Written by Isha Khandelwal*
The 27th session of the United Nations (‘UN’) Tax Committee (‘the committee’), a subsidiary group of the United Nations Economic and Social Council, was held at the UN Headquarters in Geneva, Switzerland from October 17th to 20th, 2023. This committee consists of 25 experts in tax policy and administration. The 27th Session was a closed session for committee members, delegates from member states, civil society, the private sector, NGOs, and academia.
The Committee of Experts on International Cooperation in Tax Matters was originally established in the 1980s as the Ad Hoc Group of Experts on Tax Treaties between Developed and Developing Countries. Its initial mandate (1980/13) was to examine and facilitate tax treaties between countries. Over time, the group’s mandate has expanded to encompass broader taxation matters that require international cooperation between developed and developing states, providing a platform for experts to voice concerns and protect their revenue interests.
Within the committee, several subcommittees exist, including Transfer Pricing, Increasing Tax Transparency, Health Taxes, and Taxation of the Digitalized and Globalized Economy, among others. Each subcommittee is led by the committees’ members and with industry experts who collaborate on research, model legislation development, and proposal drafting. The committee places a strong emphasis on addressing the needs of developing economies.
The Financing for Sustainable Development (‘FSDO’) representative opened the 27th session by urging attendees to use the 17 Sustainable Development Goals (‘SDGs’), outlined in the 2030 Agenda for Sustainable Development, to guide discussions. With the decline in government revenues and the global economy slowing to a 3% growth rate, the FSDO calls for international cooperation now more than ever. As stakeholders strive to recover from the economic repercussions of COVID-19, the guidance and recommendations of the UN Tax Committee are especially necessary for developing countries. International financial structures established decades ago failed to account for factors such as equity, global warming, or the impact of COVID-19. Therefore, the committee’s work must be supplemented by progressive and equitable tax policies guided by the SDGs. New policies will not only build trust between taxpayers and governments but will also allow governments to generate revenue to mobilize their own domestic resources.
During the presentations from subcommittee leads, members from developing countries such as Nigeria, Jamaica, Brazil, and Mexico, consistently highlighted the need for comparable examples. For instance, the subcommittee on transfer pricing presented a paper that described various ways to prevent aggressive avoidance at an administrative level. In the paper discussing transfer pricing in the agricultural industry, the committee member from Mexico requested that agricultural products native to many countries, particularly below the equator line, be used when providing examples. The committee member from Mexico further explained that providing methodology relevant to the production and sale of the cacao bean, for instance, would serve as a practical example. This would be especially useful to ensure fair transactions between a developing country and a developed one. However, the paper authored by Western experts lacked examples that could offer comparable guidance, through examples, to developing nations.
Members from India, Jamaica, and multiple members from Africa stressed the lack of capacity in their jurisdictions. The committee co-chair from Nigeria illustrated that the duties of tax administrators in developed states are distributed among various units and individuals., however, in developing countries, the responsibilities and workload of entire tax departments are fulfilled by only a handful of people. The struggle to gain a (quality) education or to acquire specialized skills, is just one factor that can explain the lack of capability in developing nations.
Furthermore, adopting new technologies and software can aid tax administrations in building capacity and increasing efficiency. While this may be true, a delegate from Singapore points out that when considering developing nations, the digitalization of economies may actually have a regressive effect on capacity building. In developing and developed nations alike, we must account for the human factor. If technology eliminates the need for physical jobs within government, it may not only be met with resistance from administrators but could also erode trust in the taxation system. Regardless of a country’s economic state, digitalized administrative structures must be intertwined with consideration of individuals to create a more effective and efficient administration system. In fact, doing so is necessary to maintain trust in a country’s tax system.
Another recurring theme throughout the conference was the critical need for information sharing. During the presentation by the subcommittee for Increasing Tax Transparency, a member requested the subcommittee include model legislation in their publication. This was related to legislation that would increase transparency of taxable assets stored abroad.
Similarly, a representative of the European Network on Debt and Development explained that the lack of access to information in developing countries is a growing concern for civil society and academia. The committee member for Jamaica expressed her concern that despite partaking in international discussions, the lack of access to tax-related data remains. A representative of the International Bureau of Fiscal Documentation added to the discussion by highlighting the lack of access to comparative studies, analyses, and business/corporate data. However, he stressed that sharing needs to include data from both before and after the pandemic to reflect any anomalies caused by the pandemic. The committee recorded the needs of developing states but were further challenged by the concerns raised by representatives of multi-national enterprises. They explained that sharing information for non-tax-related purposes was in clear conflict with competitive information.
The 27th session has notably distinguished itself by its strong commitment to fostering dialogue among stakeholders, with a specific focus on addressing the profound economic challenges brought by the COVID-19 pandemic, particularly in developing nations. Conversations regarding a multilateral tax treaty, though not officially addressed, lingered as a central undercurrent in the collective consciousness. Nevertheless, the complexities surrounding its development, encompassing the need for coherency, efficiency, and inclusivity across diverse global jurisdictions, necessitate further deliberation and careful consideration in future discussions. As the committee concluded its 27th session in Geneva, preparations are already underway for an even more productive 28th session in New York.
*The Marcel A. Desautels Centre for Private Enterprise and the Law was pleased to support Ms. Khandewal’s attendance at the 27th Session of the Committee of Experts on International Cooperation in Tax Matters in Geneva, Switzerland in October, 2023. Isha Khandewal is a law student at the University of Manitoba with a keen interest in the intersection of tax law and human rights.
The views and opinions expressed in the blogs and case reporter are the views of their authors, and do not represent the views of the Desautels Centre for Private Enterprise and the Law, the Faculty of Law, or the University of Manitoba. Academic Members of the University of Manitoba are entitled to academic freedom in the context of a respectful working and learning environment.