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The UN Vote Poses A Challenge To The OECD’s Leadership In Global Taxation

Muammar

IBX-Jakarta. The OECD’s leadership in global tax coordination faces a challenge following substantial support from UN members for an African-led proposal to transfer international tax discussions to the United Nations. Developing nations, long feeling marginalized in global tax talks at the OECD, expressed frustration, leading 125 predominantly developing countries to endorse a draft U.N. resolution initiated by Nigeria, seeking a “framework convention on international tax cooperation.”
Contrarily, 48 mainly developed nations, including Britain, Germany, Japan, and the United States, opposed the resolution, while nine countries, among them OECD members like Iceland, Mexico, Norway, and Turkey, abstained from voting. The African Union hailed the vote as a “beacon of hope,” foreseeing improved access to crucial financial resources.
Mathias Cormann, head of the OECD, emphasized the group’s pride in achieving consensus-based solutions among its 38 mostly developed country members and others on various international tax issues. For years, the Paris-based forum has coordinated discussions on cross-border taxation rules, covering areas from intra-group transfer pricing guidelines to sharing bank account information by tax authorities.
In 2021, the OECD orchestrated a landmark deal involving nearly 140 nations, aiming to modernize cross-border taxation for the digital commerce era, addressing concerns where major multinationals like Apple and Meta could register profits in low-tax jurisdictions. This two-tier agreement seeks to establish a 15% global minimum corporate tax rate and proposes redistributing taxing rights of highly profitable multinationals to countries where their clients are located.
While the minimum corporate tax rate is set to take effect next year, the treaty regarding taxing rights faces significant hurdles, notably in the United States, requiring a two-thirds majority in the divided Senate for ratification.
Grant Wardell-Johnson, KPMG’s global tax policy leader, highlighted that despite G20 support and aspirations for global consensus, the UN vote is likely to encourage greater collaboration between the UN and the OECD in addressing current needs for low-income economies, focusing on issues like illicit financial flows and formalizing economies.
Source: https://www.msn.com/en-us/news/world/un-vote-challenges-oecd-global-tax-leadership/ar-AA1kqpeY
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