The GloBE Rules: Challenges for Developing Countries and Smart Policy Options to Protect Their Tax Base
By Emmanuel Eze, Sol Picciotto, Muhammad Ashfaq Ahmed, Abdul Muheet Chowdhary, Bob Michel and Tommaso Faccio
The OECD global minimum tax of 15%, known as the Global Anti-Base Erosion (GloBE) Rules, have meant that developing countries need to consider what policy responses to take to ensure they collect the minimum tax and not cede it to developed countries. One option being promoted by the OECD is the “Qualified Domestic Minimum Top Up Tax” (QDMTT), with the claim that it will help developing countries collect the minimum tax of 15%. This Policy Brief points out that under the QDMTT MNEs can still pay zero taxes, it does not guarantee tax collection, it is complex to administer, it curtails national sovereignty in the form of the “peer review” mechanism and it is relevant mainly for tax havens which are destinations of profit shifting. The Brief then outlines policy options relevant for developing countries, namely Alternative Minimum Taxes (AMTs) and reform of tax incentives.
The 1944 “Bretton Woods Agreement” gave birth to the new international financial system marked by the centrality of the US dollar which is a crucial pillar of the global power of the United States. Over the past eight decades, the asymmetry of the shrinking US economic weight in the world economy and growing dominant role of the dollar has become more and more glaring. The disadvantages of overreliance on the dollar have been keenly felt, especially by developing countries. The recent moves to weaponize the dollar and the payment clearance system have triggered another wave of reassessment by national states and enterprises of the role of the dollar and led to the hitherto most broad-based de-dollarization process covering from Southeast Asia to Latin America and the Middle East. De-dollarization has been incrementally taking place in different forms and led by BRICS and some commodity exporting countries. However, there are many challenges to meaningful de-dollarization. Overall, de-dollarization efforts, despite important progress, have been limited and partial. There has been progress in reducing overreliance on the dollar through foreign exchange reserve diversification and trade invoicing as evidenced by the decline in the dollar’s share of allocated foreign exchange reserves and the increase of trade invoiced and transacted in currencies other than the dollar. However, on aspects requiring the deep financial market and wide network such as foreign exchange transactions, issuance of debt and payment clearance, the dollar’s share has not suffered a decline. To reform the international financial system, the BRICS in particular should continue to take the lead in furthering the de-dollarization efforts.
COVID-19, Future Pandemics and the Africa Care Economy Index
By Salimah Valiani
In Africa, the care economy has long been unrecognised. At least since the last major pandemic in Africa, HIV-AIDS, caring work has been severely undervalued in the continent, and the redistribution of caring work, from females in the home and communities, is next to nonexistent. Undoing this structural inequality is crucial to improve health and wellbeing of girls and women in Africa, to be prepared for future pandemics, and to realise Africa’s demographic dividend for the benefit of the majority. To achieve this, the Africa Care Economy Index is offered as a policy, advocacy, and accountability tool.
Neglected Dimension of the Inventive Step as Applied to Pharmaceutical and Biotechnological Products: The case of Sri Lanka’s patent law
By Ruwan Fernando
Apart from the basic statutory definition in section 65 of the Intellectual Property Act of Sri Lanka, there do not appear to be any detailed statutory guidelines or judicial decisions to provide any framework for the assessment of inventive step in Sri Lanka. The current statutory definition is highly insufficient to evaluate the standard of obviousness in relation to biotechnological and pharmaceutical claims based on a combination or modification of a prior art reference.
The Courts in both developed and developing countries have adopted a variety of tests to evaluate the obviousness standard of a claimed invention based on a combination or modification of a prior art reference. Sri Lanka, as a developing country, should look at the development that has taken place in other jurisdictions and adapt the patent law to local conditions when developing tests or guidelines in a manner that is compatible with the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and its biotechnology/pharmaceutical policy guidelines.
This approach that is appropriate to Sri Lanka is twofold. First, it is most likely to prevent the issuance of patents on trivial or incremental inventions that do not provide any technical advance to the existing prior art and are a mere extension of what is already known in the prior art. Second, it is most likely to protect genuine technical advances to the existing prior art while at the same time enhancing competition and promoting local innovations so that the local researchers will be able to draw on the existing knowledge for the purpose of follow-on innovations.
Reinvigorating the Non-Aligned Movement for the Post-COVID-19 Era
By Yuefen Li, Daniel Uribe and Danish
The Non-Aligned Movement (NAM) was born out of the need felt by newly emerging post-colonial nations not to be compelled to be part of any single political or military bloc during the Cold War. As the international community finds itself once again in the midst of heightened geo-political tensions, the principles of non-alignment have seen a resurgence in the Global South, providing NAM with the potential to become a major force in the configuration of a new international order.
Over six decades after its inception, the NAM stands at a crucial juncture, where consolidating non-alignment among developing countries can help build solidarity, promote collaboration and defend the interest of developing countries in the reconfiguration of global governance. Dealing with these challenges requires unprecedented levels of international cooperation, both North-South and South-South. As the grouping of non-aligned countries, the NAM could play an important role against global fragmentation, build solidarity, and strengthen multilateralism.
This paper therefore looks at the role and position of the NAM at this time, and how it can be reinvigorated to address the most critical challenges facing its Member States and other developing countries today. Considering the history, evolution and important achievements of the NAM, the paper provides some proposals that can support NAM Member States in their recovery from the COVID-19 pandemic and make progress in implementing the 2030 Agenda for Sustainable Development.
TAXING MULTINATIONALS: THE BEPS PROPOSALS AND ALTERNATIVES
BEPS Monitoring Group, 6 July 2023
This briefing by the BEPS Monitoring Group (BMG) analyses the outcomes of the latest phase of the G20/OECD project on base erosion and profit shifting, and outlines options and alternatives, especially for developing countries. The BMG is a network of experts on various aspects of international tax, set up by a number of civil society organizations which research and campaign for tax justice including the Global Alliance for Tax Justice, Red de Justicia Fiscal de America Latina y el Caribe, Tax Justice Network, Christian Aid, Action Aid, Oxfam, and Tax Research UK. This report has not been approved in advance by these organizations, which do not necessarily accept every detail or specific point made here, but they support the work of the BMG and endorse its general perspectives. It is based on previous reports, and has been drafted by South Centre’s Abdul Muheet Chowdhary, Alex Cobham, Emmanuel Eze, Tommaso Faccio, Jeffery Kadet, Bob Michel, and Sol Picciotto.
Hacia una Agencia Latinoamericana y del Caribe de Medicamentos (AMLAC)
Por Germán Velásquez
El 26 de abril de 2023 en Acapulco, México, las Autoridades Reguladoras de Medicamentos de Colombia (INVIMA), Cuba (CECMED) y México (COFEPRIS) firmaron la “Declaración de Acapulco” para la creación de la Agencia Latinoamericana y del Caribe de Regulación de Medicamentos y Dispositivos Médicos (AMLAC). Esta declaración fué confirmada en Bogotá, Colombia el 16 de junio de 2023 en una reunión titulada “Convergencia regulatoria” por los responsables de las agencias reguladoras de medicamentos de Argentina, Brasil, Chile, Colombia, Cuba y México que acordaron la creación progresiva de una Agencia Latinoamericana y del Caribe de Medicamentos -AMLAC-.
La AMLAC fué creada para contribuir a la integración regional a través de la armonización y convergencia en materia de regulación sanitaria, la creación de un mercado regional de medicamentos en busca del acceso a medicamentos y dispositivos médicos seguros, eficaces y de calidad.
Statement by the South Centre on the Two Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy
28 July 2023
The South Centre takes note of the Outcome Statement by 138 member jurisdictions of the OECD/G20 Inclusive Framework (IF) made on 11 July 2023, on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. In this statement the South Centre highlights the inclusion of rules that have the practical effect of reducing the tax payable to developing countries under Amount A, the limitations of Pillar Two and other key aspects of the OECD proposed rules that require attention by developing countries before they decide to be tied up by such rules.
COVID-19 impacted humanity in many ways and one such impact is wide acceptance of the concept of Work From Home (WFH) by the corporate sector. Previously, WFH did exist in some countries, perhaps at a much smaller scale, but compulsions of COVID-19 have made WFH a new normal. This new normal also creates new tax challenges for the Multinational Enterprises (MNEs). Does the employee create a taxable presence in the countries where they are working remotely through a ”permanent establishment” and if yes what are the profits attributable to such permanent establishment?
The existing treaty provisions are likely to result in widespread litigation on these issues. It is desirable that a new provision is introduced in the tax treaties to tackle these issues. The suggested remote worker permanent establishment provision adopts a very simple measurable threshold for determination of permanent establishment and also attempts to balance taxing rights of the country of source as well as residence. A simple standardised approach could be adopted for determining the profits attributable to such permanent establishment.
Assessing the State of Play in the WHO Pandemic Instrument Negotiations
By Viviana Muñoz Tellez
This Policy Brief discusses the state of play of the negotiations of the pandemic instrument at the World Health Organization. The Intergovernmental Negotiating Body (INB) is increasing its meetings as the target deadline for completion in the first half of 2024 draws closer. To advance, the political will needs to be scaled up in the next months. The expectations should not be lowered to focus on the lowest common denominator. Real progress needs to be made in priority areas of concern for developing countries to keep momentum.
Towards A Latin American and Caribbean Medicines Agency (AMLAC)
By Germán Velásquez
On 26 April 2023 in Acapulco, Mexico, the Medicines Regulatory Authorities of Colombia (INVIMA), Cuba (CECMED) and Mexico (COFEPRIS) signed the “Declaration of Acapulco” for the creation of the Latin American and Caribbean Medicines and Medical Devices Regulatory Agency (AMLAC). This declaration was confirmed in Bogota, Colombia on 16 June 2023 in a meeting called “Regulatory convergence” by the heads of the medicines regulatory agencies of Argentina, Brazil, Chile, Colombia, Cuba and Mexico who agreed on the progressive creation of a Latin American and Caribbean Medicines Agency (AMLAC).
AMLAC was created to contribute to regional integration through harmonisation and convergence in health regulation, the creation of a regional medicines market in pursuit of access to safe, effective and quality medicines and medical devices.
