PRESS STATEMENT Reject the OECD/G20 BEPS Tax Deal of the Rich! UN Tax Convention Now!
28 September 2022
Reject the OECD/G20 BEPS Tax Deal of the Rich! UN Tax Convention Now!
The Asian Peoples’ Movement on Debt and Development (APMDD) welcomes the support of United Nations Secretary-General Antonio Guterres for calls for a UN Tax Convention, recently reiterated by Finance Ministers in Africa and by civil society organizations across the world. This is a step in the right direction towards fixing the fundamental flaws of the international tax architecture and upholds the rights of Global South countries not only to their tax and fiscal sovereignty, but also to raise revenues and rebuild economies in the face of multiple crises that have sharpened under the COVID-19 pandemic.
A Tax Convention under the auspices of the United Nations accords meaningful participation and representation of Global South countries in the creation of international tax rules, unlike the Base Erosion and Profit Shifting (BEPS) Inclusive Framework being pushed by the OECD and G20. We have long pointed out that the two pillars of this supposedly inclusive framework in reality excludes the concerns and interests of developing countries.
Pillar One of the Inclusive Framework on BEPS accords the right of taxation on excess and non-routine profits largely to Global North countries where large multinational corporations are headquartered, rather than to the countries where the bulk of their labor and assets are located. Pillar Two sets a miniscule global minimum corporate tax rate of 15%, which strengthens the position of wealthy corporations and individuals to lobby their governments to accelerate the race-to-the-bottom in corporate taxation downward from the global average of 25%.
The two pillars of the BEPS framework have been developed and are being pushed by OECD members, many of whom also belong to the G7 and the G20, exclusive clubs of the world’s top economies. The creation of the BEPS framework is fundamentally undemocratic and seeks to impose global tax and fiscal rules only by virtue of the outsized economic influence of its primary advocates. The interests of developing countries and economies are, at best, assumed to be served by the framework, or at worst, deliberately excluded to the benefit of essentially maintaining the status quo within the international tax and fiscal architecture.
The OECD/G20 BEPS framework amounts to a Tax Deal of the Rich, and it is for this reason that we emphatically reject it and call on governments and civil society around the world to likewise reject it. We, along with a growing number of Global South governments, peoples’ movements, and other civil society actors and organizations, have long argued for a UN Tax Convention as a democratic, transparent, and inclusive alternative process for international tax reform, and it is encouraging that the UN Secretary-General has expressed support for our alternative.
Our call to move towards the adoption of UN Tax Convention is not just a matter of sovereign rights, but a practical matter meant to deal with various forms of inequality on the international level. A UN Tax Convention can pave the way for Global South countries to strengthen their domestic resource mobilization, allowing them to increase funding for critical public services such as healthcare and education, and to support the creation of dignified livelihoods that contribute to national economic growth, the strengthening of living and working standards for ordinary people, and just and sustained adaptation to climate change.
By engendering conditions to strengthen domestic resource mobilization capacities through a UN Tax Convention, Global South governments can reverse longstanding austerity policies that have deprived billions of people of their economic, social, and political rights, and which have contributed to the various debt crises around the world, most recently in Sri Lanka and Pakistan.
A UN Tax Convention also provides an opportunity for international tax reform that recognizes the complicity of wealthy individuals and large corporations (both national and multinational) in global illicit financial flows. Such entities have long taken advantage of tax havens in the Global North that rob developing countries of their resources and the fruits of their citizens’ labor. IFFs can be comprehensively tackled in negotiations through the strong representation and participation of Global South voices in a UN-sanctioned international convention.
The establishment of a democratic, transparent, and inclusive UN Tax Body through a UN Tax Convention is a matter of great urgency. We applaud the recognition offered by UN Secretary-General Antonio Guterres to convention proposals backed by Global South governments and other stakeholders, and we further appreciate the recognition offered by the Secretary-General to the necessity and ability of Global South countries, particularly those in Africa, to lead the process. The challenge now is to actually convoke the convention.
While the calls in support of the proposal are only getting stronger, it must become even stronger and sharper to ensure that the convention will be held in the soonest time possible, and that any Tax Convention that will be held will accord Global South countries and stakeholders nothing less than the strong voice it rightfully deserves.
Furthermore, any Tax Convention to be held cannot afford to reiterate or incorporate the two pillars of the OECD/G20 BEPS Framework, but should reinforce the rights of Global South citizens to reap the benefits of their labor and resolve inequalities within their countries. We call on governments to commit to pushing for the immediate convocation of a UN Tax Convention, with the participation of civil society and all stakeholders across the Global South.
The demand to address inequalities in global tax rules and rulemaking is one of the key tax justice demands raised by movements, peoples’ organizations, and CSOs in the recently concluded Asian Days of Action for Tax Justice for People’s Recovery last 23 to 24 September, during which activities and actions were held in Bangladesh, India, Nepal, Pakistan, and the Philippines.
Now more than ever, we need international tax reforms that promote welfare and strengthens the human rights of billions from the Global South who have suffered the brunt of the multiple crises worsened by the COVID-19 pandemic.
Reject the OECD/G20’s Tax Deal of the Rich!
UN Tax Convention now!
The following photo and video may be used with credit to APMDD:
-Link to photo action in New York during the Asia Days of Action for Tax Justice: : https://www.facebook.com/apmdd/posts/pfbid035LCnFsjCDKMYkbFskrBzrQRTL8TeAvPBijF2wDLdm4ucSRc7fvD2GNjAwboW1eeHl
-Link to a video of APMDD coordinator, Lidy Nacpil, supporting a UN Tax Convention