( Kofi Annan, 77th Secretary-General of the U.N,Image by Telegraph)
You might be forgiven for thinking that the United Nations (U.N) doesn’t care much about international tax and even less about rule-making to combat tax evasion and increase cooperation among domestic revenue authourities.
It does seem that the UN is content to observe the global debate on exchange of information and tax transparency from the ‘bleachers’. Indeed, the G8 declaration made after this year’s Summit, doesn’t once reference this international body.
That said, you might be surprised to know that within the structure of the UN is a subsidiary body of the Economic and Social Council, called the Committee of Experts on International Cooperation in Tax Matters.
Its mandate includes:
- up-dating and reviewing the United Nations Model Double Taxation Convention between Developed and Developing Countries and the Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries;
- providing a framework for dialogue with a view to enhancing and promoting international tax cooperation among national tax authorities and assesses how new and emerging issues could affect this cooperation; and
- making recommendations on capacity-building and the provision of technical assistance to developing countries and countries with economies in transition.
In all its activities, the Committee is supposed to give special attention to developing countries and countries with economies in transition.
A list of its membership is here.
Recent evidence of the Committee’s work can be found in the U.N Handbook on Selected Issues in Administration of Double Tax Treaties for Developing Countries, which was the result of a joint project by the Financing for Development Office of the U.N. Department of Economic and Social Affairs; and the International Tax Compact.
Written by international tax experts, the Handbook addresses how tax treaty provisions apply in practice,describes best practices of countries in administering their treaties, and focuses on the procedural aspects of applying a treaty rather than on its substantive rules.
If all of this sounds, well, toothless and rather academic, it’s because it is.
Unlike the OECD, the UN Committee has little influence on the design and enforcement of global tax rules. It is not even a proper council within the U.N and is more akin to an advisory group. It does not craft or publish tax haven blacklists or other rankings of compliant and non-compliant jurisdictions; neither has it expressed any opinion about this widespread means of economic ostracism which may well be contrary to international trade rules.
Still the U.N Handbook may be timely with the IMF recommending that developing countries review their one-sided tax treaties with developed country tax havens, based on the OECD Model Tax Convention, to improve the ‘balance of bargain’.
In the end, IMF concerns and calls for the wholesale abandonment of tax treaty negotiations based on the OECD model because its provisions encourage treaty-shopping, tax evasion and aggressive tax avoidance, may yet help the UN find its voice in matters of international tax.
UPDATE: On July 2, this year UNCTAD made some ‘Offshore’ Recommendations.