Nigeria, Ghana, South Africa, and other countries at the United Nations (UN) on Wednesday voted for greater roles in international tax matters in a move that may change the Organization for Economic Cooperation and Development’s (OECD’s), domineering position on the discussions for decades.
Over the past years, developing nations have been pushing for a greater UN role following lingering frustrations they had experienced at global tax negotiations coordinated by the Paris-based OECD.
For instance, in 2021, more than 130 countries agreed on a landmark deal aimed at curbing corporate tax avoidance by multinationals but developing countries complained they would generate relatively little revenue from the reforms compared with richer nations.
A Financial Times report indicated that a vote held at the UN on Wednesday adopted a resolution that would commence the process of creating a greater role for the UN by establishing a convention on international tax cooperation.
The measure, which was championed by African countries, was supported by 125 nations, most of which were low or middle-income countries including Nigeria, Ghana, China, India, Brazil, and South Africa.
In contrast, most of the 48 nations that voted against the measure were developed countries, including EU member-states, the US, the UK, Japan, and Korea.
During the voting, there were nine abstentions, including from OECD member states Norway, Iceland, Mexico, and Turkey. Chile and Colombia, both OECD members, voted in support of the resolution.
Commenting on the outcome of the initiative, the African Union (AU) was quoted as saying that “the decades-long fight of Global South countries to establish a fully inclusive process at the United Nations to participate in agenda setting and norm-setting on international tax is now a reality.”
In addition, the union added that it looked forward to agreeing to “an effective UN Framework Convention on International Tax Cooperation to urgently mobilize resources for our development”.
However, an EU official said that while EU countries supported “multilateralism and effective, inclusive international co-operation in tax matters”, the bloc did not believe the proposed convention would provide “the flexibility needed to reach consensus”.
A convention “would result in the duplication of ongoing or completed international standards”, the official said.
According to the EU official, the concern is hinged on the fact that a new UN tax convention “could imply reopening negotiations, potentially on issues for which promising outcomes already exist, and for which a considerable network of agreements ensuring tax transparency and tax fairness has been built over the years, to the direct benefit of all participating countries”.
The head of the OECD, Mathias Cormann, said in a statement posted on X that the OECD was “proud of its record of achieving consensus-based solutions to address tax evasion and avoidance, stabilize the international tax system and support developing countries”.
He maintained the group remained committed to implementing the global corporate tax deal.
Cormann clarified: “We are committed to continuing to collaborate with global partners — including at the UN — to strengthen inclusivity and continue to deliver a better and fairer international tax system.”
This is even as, Norway’s foreign minister, Espen Barth Eide, told the Financial Times that the country had chosen to abstain and not vote against the resolution because it wanted to “send a signal” about building bridges with developing countries.
He said: “The world is unfortunately becoming more polarised and we are seeing an unhelpful division forming between the West and the rest. We want to connect through a more global agenda.”
“We don’t want to contribute to the divide,” he added, saying he “saluted the Africa Group for raising the issue as a global issue”, the minister added.
It would be recalled that last year, 54 African countries successfully brought a resolution at the UN General Assembly. This recommended that the UN secretary-general produce a report assessing ways to strengthen the “inclusiveness and effectiveness” of international tax cooperation.
The report laid out three options for giving the UN more of a role on the global tax stage — two legally binding, including the framework convention, and one voluntary option.
