South Africa has lent its weight to the adoption by consensus of a United Nations resolution promoting inclusive and effective international tax cooperation.
The draft resolution – adopted by the General Assembly’s Second Committee responsible for finance and economic matters – also decided to begin intergovernmental discussions on ways to strengthen the inclusiveness and effectiveness of international tax cooperation, including the possibility of developing a new framework or instrument under the auspices of the UN.
The resolution also notes the corrosive effect that aggressive tax avoidance and evasion has on the rule of law and the achievement of the Sustainable Development Agenda, affecting the poorest and most vulnerable.
SA endorses UN resolution promoting inclusive international tax cooperation:
The resolution, driven by the 54-member African Group, sets the stage for critical intergovernmental talks expected to begin in earnest next year and could give developing countries a much larger say in shaping international tax rules.
Nigerian Representative Hashimu Abubakar was the lead facilitator of the negotiations. He says, “The draft resolution is a historic opportunity for governments, especially developing countries, to access the much-needed resources to respond to the crisis the world pays to the crisis of achieving sustainable development. Domestic public resource mobilization is critical to this effort. We use these resources to deliver critical public services and advance our progress toward sustainable development. African political leadership is resolute in its desire to enhance domestic resource mobilsation.”
The resolution decides to begin intergovernmental discussions in New York on ways to strengthen effective international tax cooperation; requests the Secretary General to prepare a report analysing all relevant international legal instruments that address tax cooperation while recognising that combating illicit financial flows is an essential development challenge.
“Such an effort at the UN will finally realise principles stated in the Addis Ababa agenda adopted in 2015 that tax cooperation should be universal. The UN Secretary General’s report also highlighted the lack of inclusivity of the substantive instrument and forum in relation to international tax and transparency. Therefore, a UN tax instrument would be predisposed to certain ambitious global standards and creating the mechanism for transparency and accountability to deliver an illicit financial flow target and to establish a globally inclusive intergovernmental tax body under the auspices of the UN.”
South Africa, through Ambassador Mathu Joyini indicates that support for the resolution was support for greater global equity.
“By supporting the adoption of the resolution before us, member states are indicating their support for an equitable and just world and expressing support for the right to development for all states. A UN Tax Convention will set global standards and create mechanisms for transparency and accountability to address illicit financial flows and corporate tax abuse, amongst others. The UN is the most appropriate venue for this discussion due to its universal membership and all-inclusive character.”
Developed countries in the main raised concern that this new process could be duplicative of work already done by the Organisation for Economic Cooperation and Development or OECD.
Representative Jenni Kennedy speaking for the United States says, “We disagree with the notion implied by this resolution that there is not presently a highly inclusive forum working to strengthen international cooperation on tax. Rather OP2 (operational paragraph 2) to proposes a process that will tear down much of the progress that has been made in international tax cooperation since the 2008/2009 financial crisis and will undermine the inclusive framework at the OECD through which so much progress is being made.”
The General Assembly’s decision was also supported by former President Thabo Mbeki who leads the African Union’s High-level panel on Illicit Financial Flows from Africa.
The panel’s latest report emphasised the fact that the African continent was losing more than 50 billion dollars annually through illicit financial outflows and urged the world to effectively confront what Mbeki refers to as a global challenge.
In a statement last week, he said he fully supported the creation of a globally inclusive intergovernmental process and urged international organisations and member states to resist attempts to block this important step forward.
