United Nations New Global Tax Framework – Introduction
The United Nations (UN) is stepping up its role in international tax policy, aiming to create a new framework for global tax cooperation.
Historically, organisations like the Organisation for Economic Co-operation and Development (OECD) have led the way in setting international tax standards.
However, the UN’s involvement signals a shift towards giving developing countries a stronger voice in shaping tax rules, particularly as digitalisation and globalisation have created new challenges for traditional tax systems.
The UN’s new framework is expected to focus on improving tax cooperation between countries, addressing issues like tax evasion, and ensuring fair taxation of multinational corporations.
Why is a New Global Tax Framework Needed?
The global tax system is under increasing strain. Large multinational companies, especially in the tech sector, often pay very little tax in the countries where they generate profits.
This is largely due to tax avoidance strategies that involve shifting profits to low-tax jurisdictions.
While developed countries have been trying to address this issue through initiatives like the OECD’s Base Erosion and Profit Shifting (BEPS) project, developing countries argue that they have been left out of the conversation.
The UN believes that a new framework could help level the playing field for developing nations, allowing them to claim their fair share of tax revenues.
This is particularly important as many developing countries rely on corporate tax revenues to fund public services.
What Will the New Framework Focus On?
The UN’s proposed global tax framework is expected to focus on several key areas:
- Fairer Taxation of Multinational Corporations: The UN will likely propose new rules to ensure that multinational companies pay taxes where they conduct business, rather than shifting profits to low-tax countries.
- Improved Tax Cooperation: The UN will encourage countries to work together more closely to combat tax evasion and tax avoidance. This could involve sharing information between tax authorities to ensure that companies and individuals are paying the right amount of tax.
- Greater Inclusion of Developing Countries: The new framework will aim to give developing nations a stronger voice in tax policy discussions. This could lead to more tailored tax solutions that benefit economies with less-developed tax infrastructures.
Challenges Ahead
While the UN’s push for a new global tax framework is ambitious, it faces several challenges.
For one, many developed countries, particularly those in the OECD, are already working on their own tax reforms, including the global minimum tax under Pillar Two.
Some may be reluctant to give the UN a bigger role in tax matters, fearing that it could complicate or slow down existing efforts.
Moreover, multinational companies may push back against any rules that significantly increase their tax burden.
Countries with low tax rates, like Ireland or certain Caribbean nations, may also resist changes that could hurt their status as attractive locations for businesses.
United Nations New Global Tax Framework – Conclusion
The UN’s involvement in creating a new global tax framework is a sign that the world is recognising the need for more inclusive tax policies.
As the global economy becomes increasingly digital and interconnected, it’s important that all countries—especially developing ones—have a say in how taxes are collected.
If successful, the UN’s efforts could lead to a fairer and more transparent international tax system, where corporations contribute their fair share and countries can cooperate more effectively to combat tax evasion.
Final thoughts
If you have any queries about this article on the United Nations New Global Tax Framework, or other international tax matters, then please get in touch.