As reported by TOI in its edition of November 24, India was among the 125 countries that voted in favour of a resolution for a UN tax convention, at the UN’s Economic and Financial Committee (Second Committee).This resolution, which was passed in the ratio of 125:48 calls for creation of an ad-hoc inter-government committee and is expected to result in greater inclusiveness in tax policy decision making.
“The resolution has gone through the second committee of the UN General Assembly and that’s the one that deals with budget and financial issues. It will still, later in this month, go before the plenary of the General Assembly. We don’t have any reason to believe that any vote would not be similar. And it could even be a consensus – that may not look so likely at the moment, but we believe that it’s likely to effectively confirm the vote in the budgetary committee,” said Lennard.
He added, “It was actually quite a stark vote, 125 voting in favour. The resolution was actually a modified resolution, because the African group (which led the initiative) took on board some of the comments that were made from, I’ll say the developed world – Europe and other OECD countries and they tried to factor their needs, but what they did not compromise on was they wanted a framework convention.”
Lennard threw light on the initial developments that culminated in this resolution. On December 30, 2022, the UN General Assembly adopted a resolution on ‘Promotion of inclusive and effective tax cooperation” – the first step that led to further discussions on how to strengthen the inclusiveness and effectiveness of international tax cooperation. The report issued by the Secretary General in 2023 was mandated by this resolution, which had been adopted by consensus.
“It wasn’t a majority decision. It was a consensus decision. What that means is not everyone’s entirely happy with the result,” Though some countries were not happy, they didn’t feel so strongly that they had to call for a vote, explained Lennard.
The 2023-report outlined three possible ways of strengthening inclusiveness and effectiveness of international tax cooperation, viz: by a multilateral convention on tax; a framework convention on international tax cooperation and or lastly by a framework for international tax cooperation. Only the first two options would result in legally binding commitments for governments.
“The only way in which you could proceed, reach that full closeness, is through the UN because of its 193-member status and participation of people from that,” stated Lennard.
Going forward the action point is to reach an agreement on the terms of reference for a framework convention and protocols. Here, Lennard emphasized on the importance of ‘sustainable development goals approach’ to taxation and a nose-to-tail inclusiveness. “That’s where you really have to listen to the other guy…. I think this is an area where people of goodwill who genuinely want a tax system that can be acceptable in the developed and in the developing world will be in the premium. So I think we should all listen, listen to what people are saying, trying to understand what’s what’s causing their concerns,” he concluded.