Year XXXVII, Number 2, July 2024

Claudia D'Antonio and Soumaia Bouchbika
Trainees at the Einstein Centre for International Studies,Turin

The resolution A/RES/77/244, titled “Promotion of Inclusive and Effective International Tax Cooperation at the United Nations”, and presented by the African Group during the United Nations Assembly session held in November 2023, passed with 125 votes in favour, 48 votes against and 9 abstentions. Among the ones who voted against are the United States, the European Union and Japan.

The proposal – which calls for a reform of the global tax architecture and aims at making actual fiscal rules more equitable and inclusive - has been saluted by many as a turning point for the role of African countries in UN affairs. The resolution not only resonates with one of the goals established in the African Union (AU) Agenda 2063 – that is to say, the reinforcement of tax systems and the pursuit of tax equity –, but would also advance the achievement of the UN sustainable development goals. 

Moreover, the proposal is expected to bring relevant advantages, especially to developing countries which, according to H.E. Tijjani Muhammad-Bande, Permanent Representative of Nigeria, would have “a greater ability to mobilize domestic resources, directly fuelling development projects and social welfare programs”. 

According to data collected by the International Monetary Fund, the enhancement of international tax cooperation would result in the significant reduction of tax evasion, as well as illicit financial flows (IFF), which so far have divested African countries of considerable amounts of funds. Specifically, UNCTAD (United Nations Conference on Trade and Development) researchers have shown that each year a capital flight of about 90 billion dollars in the form of IFF, which accounts for 4% of the GDP of Africa, is recorded. The resolution directly targets affiliates of multinational corporations, which under current fiscal treaties are considered as if they were separate entities and, due to the fact that they are often registered in fiscal havens, they do not have to pay taxes in the countries they operate in.

Although discussed for over a decade among the OECD (Organization for Economic Co-operation and Development) members, the proposal for the creation of a global fiscal treaty did not produce significant results. One of the main opposers of the proposal is the European Union, which leans towards a rather flexible approach implying a “non-binding multilateral agenda”. However, this attitude is at odds with a resolution of the European Parliament stating the need for a UN convention to fight tax fraud and illicit financial flows. It is precisely the failure of the developed countries to elaborate a plan to reshape the fiscal architecture that pushed the African group – supported by superpowers like Russia and China – to take initiative within the UN. 

Even though the path to redefine the tax architecture and ensure its fairness is going to be complex and challenging, this resolution represents a beacon of hope. It is no coincidence that the impetus for drafting a tax resolution came from African countries: as a matter of fact, they are the ones most affected by tax evasion and illicit financial flows, that exceed development aid, as Euractiv reports. Heralded as a historical turning point, the resolution is not only expected to bring unprecedented benefits to Africa, but also represents a first step towards equity and inclusivity within the UN. 

Indeed, this proposal challenges the actual balance of power, which have hitherto granted countries of the global North supremacy in fiscal matters. In so doing, the UN would finally become a truly universal and democratic institution, ensuring all countries the ability to express their voice especially with regards to such an urgent matter.