ADDIS ABABA – The United Nations will convene next week to negotiate and agree on terms of reference for a new international convention on Tax Cooperation, according to UN Policy Analyst.
The UN Department of Economic and Social Affairs (UN-DESA) Policy Analysis Chief Oliver Schwank, told The Ethiopian Herald that the negotiation is scheduled to take place next week in New York and aims to discuss on Terms of Reference for a new international Convention on Tax Cooperation.
During the course of the interview, Schwank pointed out that huge financing gap as the major drawback for failure to realize the SDG particularly for Africa which is already paying 20% to 30% of its GDP to pay debt the financing gap becomes even worse.
He , therefore, stressed that along with the need to increase generous development financing through development banks African countries should also work more on domestic resource mobilization. One of the major challenges to the countries domestic resource mobilization is illicit financial flow and tax evasion, among others.
He noted that the tax evasion and illicit flows are outcomes of the countries efforts to give incentives to attract more foreign investment. However, companies establish their operation in different countries and use different accounting systems to escape paying taxes to one or more the countries they invest in.
“And it’s understandable to why countries do this. But it undermines the tax base. The second thing is, it’s kind of the illicit activities and these flows are very significant in the billions of dollars.”
Schwank indicated that this is not a problem that a country can conquer alone, though it can put in place better tax administration or good governance. This measure alone is not enough to fully control the illicit financial flow and tax evasion, so the countries should come together towards a better international agreement.
“It’s too easy at the moment for these actors with different accounting measures, to avoid the responsibility to contribute their fair share in the countries where they operate in. Then the host countries where these corporate investors operate are left empty handed; they do not get their fair share of revenue. And, that’s not something a country can address on its own”
Accordingly African countries have brought the discussion to the United Nations where there will be a negotiation in New York next week to agree on terms of Reference for a new international convention on tax cooperation. He further lauded the active role of African states in both the financing for development discussion as well as the planned negotiation on tax convention. “And just next week, actually, there’ll be negotiations in New York at the United Nations to agree on Terms of Reference for a new international convention on tax cooperation, a framework convention, and this discussions, are happening only because of the leadership of the African group. So they have brought this issue to the international community,” Schwank said.
BY ZEKARIAS WOLDEMARIAM
THE ETHIOPIAN HERALD SATURDAY 27 JULY 2024
