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Countries disagree on the UN's role in taxes.

While European countries and the US caution against parallel work to the OECD's two-pillar model, African countries support the UN playing a larger role in global tax policy.

At the UN's tax committee meeting on March 31 in New York City, representatives from multiple countries clashed over the organization's role in taxes.


The UN should take up this responsibility, according to the Group of 77 and China, who claim there is no international forum for discussing tax reform. The African Group reaffirmed its earlier requests to the UN to establish such a body.


Several developed countries prefer the OECD as the model for tax reform, but many developing countries claim that the reform process has not been sufficiently inclusive. This is true notwithstanding the OECD's initiatives to involve more countries that are not members.


"My delegation is concerned about the global minimum tax because of its low rate and how it was negotiated to benefit the home countries of multinationals, mostly developed countries," said Muhammad Nami, executive chairman of Nigeria's Federal Inland Revenue Service in Abuja.

On November 23, the UN General Assembly adopted a resolution in unanimity giving the organization the authority to launch intergovernmental talks on taxes. This resolution proposed giving the UN a considerably bigger role in international tax.


Also, it argued in favor of the formation of new international tax institutions and frameworks for cooperation. Nami requested a discussion on how a UN tax convention could improve upon current standards.


The majority of African governments continue to favor the UN having more influence over taxation. At the UN tax committee, the Nigerian delegation was particularly outspoken.


Nigeria's finance minister, Zainab Ahmed, asserted that the UN was qualified to lead more inclusive work on tax policy. She argued against using the OECD procedure and in favor of a binding multilateral convention to restructure international tax.


In November 2022, the African Group played a crucial role in securing the UN resolution. But many developed nations continue to support the OECD-led initiative. US and UK officials have both cautioned against duplicating efforts on tax.


"We need to ensure that we do not undermine that progress by starting a parallel and competitive process," said Hugh Culverhouse, chair of tax law at the University of Florida and speaking for the US.


Culverhouse emphasized the work done by the Inclusive Framework on the two-pillar solution and how contributions from developing countries helped to achieve the goals.


At the same time, a number of European members proposed the UN support the OECD-led approach rather than duplicate the work on tax because doing so may result in more inconsistent tax policy.


Germany has made it clear that it does not believe a global tax organization operating under UN authority is necessary. Little European nations like Liechtenstein worry that as the UN gains more clout, tax regulations will become more fragmented.


In the summer, the UN tax committee will continue to debate tax and climate policy issues.

By fLEXI tEAM

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