Towards a UN Protocol for Taxing Cross-Border Services in a Digitalized Economy
By Abdul Muheet Chowdhary, Anne Wanyagathi Maina and Kolawole Omole
This Policy Brief offers a way forward on the United Nations Framework Convention on International Tax Cooperation’s (UNFCITC) protocol for taxing cross-border services in a digitalized economy. Such a protocol can provide a way to standardize and harmonize the existing plethora of widely varying Digital Services Taxes (DSTs), which can reduce political tension between the Global North and South, ease compliance costs and uncertainties for business, while providing a basis for the elimination of double taxation. The revenue generated can help bridge the Sustainable Development Goals (SDGs) financing gap and for the realization of human rights in the Global South. The Group of Twenty (G20) can act as a forum where key countries in the North and South can hammer out the architecture of the protocol for taxing cross-border services.
South Centre Inputs to FfD4 Elements Paper – Debt Sustainability, Business and Finance, Taxation
By Yuefen Li, Danish, Abdul Muheet Chowdhary
The upcoming 4th conference on financing for development (FfD4) represents an important opportunity for developing countries to achieve a deep reform of the international financial architecture so that it meets their sustainable development needs and enhances the scale of development finance to fully realize the 2030 Agenda for Sustainable Development. Based on the inputs provided by the South Centre to the FfD4 process, this policy brief highlights some of the key messages, problem statements and policy solutions in the areas of sovereign debt, private business and finance, and international tax cooperation that should be considered by the countries of the global South in their deliberations towards achieving ambitious outcomes at FfD4.
Determining the Upper Bound of the Scoping Criteria for Amount B in the OECD/G20 Two-Pillar Solution: A Policy Guide for Developing Jurisdictions
By Chetan Rao, Ruchika Sharma, and Dr. Vijit Patel
Amount B, a component of the OECD/G20 Two-Pillar Solution, has been designed to simplify transfer pricing for baseline distribution activities. With the aim of developing a practical policy guide for developing jurisdictions to fine tune the quantitative scoping criterion under Amount B, i.e., “annual operating expense to annual net revenue” ratio, this paper critically analyses various aspects of this criterion. The upper bound of this ratio is purported to help jurisdictions in identifying baseline distributors. It is currently set as a flexible range from 20% to 30%, with the choice available to each adopting jurisdiction deciding the exact point in the range for implementation of Amount B within its jurisdiction. Given the lack of any data-backed rationale in the Amount B report for development of this range, the authors suggest that the upper bound range might have been politically negotiated. For this very reason, developing countries need to tread carefully while setting the upper-bound and consider both its tax as well as policy implications. Through an empirical analysis of independent distributors in India, the paper highlights the link between the upper bound, functionality, and profitability, illustrating how these metrics impact developing countries with lower asset and expense intensities. The findings suggest that setting the upper bound at the higher end of the range could unintentionally bring above-baseline distributors into scope, thus foregoing long-term taxing rights for developing jurisdictions. Through this analysis, the paper offers practical insights and recommendations for jurisdictions, especially developing ones, for setting this upper bound to protect their taxing rights and minimize risks of misclassification of above-baseline distributors as baseline.
Towards a Balanced WIPO Design Law Treaty (DLT) for Developing Countries
By Nirmalya Syam
The WIPO Design Law Treaty (DLT) aims to harmonize and simplify global industrial design registration procedures, encourage digital applications and reduce costs. While the reforms required by the DLT could boost efficiency, they will mainly benefit enterprises from developed countries with resources to secure global design rights. This policy brief highlights the key concerns for developing countries, particularly the treaty’s potential impacts on small and medium-sized enterprises (SMEs) and indigenous communities. It advocates for critical adjustments in the DLT negotiation texts to allow for policy space in the DLT – binding technical assistance, flexible grace periods, enabling disclosure of the origin and source of traditional knowledge and traditional cultural expressions used in designs that are sought to be registered, and optional divisional and electronic filing provisions.
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.
Painting the Grass Green: A Climate Change Carve-Out in Investment Agreements
By Daniel Uribe
During the Twenty-Eighth Session of the Conference of the Parties (COP-28) of the United Nations Framework Convention on Climate Change (UNFCCC), States recognised the critical need to accelerate efforts to mitigate climate change and called on Parties to take action to transition away from fossil fuels in energy systems, to achieve net zero emissions by 2050. However, implementing such a transition finds obstacles in investor-state dispute settlement (ISDS) mechanisms, which can undermine regulatory actions necessary for climate policies, leading to a ‘regulatory chill’. As a response to these challenges, the Organisation for Economic Co-operation and Development’s (OECD) Future of Investment Treaties program has proposed a model carve-out provision to exclude fossil fuel sectors from ISDS protection with procedural safeguards, but its effectiveness may be limited. A holistic reform of investment agreements and additional measures, such as withdrawal from international investment agreements, are necessary to safeguard regulatory space and promote sustainable investment and a just transition.
Understanding the New WIPO Treaty on Intellectual Property, Genetic Resources and Associated Traditional Knowledge
By Nirmalya Syam and Carlos M. Correa
A new WIPO Treaty on Intellectual Property, Genetic Resources, and Associated Traditional Knowledge was adopted on 24 May 2024. The treaty creates an international obligation for patent applicants to disclose the source or origin of genetic resources (GRs) and associated traditional knowledge (TK) in patent applications. This development marks a significant step towards mitigating the misappropriation of GRs and TK, particularly benefiting developing countries that have long advocated for such a framework. While the treaty establishes minimum standards for disclosure and sanctions, it permits contracting parties considerable flexibility in implementation and opens avenues for future expansion of its scope to address emerging technologies and derivative products.
Unpacking the WTO MC13 Decision on the Work Programme on Electronic Commerce
By Vahini Naidu
The 13th Ministerial Conference (MC13) of the World Trade Organization (WTO) adopted a decision that marks a pivotal shift in the operational framework of the Work Programme on Electronic Commerce (WPEC) of the organisation. This Policy Brief examines how this Decision can enhance the trajectory of the e-commerce discourse within the WTO, elaborates on its implications and makes recommendations aimed at facilitating developing countries’ engagement in the WPEC.
The Design of a UN Framework Convention on International Tax Cooperation
By Sol Picciotto
The creation of a UN-led framework for international tax cooperation is an opportunity for an institutional and conceptual reset, to re-establish a global perspective that has been disrupted by the assumption of an increasingly dominant role in international tax by the OECD. The OECD’s expansive proselytisation of its approach, aiming to encourage foreign investment by restricting taxation of income at source where it derives, has paradoxically taken place in counterpoint with growing concerns about the evident dysfunctionality of that approach. The current process should learn from the past to design a global framework fit for the future, by embodying the aims and general principles that have come to be recognised especially in the recent period as essential guideposts for effective international tax reform.
The WIPO Diplomatic Conference for a Treaty on Intellectual Property, Genetic Resources and Associated Traditional Knowledge
By Viviana Muñoz Tellez
A new international legal instrument is set to be concluded under the auspices of the World Intellectual Property Organization (WIPO) in May 2024. Its legal nature should be that of an international treaty, given that a Diplomatic Conference, the last treaty making stage, will be held for its conclusion. The purpose of the instrument (hereinafter “the Treaty”) is to create an international minimum standard for patent applicants to provide information concerning the origin or source of the genetic resources or traditional knowledge associated with genetic resources as part of the patent application process. This Policy Brief provides an overview of the rationale for the Treaty and of the process and substantive issues to be negotiated, and advances recommendations towards ensuring a successful conclusion of the Diplomatic Conference.
The WHO Intergovernmental Negotiating Body process and the revised draft of the WHO Pandemic Agreement (A/INB/9R/3)
by Nirmalya Syam & Viviana Muñoz Tellez
This Policy Brief considers the negotiating process conducted so far by the Intergovernmental Negotiating Body (INB) for an instrument on pandemic prevention, preparedness and response under the World Health Organization (WHO), and some aspects of the draft text for the Resumed Ninth meeting of the Intergovernmental Negotiating Body (INB9R), as well as of the draft proposed resolution for consideration by the World Health Assembly in May 2024. The Policy Brief provides recommendations to assist member States in their negotiations during the INB9R to be held from April 29 to 10 May 2024.
Unlocking the Potential of Copyright Limitations and Exceptions (L&Es)
by Faith O. Majekolagbe
Copyright limitations and exceptions (L&Es) are vital tools for creativity, innovation, access to knowledge and education, and human capital formation. All of these are crucial to the development of societies and achieving the United Nations’ Sustainable Development Goals (SDGs). A strong system of well-defined copyright L&Es guarantees the public adequate access and use of the cultural goods and knowledge that are critical to achieving development goals. This paper identifies and discusses specific clusters of L&Es that are essential for achieving the SDGs. These clusters should be recognized and implemented in copyright laws at national, regional, and international levels to strengthen development objectives. Instead of applying specific L&Es to all countries, regardless of their unique developmental needs, recognizing these clusters of L&Es could help design an approach to international copyright law that is centred around development. Ultimately, this approach would provide greater flexibility in designing development programs that align with the SDGs and recognize copyright law’s inherent development rationale.
