Global Call to Action Against Poverty (GCAP), along with over 175 civil society organsations and trade unions, has submitted inputs to the United Nations, advocating for a robust and inclusive framework for international tax cooperation. This submission is a response to the UN General Assembly Resolution 78/230, which initiated the process to draft terms of reference for a United Nations Framework Convention on International Tax Cooperation (FCITC).

Download the letter here.

The joint submission was coordinated by the Global Alliance for Tax Justice (GATJ), a Southern-led global coalition, with the support of Eurodad, the European Network on Debt and Development. The proposal emphasizes the need for a fair, transparent and inclusive global tax system that ensures equitable participation from all countries, particularly developing nations.

Key Procedural Recommendations:

Establishment of Inclusive Governance Structures: The FCITC should create a Conference of the Parties (COP) and a Secretariat to oversee international tax matters. This would be the first truly inclusive global tax forum, ensuring equal participation for all countries.

Incorporation of Existing Bodies: The UN Expert Committee on International Cooperation in Tax Matters should be integrated as a subsidiary body of the FCITC. Additionally, the establishment of a UN public registry for tax and fiscal policies, corporate transparency, and a global asset register is recommended.

Commitment to UN Principles: The FCITC should align with the UN’s principles, ensuring that all member states participate on equal terms and that existing non-UN tax standards do not dictate the outcomes of FCITC negotiations.

Substantive Elements Outlined:

The submission outlines several key objectives and principles that should guide the FCITC:=

Promoting Fair and Transparent Tax Systems: Ensuring tax systems are equitable, progressive, and effective.

Combating Illicit Financial Flows: Addressing tax avoidance and evasion that disproportionately affect developing countries.

Linking Tax Policies to Global Goals: Aligning tax policies with international commitments on human rights, gender equality, public services, and sustainable development.

Key obligations for states include the review and renegotiation of existing tax treaties that conflict with FCITC commitments, enhancing the coherence of the international tax system.

Cross-Cutting Issues and Transparency:

The submission highlights the intersection of tax policies with gender equality and human rights, urging the FCITC to promote full participation of women in tax policymaking and to ensure non-discriminatory practices.

Transparency provisions recommended include:

Automatic Information Exchange (AIE): Developing a UN system for AIE that aids developing countries, including a transition period for non-reciprocal information sharing.

Public Beneficial Ownership Registers: Increasing transparency around the true owners of companies to combat tax evasion.

Country-by-Country Reporting (CBCR): Mandating public CBCR by multinational corporations to assess tax fairness and effectiveness.

Tax Reforms and Environmental Considerations:

The proposal calls for fundamental reforms to the international corporate tax system, advocating for a unified approach where multinational enterprises are taxed based on global profits and activity locations. It also emphasizes the need for progressive green taxes that address environmental objectives and reduce inequalities.

Early Protocols and Committee Process:

The FCITC should include precise provisions on key components of international tax cooperation, with specific issues to be addressed through subsequent protocols. The civil society submission stresses the importance of transparent negotiations and robust participation from developing countries, suggesting mechanisms similar to the UNFCCC Trust Fund to support their involvement.

A Path Forward for Fair Taxation:

As the global community strives for a fair and inclusive international tax system, this comprehensive submission by civil society organizations and trade unions provides a detailed roadmap for the FCITC. Ensuring transparency, equity, and effective participation from all nations, particularly those in the developing world, will be crucial for the success of this groundbreaking initiative.