Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Diplomats from the European Union and UK have been accused of trying to “kill” proposals that seek to give more voice to developing countries in international tax negotiations.
Countries are in talks at the United Nations over plans to give the UN more of a role in global tax discussions — a measure being pushed for by low and middle income countries.
The OECD has convened countries over international tax matters for decades, but it has attracted criticism from officials in some developing economies who believe it does not reflect their interests.
Last year, a group of 54 African countries, frustrated at the OECD process, successfully brought a resolution at the UN general assembly. This recommended that the UN secretary-general produce a report assessing ways to strengthen the “inclusiveness and effectiveness” of international tax co-operation, including options that gave the UN more of a role on the global tax stage.
The measure was adopted unanimously in November 2022 and the UN secretary-general published a report in the summer listing three potential options that would give the UN more of a role in international tax co-operation: two legally binding and one voluntary option.
But a negotiator from a developing country told the Financial Times that representatives of the EU and the UK had been vocal in their opposition to backing any of them.
“The resolution called for a report. They’re rubbishing that report and they’re out to rubbish the entire process and just kill it. They don’t want to bring taxation matters here [to the UN],” the person said.
“We’ve tried to negotiate in good faith. The EU and the UK are not willing to do that and are trying to delay the process,” another negotiator from a developing country said. “It’s a grand scheme to keep the status quo and keep developing countries at the periphery [of global tax discussions].”
Developing countries, including Nigeria, Ghana, India and Brazil, have been pushing for a legally binding role for UN tax negotiations.
European countries, however, are concerned that a greater role for the UN would undermine existing procedures at the OECD and fragment the international tax system. In 2021, the OECD unveiled a groundbreaking tax deal to tackle corporate tax avoidance. However, its implementation has been beset by delays and doubts over ratification.
In September, EU finance ministers said EU member states “could consider . . . working at the UN on a non-binding multilateral agenda for co-ordinated actions”. This voluntary option would “avoid duplication with existing international tax agreements and brings concrete benefits to the participating countries, while facilitating parallel and sustained progress at the OECD”, they wrote at the time.
However, negotiation documents seen by the FT, showed that those representing the EU, along with other nations, had sought to row back from supporting even the voluntary option presented by the secretary-general’s report.
Instead they have backed the creation of a new working group which would propose alternative options for a UN role, and bring these back for discussion at the 80th UN general assembly which starts in September 2025.
“It is counterproductive and aimed at kicking the can down the road,” one of the developing country negotiators said of the suggestion.
“They are trying to talk this to death and obstruct the process,” another person with knowledge of negotiations said.
A UK government spokesperson said the UK had “long worked with partners to find international co-operation on tax” and had a “strong record” of working with developing countries. In September it announced a new £17mn package to help developing countries collect taxes owed to them.
“We are negotiating in good faith. Our approach reflects that we believe it is possible to have a UN process that enhances the international tax system without duplicating the work of the OECD,” the spokesperson added.
A spokesperson for the European Commission declined to comment.
Additional reporting by Henry Foy in Brussels and Kana Inagaki in Tokyo
Source: Economy - ft.com
