Defying all common wisdom, the world had never had an apex body for international tax cooperation. In November, the United Nations General Assembly's finance committee voted to open discussions on international tax standards, effectively overriding a decade-old initiative by the Organisation for Economic Cooperation and Development (OECD).

The stakes are high as the November 23 resolution aims at setting new rules for multinational corporations about whether they should be allowed to shift profits to tax havens and in what jurisdictions they can or can't be taxed.

THE FAILURE OF OECD

Paris-based OECD has been struggling to set tax standards acceptable to all economies since 2013. As a last-ditch effort, the OECD launched the minimum effective global corporate tax rate of 15 per cent on multinational companies. This also could not come into being as member countries did not legislate it and Hungary objected to the European Union's adoption of the plan.

The Tax Justice Network (TJN), a group of economists, journalists and activists, is a staunch critic of the OECD. In its release styled "UN tax convention proposed at General Assembly", the network summarised OECD's long-standing effort this way: "The OECD reform process has been hamstrung by a combination of entrenched private sector lobbying and opposition from OECD member countries that rank among the world's biggest enablers of abuse on the Corporate Tax Haven Index and Financial Secrecy Index, and the organisation's inability to offer a meaningful voice to lower-income countries."

Indeed, the state of increasing unlikeliness on the OECD's part to deliver global tax solutions is largely homegrown.

COMING TOGETHER OF AFRICAN NATIONS

The tax convention proposed in October was first requested by a delegation of African countries back in 2019. In February 2021, the UN high-level panel for Financial Accountability, Transparency, and Integrity called for a UN convention with a view to reforming tax policies. Also, the World Economic Forum supported the idea of a UN tax convention. The more OECD's failure came to light, the more UN's takeover gained ground.

None other than the secretary-general appeared as a protagonist for a broader UN role in international tax cooperation. His 17-page report to the General Assembly on combating illicit financial flows categorically called for implementing the Addis Ababa Action Agenda of the third international conference on Financing and Development whereby member states are pledge-bound to gear up international tax cooperation. Such cooperation must be universal in approach. One can understand now that the proposal is not just an apple falling from an African tree. It is rather a culmination of a series of efforts by countries, groups and individuals who are aware of and/or impacted by corporate manipulations.

HOW BIG IS THE LOST REVENUE

The International Consortium of Investigative Journalists (ICIJ) is a major player in unearthing tax fraud.

Spencer Woodman of the ICIJ writes: "In 2017, ICIJ's Paradise Papers project shed light on tax manoeuvres of more than 100 corporations, including Nike and Apple, which shifted profits around the world to accumulate $252 billion offshore. A study published last year showed that, in one year alone, corporations shifted $1 trillion offshore, depriving governments of hundreds of billions in revenue."

The TJN has quantified the lost revenue to the tune of $483 billion a year.

If and when things change, can Bangladesh have a slice of the pie? We will talk about that in the next write-up.

The author is a member of the Pacific Council on International Policy.