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PSI submits comments to Zero Draft UN Tax Convention, advocates for progressive tax systems

Jun 27, 2024

PSI submits detailed comments on the Zero Draft Terms of Reference for the UN Framework Convention on International Tax Cooperation, emphasising the need for progressive tax systems and transparency.

On June 21, 2024, Public Services International (PSI) submitted comments on the UN’s Zero Draft Terms of Reference for a United Nations Framework Convention on International Tax Cooperation. The submission underscores the importance of progressive tax systems, transparency, and fair allocation of taxing rights to support quality public services globally. 

The Zero Draft includes a number of substantive elements such as the taxation of multinational enterprises (MNEs), high-net-worth individuals, measures addressing environmental challenges, transparency and exchange of information, and prevention and resolution of disputes. Additionally, a number of protocols are proposed to supplement the framework, including taxation of the digital economy, taxation of income derived from cross-border services, addressing tax-related illicit financial flows, prevention and resolution of tax disputes, and taxation of high-net-worth individuals. 

In September 2023, the General Assembly decided to establish UN governance for international taxation. An ad hoc committee with 25 members nominated by governments was set up in January 2024 to draft terms of reference for a framework convention. The zero draft of the terms of reference (ToRs) were published on June 7, 2024, and the committee will discuss and possibly agree on these ToRs at its third session in July-August 2024. Based on the committee's proposal, intergovernmental negotiations will start in September 2024, aiming for completion by 2026. 

PSI’s specific comments include: 

  1. Progressive Tax Systems: PSI advocates for tax systems that do not undermine the tax base of other Member States and promote progressive taxation to support public services and reduce inequalities. 

  1. Fair Allocation of Taxing Rights: PSI supports a fair allocation of taxing rights, particularly equitable taxation of multinational enterprises, ensuring that revenue is allocated to countries where economic activity takes place. 

  1. Transparency and Exchange of Information: PSI emphasizes the importance of tax transparency, advocating for public country-by-country reporting to enhance revenue collection, democracy, and employment. 

  1. Capacity Building: The comments highlight the need for capacity building to ensure inclusive engagement in decision-making, rather than limiting the role of Global South countries to enforcement. 

  1. Governance and Transparency: PSI calls for complete transparency in the governance of the framework convention, allowing trade unions and other stakeholders to hold governments accountable. This includes making country positions, negotiating texts, and impact assessments public. 

  1. Protocols Development: PSI stresses that the simultaneous development of early protocols should not hinder progress on adopting the Framework Convention. Key priorities include tax transparency, taxation of the super-rich, and taxation of digital profits. 

PSI's submission reflects its commitment to supporting fair and inclusive international tax governance.  

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