African countries are winning a UN dispute over paving the way for global tax reforms

In a diplomatic bonanza for African nations, the United Nations has agreed to lay the groundwork for creating a new system of international tax cooperation.

The United Nations approved a resolution today to begin talks on creating a new global tax regime that can control corporate tax evasion and reduce money laundering around the world.

The resolution has been submitted for consideration by Nigeria on behalf of the 54-nation African group, who hope to have a greater say in global tax policy – something that has traditionally been the domain of a small group of rich countries across the organization. Economic cooperation and development.

“This is an historic victory for tax justice and the broader economic justice movement, and a huge step forward in combating illicit financial flows and tax abuse,” said Derry Alemayehu, Executive Coordinator of the Global Tax Justice Alliance, in a statement.

“A power shift from the Organization for Economic Co-operation and Development is critical to ending exploitation and predation in developing countries.”

Investigations by the International Consortium of Investigative Journalists such as the Pandora Papers and the Paradise Papers have shown the intricate and intricate methods companies use to find ways to shift their profits to low-tax jurisdictions around the world. The ICIJ’s Paradise Papers project exposed the efforts of several multinational corporations, including Nike and Apple, to shift profits offshore on a massive scale.

The UN resolution could theoretically pave the way for reducing tax evasion by creating an international tax body that could set tax standards across countries and take the lead in enacting the long-awaited global minimum tax.

Debates about a global minimum tax have raged for years under the auspices of the Organization for Economic Co-operation and Development, a group of 38 of the world’s richest countries that has positioned itself as a leading setter of international tax standards.

The OECD minimum tax plan sought to stop tax evasion by discouraging companies from moving wealth to low-tax countries around the world. But disagreements among members and bureaucratic hurdles have led to significant delays in progress, which hinges on some countries, including the United States, seeing major tax changes approved by national legislatures.

The approval of the UN tax resolution is a sign of growing frustration with the stalled OECD efforts on taxation, and could shift power from the OECD to the UN, where developing countries wield more influence.

At the very least, the UN’s efforts on taxation appear to have prompted the OECD to become more inclusive in its own tax efforts, Bruce Zagaris, an attorney who focuses on global tax policy at Berliner Corcoran & Rowe, told ICIJ.

Zagaris says a shift in tax policy authority toward the UN is possible but could take years. “The Organization for Economic Co-operation and Development will continue to dominate and make most of the decisions related to taxation in the near term,” Zagaris said.

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The effectiveness of the new global tax system overseen by the United Nations will depend, among other things, on buying from rich countries that have previously resisted various measures by the international community.

Noting the differing views on tax policy among members of the United Nations, the United States today introduced an amendment that would significantly reduce the scope of a global tax decision by deleting language describing the hoped-for framework in general terms. The American amendment failed by a wide margin.

Alex Cobham, executive director of advocacy group the Tax Justice Network, said the amendment “sought to make the intergovernmental discussions agreed upon in the resolution so vague as to be almost meaningless,” but noted that the US later joined in the vote to approve the resolution.

“We must hope that the country will play a more constructive role in the upcoming discussions,” Cobham said.

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