched the joint publication entitled “Developing National Ecosystems for South-South and Triangular Cooperation to Achieve Agenda 2030 for Sustainable Development” on the side lines of the 74th session of the United Nations General Assembly in New York. It discusses how to strengthen national ecosystems to promote SSTrC. The concept of national ecosystem advocates a bottom-up and incremental approach. It emphasizes that the national ecosystem is not meant to be prescriptive or a one size fits all model. Developing an effective national ecosystem for SSTrC requires understanding of the national realities and objectives and takes time, effort, commitments and financing.
Improving Transfer Pricing Audit Challenges in Africa through Modern Legislation and Regulations
By Thulani Shongwe
Auditing multinational enterprises often involves a broad range of complex technical issues, and transfer pricing (TP) is often the most important one. This policy brief looks at some of the key aspects of the modern TP legislation and illustrates how different drafting of regulations can assist in additional revenue collection as well as increased compliance. It further provides practical examples from real cases to show where poor legislation has given rise to tax planning and to profit shifting. Lastly, the brief offers practical solutions to some of the transactions illustrated through the African Tax Administration Forum (ATAF) Suggested Approach to Drafting Transfer Pricing Legislation.