ISLAMABAD: The United Nations has put forward a groundbreaking proposal for a universal tax convention, marking a historic step towards transforming the global financial landscape.
The UN’s proposed tax convention aims to significantly alter international taxation, potentially reshaping global financial systems and influencing how tax revenues are allocated for public welfare.
Unveiled during a recent meeting at the UN headquarters in New York, the draft of the UN Framework Convention on International Tax Cooperation highlights the need for a comprehensive and inclusive approach to global tax issues. The draft will be further developed by an intergovernmental negotiating committee, established by the UN General Assembly, which will hold sessions in 2025, 2026, and 2027, with the aim of finalizing the convention text for review by the General Assembly.
The draft convention underscores the importance of enhanced international tax cooperation to address current challenges such as digitalization, the global operations of multinational enterprises, and the mobilization of domestic resources for sustainable development. It seeks to establish a governance system for international tax cooperation that is inclusive, fair, transparent, and effective.
Key objectives of the proposed framework include ensuring a fair allocation of taxing rights, equitable taxation of multinational enterprises, and addressing tax evasion and avoidance by high-net-worth individuals. It also emphasizes the need for effective mutual administrative assistance, transparency, and resolution of tax disputes, while aligning with international human rights law and supporting sustainable development goals.
The draft convention advocates for a universal approach that takes into account the diverse needs and capacities of all countries, including those in special situations. It also reaffirms the sovereign right of member states to set their tax policies, while respecting the sovereignty of others.
