MUMBAI: India was among the 110 countries that voted, on Friday, in favour of adopting the ‘Terms of Reference ‘ for a United Nations (UN) Framework on international tax co-operation.
As was reported by TOI earlier, under the UN Framework developing countries – African and Asian countries (including India) are likely to have a greater say in the formulation of global tax rules.In Nov 2022, the UN General Assembly had unanimously adopted a resolution that called for developing an international tax co-operation framework or instrument that is developed and agreed upon through an UN intergovernmental process.
The Terms of Reference have now been decided and approved by a UN ad hoc intergovernmental committee. These terms will now be presented to the UN General Assembly in late November or early December, for final approval.
A key term of reference which India and several countries wanted on board was addressing tax-related illicit financial flows, tax avoidance, tax evasion and harmful tax practices. Other points of reference are a fair allocation of taxing rights, including equitable taxation of multinational enterprises – which tax experts and government officials view would be favourable to India; addressing tax evasion and avoidance by high-net worth individuals and ensuring their effective taxation in relevant countries; effective mutual administrative assistance in tax matters, including with respect to transparency and exchange of information for tax purposes; and effective prevention and resolution of tax disputes.
USA, UK, Canada, Israel, Australia, New Zealand, Japan, and Republic of Korea were the eight countries that voted against adopting the Terms of Reference. 44 countries which include Switzerland and primarily various EU countries abstained from voting. The 110 votes in favour are seen as a thumping majority and a clear shift in international tax policy making from the OECD (whose 38 members are dominated by rich nations) to a more broad based and equitable platform of the UN.
The Tax Justice Network, a think-tank, has welcomed this development. It had earlier pointed out that OECD-member countries with their territorial dependencies, are estimated to be responsible for nearly 78% of the $ 480 billion in tax losses suffered by countries across the globe. It had added that the world would lose nearly $ 5 trillion to tax havens over the next decade unless the UN tax convention was adopted.
As was reported by TOI earlier, under the UN Framework developing countries – African and Asian countries (including India) are likely to have a greater say in the formulation of global tax rules.In Nov 2022, the UN General Assembly had unanimously adopted a resolution that called for developing an international tax co-operation framework or instrument that is developed and agreed upon through an UN intergovernmental process.
The Terms of Reference have now been decided and approved by a UN ad hoc intergovernmental committee. These terms will now be presented to the UN General Assembly in late November or early December, for final approval.
A key term of reference which India and several countries wanted on board was addressing tax-related illicit financial flows, tax avoidance, tax evasion and harmful tax practices. Other points of reference are a fair allocation of taxing rights, including equitable taxation of multinational enterprises – which tax experts and government officials view would be favourable to India; addressing tax evasion and avoidance by high-net worth individuals and ensuring their effective taxation in relevant countries; effective mutual administrative assistance in tax matters, including with respect to transparency and exchange of information for tax purposes; and effective prevention and resolution of tax disputes.
USA, UK, Canada, Israel, Australia, New Zealand, Japan, and Republic of Korea were the eight countries that voted against adopting the Terms of Reference. 44 countries which include Switzerland and primarily various EU countries abstained from voting. The 110 votes in favour are seen as a thumping majority and a clear shift in international tax policy making from the OECD (whose 38 members are dominated by rich nations) to a more broad based and equitable platform of the UN.
The Tax Justice Network, a think-tank, has welcomed this development. It had earlier pointed out that OECD-member countries with their territorial dependencies, are estimated to be responsible for nearly 78% of the $ 480 billion in tax losses suffered by countries across the globe. It had added that the world would lose nearly $ 5 trillion to tax havens over the next decade unless the UN tax convention was adopted.
