On Nov. 23, 2022, the General Assembly adopted a resolution on the “Promotion of Inclusive and Effective International Tax Cooperation at the United Nations.”
The resolution is expected to lay the foundation for the creation of a new system of international tax cooperation that should be universal in scope and approach.
With this, Member States agreed for the first time to have a convention on Tax cooperation annually to discuss global tax issues and review progress.
The motion, submitted for consideration by Nigeria on behalf of 54- member African Group of States, was adopted by consensus, after some discussion on a failed amendment.
In a revised draft Resolution, under “Agenda item 16 on Macroeconomic Policy” submitted by Nigeria on behalf of the Africa Member States, resolved to begin intergovernmental discussions in New York at United Nations Headquarters.
The document stated that the resolution will begin intergovernmental discissions at the UN headquarters on ways to strengthen the inclusiveness and effectiveness of international tax cooperation.
Among others, it recognises that combating illicit financial flows is essential development challenge and that the developing countries are particularly susceptible to the negative impact of illicit flows.
Speaking on the resolution, the Spokesperson for the President of the General Assembly, Ms Paulina Greer, said the discussions by the Member States on strengthen tax cooperation would be done through the evaluation of additional options.
“Those include the possibility of developing an international tax cooperation framework or instrument that is developed and agreed upon through a United Nations intergovernmental process, taking into full consideration existing international and multilateral arrangements,’’ she said.
The historic adoption of the resolution started with the consultation by Nigeria on behalf of the African Group with the 193 Member States on Oct 10.
Mr Hashimu Abubakar, the Coordinator of Africa Group on Draft Resolution, while introducing the Tax Convention Resolution to the delegates said it was pertinent to note that African countries were not under the illusion that having a UN Tax Convention would solve all Tax challenges.
The coordinator said, at the first Informal Consultations on the Draft Resolution, that the Africa Group was not thinking that it would be a short-term fix for the fiscal challenges of developing countries in the midst of compounding international crises.
He argued that the resolution could be one component of wider efforts to strengthen revenue for the medium and long term while bearing in mind that a UN tax convention can do two things.
“It can bring universalism and going further building on the progress already made,’’ Abubakar, the Senior Counsellor (Second Committee), Permanent Mission of Nigeria to the UN, said.
While presenting the resolution for adoption at the Second Committee of the United Nations session, Abubakar, said promotion of inclusive International Tax Cooperation remained a critical subject in the attainment of the 2030 Sustainable Development Goals (SDGs).
Abubakar, while delivering a statement on the Introduction of the Resolution explained that the draft resolution would give opportunity for governments, especially in developing countries to access the much-needed resources to respond to the crisis they face towards the achievement of sustainable development.
According to the Nigerian diplomat, the African Group has invested heavily on tax policy and tax administration, significantly increasing its capacity in recent years, including with the welcome support from donors and international institutions.
“But given globalisation, and our integration with the rest of the world through business and trade, progress on our continent alone is not enough.
“We must have progress internationally to ensure all taxpayers are paying their fair share.’’
Abubakar said that African countries had also strengthened their participation in international tax cooperation efforts, with remarkable strides in closing loopholes and countering base erosion and profit shifting.
He, therefore, said a UN tax instrument would be predisposed to setting ambitious global standards; and creating the mechanisms for transparency and accountability to deliver on the illicit financial flows target; and to establish a globally inclusive intergovernmental tax body under the auspices of the UN.
“We note that the Organisation for the Economic Co-operation and Development (OECD) has played a role in these areas; it is clear after ten years of attempt to reform international tax rules that there is no substitute for the globally inclusive and transparent forum provided by the United Nations.
“Therefore, the African Group urges countries to remain committed to the development of an inclusive tax instrument at the UN and encourage the OECD to play a supportive role in this regard.
Ms Regina Aondona, Minister, head, Second Committee, Permanent Mission of Nigeria to the UN recalled that Nigeria’s Presidency of the 74th General Assembly had underscored the gaps, loopholes and vulnerabilities in international systems that allowed the pilfering of resources, including tax and other financial crimes.
Aondona said the report of the High Level Panel on International Financial Accountability Transparency and Integrity for achieving the 2030 agenda (FATI PANEL) emphasized a fully inclusive and effective international tax cooperation at the United Nations.
“African ministers publicly stated their desire for a UN Tax Convention six months ago. We therefore hope that Member States would collectively engage on this resolution moving forward.
“We look forward to taking steps as urgently as possible as we have only eight years to realise our ambitious 2030 Agenda.
“We will not achieve it unless we step up the pace of our efforts to reshape multilateralism,’’ she said.
Above all, historic adoption of the resolution aimed to ensure that all countries benefit from strong revenue mobilisation and fairer tax system which will bring universalism in tax matters.
Also, it will help to sustain progress in issues already agreed upon to achieve the 2030 agenda.
In addition, this resolution will usher in inclusiveness and effectiveness in the discussion of Tax cooperation through the commencement of the Intergovernmental discussions at the UN by 2023.
