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African nations win latest round on UN tax reform body

Defying opposition from the Paris-based OECD club of rich countries, developing economies are trying to win rights for a greater share of global tax revenues

The United Nations has agreed to lay the groundwork for the creation of a new system of international tax cooperation by approving a resolution on 23 November to begin talks on establishing a system that could rein in corporate tax dodging and curb money laundering around the world.

The question of how international standards covering tax avoidance and financial information exchange are decided has long been a sore point for African states (AC Dispatches, 19/10/21, Tax reforms – by the rich for the rich).

The Group of 77 developing countries have been calling for the UN committee of tax experts to become a formal, rule-making body for most of the last decade, taking over the role from the Paris-based Organisation for Economic Cooperation and Development (OECD), which has no developing countries among its 35 members. The United States, Japan, and most EU member states, have consistently opposed the proposal (AC Vol 59 No 5, Tax treaties 'made by the rich').

The G77's demands have gained momentum in recent years, partly on the back of the African Union High Level Panel on illicit financial flows chaired by former South African President Thabo Mbeki. That called for a UN-backed tax body to combat illicit financial flows and corporate tax abuse in support of the UN Secretariat's 17 Sustainable Development Goals.

The UN's Economic Commission for Africa (ECA) declaration of African Finance Ministers had wanted negotiations on a UN tax convention to start in May.

At the General Assembly in September, UN Secretary-General António Guterres pledged his support for such negotiations, highlighting the lack of inclusivity in bodies that manage international tax and transparency regulations.

Developing countries are still struggling to persuade rich states to vote for change. The UN General Assembly (UNGA) resolution on the 'promotion of inclusive and effective international tax cooperation at the United Nations', spearheaded by Nigeria on behalf of the 54-member African Group of states is just a start, and does not guarantee the launching of a new organisation.

In October, OECD members did not support resolutions tabled by the G77 and China calling for an intergovernmental tax body, or the African Group's calls for negotiations on a UN Convention on International Tax Cooperation. Supporting the African Group's position, the Tax Justice Network Africa (TJNA) argues that adopting the resolution will be a step towards democratising the global tax system. 'ten years of OECD-led reform process has not moved us an inch towards solutions', said Global Alliance on Tax Justice Executive coordinator, Dereje Alemayehu.

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