Improve nexus rule for fair distribution of taxing rights to developing countries
By Radhakishan Rawal
One of the open issues for Pillar One in the discussion on the taxation of the digital economy is the nexus threshold, which would determine which Multinational Enterprises (MNEs) have a taxable presence. Big developed economies or smaller developing economies both may be deprived of taxing rights as a result of nexus thresholds as presently described in the Pillar One proposal. Further, even where smaller thresholds are adopted, some countries may still be denied taxing rights. Financial threshold was never a parameter of distributing taxing rights between the countries. A minor tweaking of the tax certainty process could address the issue.
This article recommends giving the taxing right over Amount A of Pillar One, which covers the main portion of taxable profits from the digital economy to all the market jurisdictions, but to give rights related to affected tax jurisdictions only to those countries meeting the nexus thresholds. This approach will result in a fair distribution of taxing rights and will also ensure that there is no additional burden on the tax certainty process, which will be easier for developing countries.
Investment Policy Options for Facing COVID-19 Related ISDS Claims
By Daniel Uribe and Danish
Developing and least developed countries have undertaken a number of measures to fight against the multidimensional impacts of the COVID-19 pandemic. Such measures and those that may be adopted in the context of the recovery efforts are, however, susceptible to challenges by foreign investors using investor-State dispute settlement mechanisms.
This policy brief first considers the kinds of measures States have adopted to limit the spread of COVID-19, protect their strategic sectors and promote economic recovery, including through foreign investment aftercare and retention. It then addresses how the investor-State dispute settlement system (ISDS) has been used by investors in times of crises, based on the analysis of the awards in several cases brought against both developed and developing countries.
Against this backdrop, the brief elaborates on the different options and initiatives States can take for preventing ISDS claims at the national, bilateral, regional and multilateral levels. It concludes with some policy advice for developing and least developed countries to face possible COVID-19 related ISDS claims in the future.
TRIPS Flexibilities and TRIPS-plus Provisions in the RCEP Chapter on Intellectual Property: How Much Policy Space is Retained?
By Vitor Henrique Pinto Ido
The Regional Comprehensive Economic Partnership (RCEP) was signed on 15 November 2020 by 15 Asian-Pacific countries (ASEAN—Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam—, and China, Japan, South Korea, Australia and New Zealand), comprising about one third of the world’s population and economy. India was a crucial party to the negotiations but opted out of the agreement. Ratification of the agreement is still pending, subject to more Parties ratifying it at the national level. This paper provides a broad overview of the RCEP agreement and discusses the details of the intellectual property (IP) Chapter. Significantly, it does not contain substantive TRIPS-plus provisions that undermine public health in developing countries—although it does contain such provisions in other areas such as copyrights, trademarks, and IP enforcement.
Systemic reform of the international debt architecture is yet to start
By Yuefen Li
The COVID-19 pandemic has pushed the reform of the international debt architecture to the policy agenda. Up to now policy measures to address the crushing debt burden of developing countries have focused on boosting time bound liquidity provision, which is insufficient in amount and restrictive in scope as debt-ridden and pandemic struck middle-income countries have not been covered. Even the implementation of these policy measures has been hindered by existing systemic problems. The reform of the debt architecture is yet to start. However, complacency seems to emerge. The risk of “wasting” the crisis should be avoided.
Repensando la fabricación mundial y local de productos médicos tras el COVID-19
Por Germán Velásquez
La crisis sanitaria mundial sin precedentes provocada por la pandemia del coronavirus –COVID-19, durante el primer semestre de 2020, hace que se vuelva a plantear con especial urgencia el debate sobre la producción farmacéutica local. La crisis de COVID-19 puso de manifiesto la interdependencia en la producción mundial de medicamentos, ningún país es autosuficiente. Muchos países industrializados están tomando la decisión de repatriar o desarrollar la producción de Ingredientes Farmacéuticos Activos (API). Muchos gobiernos están empezando a hablar de soberanía farmacéutica y/o seguridad sanitaria. Si esto se hace realidad, los países en desarrollo tendrán que desarrollar y/o fortalecer la producción local de medicamentos y vacunas. La guerra para obtener la futura vacuna para COVID-19 no parece fácil con estos nuevos desarrollos.
The Role of Courts in Implementing TRIPS Flexibilities: Brazilian Supreme Court Rules Automatic Patent Term Extensions Unconstitutional
By Vitor Henrique Pinto Ido
This policy brief provides a background, summary and analysis of the Brazilian Federal Supreme Court decision of 6 May 2021 that ruled automatic patent term extensions unconstitutional, striking down Article 40, Sole Paragraph, of the Brazilian Industrial Property Code of 1996. It concludes that this is a landmark ruling that contributes to the implementation of a more balanced patent regime in Brazil, with a positive impact on access to medicines in the country. It is an important precedent in relation to the role that courts may play in defining the contours of intellectual property protection and the TRIPS flexibilities.
Recent changes to the United Nations (UN) Model Tax Convention have resulted in provisions that are more advantageous for developing countries in raising revenue through international taxation, i.e. taxation of foreign income. These include taxation of income from automated digital services, software payments, capital gains and others. Normally, these would be incorporated into bilateral tax treaties through time-taking negotiations. A UN Multilateral Instrument (MLI) provides a speedy manner for updating multiple tax treaties through a single negotiation. This will help developing countries in collecting revenue more quickly. This Policy Brief discusses the possible structure of such an MLI.
The Tax Sovereignty Principle and Its Peaceful Coexistence with Article 12B of the UN Model Tax Convention
By Kuldeep Sharma, ADIT (CIOT, UK)
Article 12B of the United Nations (UN) Model Tax Convention (MTC) provides developing countries with a practical and easy way to administer policy solutions for taxing the digital economy, in particular income from Automated Digital Services. It merges seamlessly with the existing provisions of the UN MTC and it is completely aligned and coexistent with the Tax Sovereignty Principle.
Build Your House on Your Own Pillars – Key Issues for Developing Countries at the OECD Inclusive Framework Negotiations on the Taxation of the Digital Economy
Propiedad intelectual y acceso a medicamentos: una introducción a cuestiones clave – algunos términos y conceptos básicos
Por Germán Velásquez
La propiedad intelectual y las patentes en particular se han convertido en uno de los temas más debatidos sobre el acceso a los medicamentos, desde la creación de la Organización Mundial del Comercio (OMC) y la entrada en vigor del Acuerdo sobre los Aspectos de los Derechos de Propiedad Intelectual relacionados con el Comercio (ADPIC). Las patentes no son de ninguna manera las únicas barreras para el acceso a medicamentos que salvan vidas, pero pueden desempeñar un papel significativo, o incluso determinante. Durante el período de protección de la patente, la capacidad del titular de la patente para determinar los precios, en ausencia de competencia, puede hacer que el medicamento resulte inalcanzable para la mayoría de las personas que viven en los países en desarrollo. Este primer número de los “Materiales de capacitación del South Centre” pretende, en su primera parte, ofrecer una introducción a cuestiones clave en el ámbito del acceso a los medicamentos y la propiedad intelectual. La segunda parte describe y define algunos términos y conceptos básicos de esta área relativamente nueva de las políticas farmacéuticas, que son los aspectos comerciales de los derechos de propiedad intelectual que regulan la investigación, el desarrollo y el suministro de medicamentos y las tecnologías sanitarias en general.
Submission to the Special Session of the General Assembly on Challenges and Measures to Prevent and Combat Corruption and Strengthen International Cooperation
South Centre, 28 May 2021
The South Centre submission to UNGASS2021 highlights the need for strong inter-institutional and cross-sectorial coordination and more effective and open government tools. The UNGASS2021 should support the implementation of the FACTI Panel recommendations as means to enhance States’ effort to combat corruption.
