The Implications of Treaty Restrictions of Taxing Rights on Services, Especially for Developing Countries
By Faith Amaro, Veronica Grondona, Sol Picciotto
Taxation of cross-border services has been identified as a high priority issue in the United Nations (UN) negotiations to establish a new global framework for tax. This paper analyses the defects of international tax rules as applied to services, and their exploitation by multinational enterprises (MNEs), focusing on the impact on developing countries. Services have become increasingly important for economic development, but international tax rules favouring delivery by non-residents act as a disincentive to the growth of local services providers, particularly disadvantaging developing countries which are mainly hosts to MNEs. We analyse the restrictions on source taxation of services in tax treaties, particularly those based on the model of the Organisation of Economic Co-operation and Development (OECD), and show that their spread has been accompanied by a widening deficit in services trade of developing countries, while the weakening of their attempts to protect their tax base through withholding taxes has resulted in increasing losses of tax revenue. The paper combines detailed qualitative analyses of tax treaties with quantitative estimates of their effects on trade and tax revenues for services of five developing countries: Argentina, Brazil, Colombia, Kenya and Nigeria. Our analysis suggests that a new approach is needed for taxation of services, breaking with the residence-source dichotomy, and adopting formulary apportionment. This could be based on the standards agreed in the Two Pillar Solution of the OECD/Group of Twenty (G20) project on base erosion and profit shifting (BEPS) and developed now through the UN.
Summary of Carlos Correa’s intervention at the 25th Meeting of COMSATS Coordinating Council
Below is the summary of South Centre Executive Director Carlos Correa’s intervention at the 25th Meeting of the Commission on Science and Technology for Sustainable Development in the South (COMSATS) Coordinating Council.
A Fair Solution for Access and Sharing of Benefits of Digital Sequence Information? Decision for the CBD COP in November 2024
By Viviana Munoz Tellez
A decision is expected from the Conference of the Parties of the Convention on Biological Diversity (CBD) by 1 November 2024 on a solution to the fair and equitable sharing of benefits from the use of digital sequence information (DSI) on genetic resources. There are different forms of non-monetary and monetary benefits from the use of DSI that are being considered. This paper argues that for monetary benefit sharing, the focus should be on when DSI is used commercially, as part of products or services. Calculations should be based on revenue that includes sales and intellectual property licencing.
Decision 15/9 and the Nagoya Protocol: Who should get what in the Multilateral Benefit-Sharing Mechanism?
By Joseph Henry Vogel, Natasha C. Jiménez-Revelles, Xavier A. Maldonado-Ramírez de Arellano
Article 10 of the Nagoya Protocol (NP), “Global Multilateral Benefit-Sharing Mechanism” (GMBSM), asks Parties to consider the distribution of benefits derived from the utilization of genetic resources in transboundary situations. A literature exists which applies the economics of information to genetic resources, when interpreted as “natural information”. The policy implication would incentivize reduction in the drivers of mass extinction, through economic rents in royalty obligations. Fifteen cases become thought experiments on how to share royalty income. A sixteenth case addresses the TP53 gene in elephants, which may revolutionize oncology. In parallel to Article 10 of the NP is Decision 15/9 of the fifteenth Conference of the Parties to the Convention on Biological Diversity. That Decision establishes a “multilateral benefit-sharing mechanism from the use of digital sequence information on genetic resources”. Redundancy with the GMBSM is only apparent. The Decision omits rents and thus renders its mechanism inefficient, unfair and inequitable.
AMR in Aquaculture: Enhancing Indian Shrimp Exports through Sustainable Practices and Reduced Antimicrobial Usage
By Robin Paul
This study on Antimicrobial Resistance (AMR) in Indian shrimp farming underscores its critical impact on public health, environmental sustainability, and economic viability. The global scenario with many export rejections on account of persistent residues of antibiotics, reiterate that antimicrobial use in aquaculture, demands urgent global attention.
In the Indian context, the shrimp industry grapples with a delicate balance between production demands and long-term shrimp health. Sustainable practices, including responsible antimicrobial use, are crucial for economic viability, given the industry’s reliance on specific markets like the United States, EU and China.
Sustainable aquaculture emerges as a pivotal solution, supported by government policies and a gradual industry shift towards best practices. However, challenges persist, requiring a comprehensive approach to balance economic interests with environmental conservation. The key challenges remain the large number of small stakeholders and huge geographical spread of farms which make implementation of regulations and sharing of best practices difficult. Traceability and certification programs can play a key role in promoting responsible aquaculture, ensuring transparency and accountability in the supply chain. Technological innovations, including block chain can offer efficient solutions for traceability.
The collaborative action suggested emphasizes the role of government bodies, regulatory agencies, industry players, researchers, and consumers in addressing AMR. Clearer implementable regulatory frameworks aligned with economic and environmental priorities are essential. Looking ahead, the study envisions a future where the blue economy is sustainable not just for the industry’s success but also to protect the wider environment. By enhancing domestic market presence and fostering collaboration with importing countries, the Indian industry can overcome the multiple challenges raised by AMR in shrimp aquaculture.
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.
FIRST DISCUSSIONS ON DAMAGES IN THE INVESTOR-STATE DISPUTE SETTLEMENT SYSTEM AT UNCITRAL WORKING GROUP III
By José Manuel Alvarez Zárate
This paper summarises the history of initial discussions within UNCITRAL Working Group III (WG.III) on the reform of investor-state dispute settlement (ISDS) regarding the lack of correctness, consistency and predictability of compensation awards. It covers the period up to 2022, beginning with the initial concerns expressed by some countries of the Global South regarding the methodologies used to assess damages and the Draft on Damage Assessment and Compensation prepared by the UNCITRAL Secretariat, which served as the basis for subsequent discussions among the members of WG.III. It then describes the comments made by some states and observers on this draft and the discussions that ensued, including the discussion of damages as part of the issues of ISDS reform. A second paper on this topic will describe the period from September 2022 to the publication by the Secretariat of the second draft of procedural and cross-cutting issues on July 8, 2024.
The purpose of this paper is to provide Global South States with a track record of the main concerns expressed by States on various aspects of damages during the discussions in UNCITRAL WG.III, which have often been lost at some point during the long process of discussions on ISDS reform.
Ensuring a Balanced Approach for the Global South in UNCITRAL Working Group III
By José Manuel Alvarez Zarate
This paper examines the ongoing efforts of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG III) to reform the Investor-State Dispute Settlement (ISDS) system. It argues that the current approach prioritises the concerns of developed countries over those of the Global South. The document highlights the disproportionate focus on the Permanent Multilateral Investment Court (MIC) and related issues, while neglecting procedural and cross-cutting concerns crucial for developing nations. The paper proposes concrete actions to rebalance the discussions, including prioritising procedural reforms and ensuring equitable representation in the MIC’s structure and appointment process. It emphasises the need for transparency, depoliticisation, and genuine consideration of the Global South’s concerns to achieve a genuinely legitimate and balanced ISDS reform.
Reviewing the Implementation of Select Sustainable Development Goals – A Southern Perspective
By Yuefen Li, Viviana Muñoz Tellez, Vahini Naidu, Danish, Vitor Ido, Peter Lunenborg, Nirmalya Syam, Daniel Uribe
In line with the focus of the work of the South Centre, this paper specifically looks at the following Sustainable Development Goals (SDGs): Goal 1 – No poverty; Goal 2 – Zero Hunger; Goal 3 – Good Health and Well-being; Goal 9 – Industry, Innovation and Infrastructure; Goal 13 – Climate Action; Goal 14 – Life Below Water; Goal 15 – Life on Land; and Goal 17 – Partnerships for the Goals. Particular attention has also been paid to the concerns of least developed countries (LDCs) in relation to the SDGs.
The paper thus seeks to provide a review of the trajectory of the implementation of the aforementioned SDGs in the years since 2015 from the perspective of the Global South. It then spells out the drivers for the progress made and the challenges and the changing narratives in the world today. It also provides some concrete recommendations which can support developing and least developed countries in their sustainable development pathways.
Catalyzing Policy Action to Address Antimicrobial Resistance: Next Steps for Global Governance
By Anthony D. So
The United Nations General Assembly has taken up Antimicrobial Resistance (AMR) twice in the past decade, but the follow-through on commitments and financing of both Global and National Action Plans on AMR have lagged considerably behind the policymaker pronouncements. The need to update the intersectoral approach to the Global Action Plan on Antimicrobial Resistance requires urgent attention if measurable progress is to be made in tackling this One Health challenge. This paper identifies where progress must pick up and outlines how intersectoral action might catalyze needed next steps.
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.
Discussions on Draft Provisions on Damages in the Investor-State Dispute Settlement System in UNCITRAL Working Group III
By José Manuel Alvarez Zárate
This paper summarizes the discussions within the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG III) on the reform of investor-state dispute settlement (ISDS) regarding the two draft provisions on damages prepared by the UNCITRAL Secretariat as part of the two drafts on procedural and cross-cutting issues. It covers the period from September 2022 to July 8, 2024. It describes the draft provisions on damages and related provisions on procedural and cross-cutting issues of document A/CN.9/WG.III/WP.231, dated 26 July 2023, as well as the comments made on it by some members of WG III and observers. It also describes the changes to the above document contained in the second draft on the procedural and cross-cutting issues, dated July 8, 2024, contained in document A/CN.9/WG.III/WP.244.
The purpose of this paper is to provide an overview of the comments made by some States on the draft provisions on damages, the substantive changes made by the Secretariat to the first draft, mostly based on the comments made by some States, and the exclusion of important aspects highlighted by some Global South States in their interventions. In the light of this review, countries of the Global South may consider commenting on document A/CN.9/WG.III/WP.244 to ensure that their concerns are effectively taken into account.
