Explore
Settings

Settings

×

Reading Mode

Adjust the reading mode to suit your reading needs.

Font Size

Fix the font size to suit your reading preferences

Language

Select the language of your choice. NewsX reports are available in 11 global languages.
we-woman

New UN Tax Treaty Aims To Overhaul Global Tax System And Enhance Cooperation

The United Nations has announced a new universal tax compact, aimed at overhauling the global tax system. This initiative is designed to support countries in their economic development efforts and contribute to the 2030 Agenda for Sustainable Development, which includes 17 goals.

New UN Tax Treaty Aims To Overhaul Global Tax System And Enhance Cooperation

The United Nations has announced a new universal tax compact, aimed at overhauling the global tax system. This initiative is designed to support countries in their economic development efforts and contribute to the 2030 Agenda for Sustainable Development, which includes 17 goals.

The UN’s Ad Hoc Committee has made substantial progress by approving a set of guidelines for the proposed treaty. This compact represents a significant shift in international taxation, with the potential to alter global financial systems and the utilization of tax revenues.

Purpose of the New Tax Convention

The proposed UN tax convention is intended to enhance international tax cooperation. It seeks to address challenges related to digitalization and the global activities of multinational corporations, as well as to strengthen domestic resources and promote sustainable development.

READ MORE: Russia-Ukraine War: Why is Russia Changing It’s Nuclear Doctrine Amid War?

The framework is expected to create a tax system that is inclusive, fair, transparent, efficient, equitable, and effective. Key features of the proposed convention include:

Taxation of Multinational Companies: Ensuring that multinational corporations contribute appropriately in the jurisdictions where they operate.

Addressing Tax Evasion: Tackling tax evasion and avoidance by high-net-worth individuals.

Protocols on Digitalization: Two legally binding protocols are anticipated, including one focused on the taxation of income from cross-border services in a digitalized economy.

Potential Impact on Developing Countries

The compact could provide significant benefits for developing nations. By establishing a more inclusive tax framework, the convention aims to bolster domestic resources in these countries, potentially increasing tax revenues. This additional revenue could support essential services such as infrastructure, education, health, and climate initiatives, helping to advance the Sustainable Development Goals (SDGs).

Reception of the Proposal

The proposal has received support from 110 Member States. However, eight countries—Australia, Canada, Israel, Japan, New Zealand, South Korea, the United Kingdom, and the United States—voted against it, while 44 countries abstained.

Next Steps

The terms of reference for the compact will be forwarded to the UN General Assembly, which will vote on the proposal during its 79th session starting in September. If approved, a Member State-led negotiating committee will be established to draft the convention and its protocols over the next three years. The finalized text is expected to be presented to the General Assembly in early 2027. Upon approval, the treaty will be open for signature and ratification by all 193 UN Member States.

The introduction of this universal tax compact marks a significant development in international tax policy, with the potential to influence global financial cooperation and sustainable development.

ALSO READ: UAE pardons Bangladeshi nationals jailed for protests in the Arabian Peninsula nation


mail logo

Subscribe to receive the day's headlines from NewsX straight in your inbox