Global Responsible Tax Thought Leaders Group: Global Institutions for Better Tax Policy
Context
On 8 August 2023, the Secretary-General of the United Nations issued an “Advanced unedited version” of a report on Resolution 77/244 titled Promotion of Inclusive and Effective International Tax Cooperation at the United Nations. The resolution called for various actions, including discussions on strengthening international tax cooperation and the possibility of developing a UN-led framework for shaping tax policy. Three options for consideration were suggested: a binding treaty, a binding framework agreement, or a non-binding multilateral agenda. The draft report noted that the OECD had introduced several initiatives to engage and include non-OECD members in its work. However more ought to be done to address the needs of developing countries.
Generating international tax cooperation on an inclusive and effective basis is clearly an important goal for our global future but achieving this is not an easy task. An institutional framework that can drive this process will be critical to all.
Considering these events, KPMG International hosted a roundtable conversation (as part of the Global Responsible Tax Thought Leaders Group) to take a deeper dive into what global institutions are needed (and how) to address the challenges, changes and opportunities for tax policy in a world in flux.
The conversation was held under The Chatham House Rule and was attended by 16 expert participants (see below for a list of attendees). The write-up below summarises the personal views of participants and does not necessarily reflect the view of any particular organisation, including KPMG.
Executive Summary
What does a ‘good’ global body for tax look like? Something that embodies international coordination that’s administrable and works for developing countries
There seems to be a genuine desire for cooperation between the UN and OECD but a concern that there may be a duplication of efforts and a question of how trust between both bodies the Global South and Business can be improved
Transparency and inclusivity must be improved – institutions can learn from how and when nations have felt (un)heard concerning both political and technical agreements in the past
Wealth inequality is gaining momentum as the most urgent issue to address globally alongside climate change
Urgent work is needed to strengthen tax capacity with a focus on low-income countries
1. What does ‘good’ look like?
There was discussion in the group that a ‘good’ Global Institution for Tax Policy should (1) embody international coordination that’s (2) administrable and (3) works for developing countries. This is a simple proposition that is undoubtedly difficult to achieve in practice.
2. Cooperation & Trust
It was noted by the group that there seems to be a genuine desire from the UN and OECD to cooperate where practical. However, there were suggestions that a deeper struggle concerning lack of trust may be harder to reconcile than originally thought. There was additional concern that this may lead to the duplication of efforts.
It was felt that while the OECD is good at engaging with business it has less developed relationships with civil society.
There was consensus in the group that whatever body takes on these tax policy-shaping conversations going forward, there needs to be more trust between government and business and assurance that it is not just a tax-raising exercise.
The issues of trust were most pressing concerning the perceptions of these global bodies by developing nations. What global body is best placed to demonstrate that the global agenda is not going to be formed to best serve the interests of the global north and how can greater trust be established?
3. Transparency & Inclusivity
There was disagreement among some in the group that the OECD does not share enough with its own members - particularly regarding what their representatives are suggesting. It was argued that whilst the UN is not without its faults, it may be better suited for transparency and accountability around government activity.
It was suggested that developing countries should be a part of setting the agenda, allowing them the space to voice their priorities when it comes to tax policy. The room for cooperation is huge and many low-income countries feel they are being left aside.
There was a sense from some that the OECD has put in a lot of effort to make itself more inclusive. But many countries are not yet satisfied. Could this be down to misplaced expectations? How well are countries equipped to navigate these multilateral conversations?
A suggestion from the group that it may be worth considering which issues countries feel ‘heard’ on at the UN, but less so at the OECD. Political agreements could be easier, whereas technical agreements are much harder.
Climate financing was also raised as an issue of inclusivity – in a broader sense – contributing to the wider issue concerning a divide between the Global North and South.
4. Focus on taxing wealth?
Others in the group highlighted that we should be looking to move the agenda on from Corporation Tax and BEPS to the issue of global wealth inequality. Regardless of which body leads, we should be looking to build up tax capacity and in-country support. It was suggested that the skills of the OECD could be best placed to deliver solutions in-country but there was a question around the financing of this.
5. Implementation
Some participants worried that moving to a UN-led framework will take time that we do not have (both to build consensus and capacity). While the OECD could benefit from some changes, it is already set up and ready to go.
A question was raised as to whether the UN would run into many of the same challenges as the OECD – particularly on technical agreements. Regardless of who is moderating the agreements, technical capacity will be a problem for many developing countries.
The group discussed that for many MNE’s there is a worry about the time, effort and cost that has already been spent to prepare for the implementation of policies agreed by current global bodies. There is a fear that a move to another global body would bring about alternative outcomes which would incur a heavy cost to implement.
There was a shared concern that initiatives from current global bodies may not be implemented by all members. Whilst morally persuasive, nothing is binding. Should they be?
6. Capacity
Capacity featured heavily in the conversation. It was suggested that the UN, though considered in some ways to be more inclusive, needs to recognise challenges in the global south in terms of both tax administration capacity and the ability to send qualified personnel to represent and contribute to debates at the global level.
Elaborating on this, other practicalities around language translation and interpretations of, what are often, hundreds of pages of guidance are a complicating factor for nations whose capacity is limited. Poor exchange of information is also a common feature of these as a result of limited capacity.
Work is needed to strengthen tax capacity with a focus on low-income countries, but this is something that will take time. How this lack of capacity is reconciled in the short term is unclear.
7. What role for other organising bodies?
Beyond the UN and OECD there was a question of where does (or should) the G20 sit? Does it have the same ‘rich club’ perception as the OECD?
A question was also asked of regional bodies. Is a body such as ATAF, which has played a big role in the inclusive framework, equipped enough? What is the status of these organisations? Are they just observers and what weight do they carry when they intervene?
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We welcome ideas about where the focus of any future work could be in terms of global governance of tax. For more information or to get involved please contact becky.holloway@jerichochambers.com
Contributors to the conversation included:
Chiara Bronchi, Practice Manager, Public Institutions Data and Analytics, GOV, Equitable Growth, Finance and Institutions, World Bank
Alessandro Bucchieri, GM Taxation, Enel
Jessie Coleman, Principal - Washington National Tax, KPMG US
John Connors, Group Tax Director, Vodafone
Sean Donohue, Head of Tax Affairs, Macquarie
Christian Hallum, International Tax, Oxfam
Loughlin Hickey, Founding Trustee, Blueprint for Better Business and Senior Adviser to Blueprint
Neal Lawson, Partner, Jericho
Alan McLean, Retired - former EVP Tax, Royal Dutch Shell plc
Chris Morgan, Head of the KPMG Global Responsible Tax Project, KPMG International
Richard Murphy, Director, Tax Research UK
Heather Smith, Communications, The 99% Organisation
Joseph Stead, Senior Policy Analyst - Tax and Development, OECD
Oliver Tourtoulou, Deputy Group Tax Director, AXA
Grant Wardell-Johnson, Global Tax Policy Leader, KPMG International
Phil White, Activist, working on social justice and climate change, Patriotic Millionaires
