United Nations convenes historic meeting on global tax reform

By agency reporter
April 28, 2019

At the crossroads of the most fundamental global corporate tax reform since the 1920s, the United Nations will hold a special meeting on Monday 29 April 2019 on outlining fair tax rules fit for the modern digital economy.

The meeting, to be attended by over 50 country delegates and over a hundred tax experts, academics and activists, comes on the heels of the OECD’s recent proposals for root and branch reform of the international tax system to meet the challenges of an increasingly digital world – effectively marking the OECD’s last chance to retain its role as a global rule-setter on international tax.

According to research by the Tax Justice Network, $500 billion is lost in corporate tax each year globally, due to systemic tax abuse by multinational corporations. This is enabled by current international tax rules, particularly by the ‘arm’s length’ approach to taxing multinationals which has been the bedrock of international taxation for nearly a century. Compared to the economic outputs of the world’s economies, the $500 billion in tax dodged by multinationals each year would rank as the world’s 26th largest economy – larger than the economic output of the United Arab Emirates, Ireland or Singapore. The IMF’s own estimates puts these tax losses at $600 billion a year. 

The OECD now faces the challenge of moving beyond the ‘arm’s length’ approach. However, the Tax Justice Network has raised the alarm on the various ways in which the OECD’s richer member countries may rig new tax rules against lower income nations. The organisation is calling for the UN to push for ambitious reform that makes sure tax contributions are paid in the countries where real economic activity takes place.

Alex Cobham, chief executive of the Tax Justice Network, said: “There is now international consensus that multinational companies are avoiding hundreds of billions of dollars a year in tax, as a direct result of the OECD’s failed tax rules. With OECD member countries finally accepting that the arm’s length principle is not fit for purpose, and that the race to the bottom on tax rates must be stopped, this is the greatest opportunity for reform in decades.

“All eyes are now on the UN to seize this moment for radical change and to lay down a marker for transparent tax rules fit for the 21st century – and fair for countries at all income levels.”

Liz Nelson, a director of the Tax Justice Network, said: “This a watershed moment for securing the human rights of billions of people across the world. To build the sustainable world that the UN envisioned for 2030, where human rights are realised and inequalities, including gender inequalities, are minimised, we need to build a fair tax system that protects low income countries’ taxpayers and fosters economic sustainability.”

* Read the Tax Justice Network Briefing on international tax reform here

* Tax Justice Network https://www.taxjustice.net/

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