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.
By Veronica Grondona, Abdul Muheet Chowdhary, Daniel Uribe
The Organisation for Economic Co-operation and Development (OECD)’s Inclusive Framework is considering a two-pillar approach on taxing the digital economy. Preliminary estimates about the impact of its recommendations show a modest increase in corporate income tax collection, the benefits of which are expected to go mostly to the developed countries. At the same time, there is a rise in national measures on taxing the digital economy, a move spurred by the onset of the COVID-19 pandemic. This is also fully within the rights of countries under international law, despite labels of ‘unilateralism’. This research paper highlights the direct tax measures being taken by various countries and finds three key approaches to tax the digital economy: (1) digital service taxes; (2) nexus rules based on significant economic presence ;(3) withholding tax on digital transactions.
The post-Covid world requires a new social contract. The United Nations Secretary-General should convene a World Conference on Post-Covid Recovery based on multilateralism and international solidarity. This entails a paradigm shift in the prevailing economic, trade and social models. Governments bear responsibility for their unwise and inequitable budgetary allocations, which prioritized military expenditures over investment in health, education and people-centered infrastructures. A new functional paradigm on human rights should discard the skewed and artificial division of rights into those of the first, second and third generations and impose new categories of enabling rights, inherent rights, procedural rights and end rights so as to ensure human dignity and development for all.
Taxing the Digital Economy to Fund the COVID-19 Response
By Abdul Muheet Chowdhary and Daniel Uribe Teran
The COVID-19 pandemic has weakened global economic growth, raising pressures on revenue authorities to fund the fiscal stimulus necessary to contain the spread of the virus and provide income support to affected households. Accordingly, countries are taking national measures to tax the digital economy as highly digitalized businesses are seeing a rise in sales, subscribers and profits owing to the work from home lockdown measures. The three main policy responses undertaken are digital service taxes, nexus rules based on significant economic presence and withholding taxes on digital transactions. These are briefly summarized here and elaborated in detail in a forthcoming research paper by the South Centre Tax Initiative (SCTI).
Spotlight: Arab region and the Implementation of the Beijing Platform for Action
Regional Round-up on progress in implementing the Beijing Platform for Action in light of the upcoming 25th anniversary of the platform Spotlight: Arab region
El presente documento realiza un estudio preliminar del capítulo XX relativo a propiedad intelectual del Acuerdo MERCOSUR – UE de libre comercio, MERCOSUR logró en este capítulo que la UE hiciera tabla rasa respecto de los anteriores acuerdos de libre comercio. Se arribó a un resultado equilibrado, que refleja las concesiones de ambas partes.
COVID-19 and WTO: Debunking Developed Countries’ Narratives on Trade Measures
By Aileen Kwa, Fernando Rosales and Peter Lunenborg
In response to the COVID-19 pandemic, developing countries at the World Trade Organization (WTO) are faced with demands to i) permanently liberalize their markets in health products, and also in agriculture; ii) ban export restrictions in agriculture; and iii) conclude new digital trade rules including liberalizing online payment systems, and agreeing to free data flows. There seems to be a confusion between short-term and long-term responses. For the short-term, governments must take measures needed to address the crisis, including liberalizing needed health products. However, permanently bringing tariffs to zero for the health and agricultural sectors will not support developing countries to build domestic industries. Export restrictions in agriculture cannot be given up. They can be a very important tool for stabilizing domestic prices and for food security. New digital trade rules at the WTO would foreclose the possibility for countries to impose data sovereignty regulations, including data localization requirements that can support their infant digital platforms and industries.
COVID-19: An Opportunity to Fix Dysfunctional Biomedical R&D System
By Sreenath Namboodiri
Failures of the patent system to meet the public health priorities demand a new approach in research and development (R&D) financing and incentive to pharmaceutical innovations. An R&D model delinking the cost of R&D from the price of the product is the way forward.
Non-Violation and Situation Complaints under the TRIPS Agreement: Implications for Developing Countries
By Nirmalya Syam
While the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provided for the applicability of non-violation and situation complaints to the settlement of disputes in the area of intellectual property (IP), when the World Trade Organization (WTO) agreements were adopted in 1994, a moratorium was put in place until WTO Members could agree on the scope and modalities for the application of such complaints. However, for more than two decades, discussions in the TRIPS Council on the subject have remained inconclusive. The biannual WTO Ministerial Conference has granted extensions of the moratorium with regularity. This paper reviews the debate on the applicability of non-violation and situation complaints under the TRIPS Agreement, including the arguments consistently held by two WTO Members that if the moratorium is not extended by consensus, non-violation and situation complaints would become automatically applicable. This paper argues that a consensus decision by the WTO Ministerial Conference is required to determine the scope and modalities and, hence, the applicability of such complaints under the TRIPS Agreement. Even if the moratorium was not extended, the WTO Ministerial Conference should still adopt a decision calling on the TRIPS Council to continue examination of the scope and modalities of such complaints. It also argues that in the absence of an extension of the moratorium on initiating such complaints—and although they would not be applicable—a situation of uncertainty would be created that may lead to a de facto limitation in the use of flexibilities allowed under the TRIPS Agreement.
Will post COVID-19 pandemic lead to a climate compatible, more just, resilient and sustainable society?
By Youba Sokona
As a result of the economic shutdown and physical lockdown triggered by the COVID-19 pandemic, greenhouse gas emissions, in particular CO2, have decreased and air pollution levels have seriously dropped. However, the temporary reduction of greenhouse gas emissions resulting from the pandemic is not to be celebrated as it is not a result of deliberate climate and sustainable development policy. People who are the most vulnerable, most marginalized, and least empowered are the hardest hit by both COVID-19 and climate change. Both crises require robust scientific, evidence-based, accurate information in order to inform adequate policies and actions. They are global in nature and as such need global participation at all levels as well as strong international cooperation and transparency for their resolution.
Repensando la I+D para productos farmacéuticos después del choque de la Coronavirus COVID-19
Por Germán Velásquez
La crisis sanitaria mundial sin precedentes provocada por la pandemia de coronavirus –COVID-19–, durante el primer trimestre de 2020, hace que vuelva a ser especialmente urgente el debate sobre el modelo de investigación y desarrollo (I+D) de productos farmacéuticos y otras tecnologías sanitarias. La crisis de COVID-19 muestra que existe una necesidad urgente de rediseñar la gobernanza mundial de la salud pública para la I+D en materia de salud. La adopción de un instrumento vinculante –como permite el artículo 19 de la Constitución de la OMS– en esta materia fue propuesta hace muchos años. Este documento sostiene que es hora de revivir y materializar esta iniciativa.
Reforming Responsibly: Why Governments Should Assess the Human Rights Impacts of Economic Reforms
ByDaniel Bradlow
The purpose of economic reforms is to change the structure and overall direction of an economy. They therefore will affect the amount and allocation of resources available to a country. This means that the reforms will also affect the human rights situation in the country. This requires impact assessments of each reform option before it is implemented.
