Tax Cooperation

SCTI Submission, October 2020

Comments on Discussion Draft: Possible Changes to the United Nations Model Double Taxation Convention Between Developed and Developing Countries Concerning Inclusion of software payments in the definition of royalties

The South Centre Tax Initiative (SCTI) offers its comments on the discussion draft on inclusion of software payments in the definition of royalties. As is well known, this is an important issue that developing countries have been fighting for, for a while now. The SCTI supports the proposed change which seeks to insert the phrase “computer software” in article 12(3) of the United Nations Model Double Taxation Convention Between Developed and Developing Countries. The COVID-19 pandemic adds special urgency to resolving this long-pending issue as revenue from software payments made from developing countries continues to increase.

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International virtual seminar on Equity in Global Tax Regimes and Implications for the SDGs, 7 October 2020

International virtual seminar on Equity in Global Tax Regimes and Implications for the SDGs

The seminar is designed to be an introduction to two topics: (1) key issues faced by developing countries in international taxation (2) redistributing taxing rights to the Global South through the ongoing proposals on taxing the digitalized economy. The speakers will be two Members of the United Nations Committee of Experts on International Cooperation in Tax Matters. The seminar is organized in collaboration with The Sustainability Platform (TSP) Asia, the University of Mysore and the Indian Economic Association.

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Tax Cooperation Policy Brief 12, September 2020

Base Erosion and Profit Shifting in the Extractive Industries

By Danish and Daniel Uribe

Developing countries with significant natural resources have not fully utilised them for financing their development aspirations. Extractive industries and the revenue generated from their extractive activities need to constitute a larger share of domestic resource mobilisation. However, the sector remains beset with massive tax base erosion and profit shifting by large multinational companies. This policy brief therefore looks at the extractive industries, and the potential impact of their practices on the national policies and regulations in developing countries. It further also considers some current initiatives at the international level for enabling countries to obtain more revenue from natural resource extraction, and offers some observations on the policy options available to developing countries.

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South Centre Semester Report, January-June 2020

South Centre Semester Report, 1 January to 30 June 2020

This Semester Report summarizes the activities undertaken by the South Centre during the period 1st January to 30 June 2020. It is intended to provide information, organized by themes, about recent developments in the areas covered by the Centre’s Work Program, meetings organized or co-organized by the Centre to examine particular issues or provide analytical support for negotiations taking place in various international fora, and conferences and other meetings where the Centre has participated. It also informs about publications made.

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Document de Recherche 111, Septembre 2020

Mesures nationales sur l’imposition de l’économie numérique

Par Veronica Grondona, Abdul Muheet Chowdhary, Daniel Uribe

Le Cadre inclusif sur le BEPS de l’Organisation de coopération et de développement économiques (OCDE) envisage une approche fondée sur deux piliers en matière de taxation de l’économie numérique. Les premières estimations concernant l’impact de ses recommandations montrent une modeste augmentation de la collecte de l’impôt sur les sociétés, dont les bénéfices devraient revenir principalement aux pays développés. Dans le même temps, les mesures nationales de taxation de l’économie numérique se multiplient, en conséquence de la pandémie de COVID-19. Le droit international reconnaît pleinement ce droit aux pays, bien que cette approche soit considérée comme une forme d’unilatéralisme. Ce document de recherche met en lumière les mesures de fiscalité directe prises par différents pays et présente les trois approches clés retenues pour taxer l’économie numérique : (1) l’imposition de taxes sur les services numériques ; (2) l’élaboration de règles permettant d’établir un lien fiscal pour les entreprises numériques qui opère par l’intermédiaire d’une présence numérique significative ; (3) des retenues à la source sur les transactions numériques.

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Documento de Investigación 111, Septiembre 2020

Medidas Tributarias Nacionales  sobre la Economia Digital

Por Veronica Grondona, Abdul Muheet Chowdhary, Daniel Uribe

El Marco Inclusivo de la Organización de Cooperación y Desarrollo Económicos (OCDE) está considerando un enfoque de dos pilares en relación con el cobro de impuestos sobre la economía digital. Las estimaciones preliminares acerca de la repercusión de sus recomendaciones indican un modesto incremento en la recaudación de impuestos sobre la renta de las sociedades, cuyos beneficios se prevén que se dirijan principalmente a los países desarrollados. Al mismo tiempo, están proliferando las medidas nacionales en materia de cobro de impuestos sobre la economía digital, un cambio estimulado por el comienzo de la pandemia de COVID-19. Los países también tienen plenos derechos a aplicarlas en virtud del derecho internacional, pese a las etiquetas de “unilateralismo”. En este documento de investigación se ponen de relieve las medidas en materia de impuestos directos que están adoptando diversos países y se exponen tres enfoques fundamentales con respecto al cobro de impuestos sobre la economía digital: 1) impuestos sobre los servicios digitales; 2) normas sobre un nexo en base a una presencia digital significativa; y 3) retenciones en origen sobre las transacciones digitales.

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SC Webinar Series on Development and COVID-19

Webinar on Tax Policy Options For Funding the Post-COVID Recovery in the Global South

The COVID-19 pandemic has negatively affected tax revenue collection globally, with the Global South especially hard-hit. The decline in economic activity has meant reduced corporate profits, declining consumption and increasing unemployment. This in turn implies declining revenue from corporate income taxes, goods and services taxes and personal income taxes. Resource-rich countries are especially being affected by the drop in global commodity prices and decline in international trade. This reduction in revenue collection is limiting developing countries’ ability to effectively respond to the COVID-19 crisis. It is therefore necessary to explore what are the concrete tax policy measures developing countries can take to raise revenue at this critical time. Measures pertaining to the digitalized economy are of particular importance given the increasing sales of tech companies and highly digitalized businesses during the lockdown.

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SouthViews No. 201, 23 June 2020

The Weakness of Economic Multilateralism

By José Antonio Ocampo

The weakness of multilateral cooperation was evident at the meetings of the Group of 20 and the Bretton Woods institutions in Washington. The limited international cooperation contrasts with the ambitious domestic policies adopted by some developed countries, and in particular the United States, to manage their crisis. The big losers will be the emerging countries, for whom cooperation has so far been minimal.

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SCTI Submission, May 2020

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.

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Research Paper 111, May 2020

National Measures on Taxing the Digital Economy

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.

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SouthViews No. 196, 22 May 2020

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).

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