African nations have been successful in their efforts to get a forum at the UN to discuss international tax laws equally. These nations’ inability to raise enough money for development would be made possible by the tax regulations, which would allow them to address problems like tax evasion and dodging, illegal financial practices, and detrimental tax competition.
The draft terms of reference for a United Nations Framework Convention on International Tax Cooperation were approved by the Ad Hoc Committee on August 16 by United Nations (UN) Member States.
By recovering the billions of dollars lost to tax evasion, corruption, and money laundering, governments will be able to finance vital initiatives addressing extreme poverty, COVID-19, and the climate catastrophe.
“What this means is that for many years, Africans have been saying that the current tax system is unfair in the sense that it is biased towards rich countries or developed countries and because of that it doesn’t allow developing countries to generate as much revenue as they should from their own resources,” Chenai Mukumba, Executive Director of the Tax Justice Network Africa (TJNA) said, as reported by Zawya.
The lack of efficient institutions for international tax cooperation is a gap in the global financial architecture. The purpose of the new UN Tax Convention is to close this gap.
This disparity frequently enables multinational corporations to evade taxes in underdeveloped countries while enjoying protection in affluent areas.
“And it also creates an environment where African countries are losing a lot of the revenue that they generate to illicit financial flows. So what was adopted was the terms of reference of what is supposed to become a tax convention that should ideally create an agreement that is going to address these imbalances in the global tax systems,” Chenai, who participated in the historic vote in New York said.
The goal of the convention is to address a broad range of tax policy issues, many of which have the potential to generate significant amounts of revenue for funding climate protection and sustainable development.