The United Nations wants more power to shape global tax rules and is highly critical of the work done by the Organisation for Economic Co-operation and Development, which now has Bermuda consulting over establishing a new corporate tax regime.

The outsize influence of wealthy countries on the OECD’s policy agenda has led many developing countries, including some OECD members, to question its efficacy in setting equitable global tax standards.

The UN Secretary-General Antonio Guterres is pushing for a larger UN role in establishing new guidelines for global tax changes amid concerns the OECD’s group of wealthy countries have ignored the needs of developing nations.

The OECD was quick to defend its position as a global tax policy leader, saying the UN report was “disappointing” and “surprising” and that it ignored achievements that would benefit developed and developing countries.

But next month, the UN General Assembly will debate Mr Guterres’s proposals for “fully inclusive and more effective” international tax co-operation, including a legally binding framework to “establish an overall system of international tax governance.”

It could mean a showdown between the two bodies for the reins of authority in international tax leadership.

The OECD's plan seeks significant changes to international tax rules affecting multinational companies, after winning preliminary agreement from more than 130 countries.

Large companies would pay more taxes in countries where they have customers and less in countries where they have headquarters, employees and operations.

Additionally, the agreement sets out a global minimum tax of 15 per cent which would, the proponents believe, increase taxes on the largest multinational companies with earnings in low-tax jurisdictions.

Governments have been sent away to develop implementation plans to turn the agreement into law.

Bermuda has begun an initial consultation period to September 8, with an outline of ideas up for discussion that could propose a new corporate income tax rate of between 9 per cent and 15 per cent for the affected companies.

But critics of the global way forward say the world’s wealthiest countries are also the biggest enablers of tax abuse, and should not be setting the rules for everyone else.

The OECD is, after all, a group of mostly high-income countries playing a dominant role in setting the new rules of global tax.

The advanced, unedited version of Mr Guterres’s report to the 78th session says that many non-OECD members find that there are significant barriers to meaningful engagement in agenda-setting and decision-making within the OECD.

“As a result, the substantive rules developed through these OECD initiatives often do not adequately address the needs and priorities of developing countries and/or are beyond their capacities to implement.”

The report concludes that: “Enhancing the UN’s role in tax-norm shaping and rule setting, fully taking into account existing multilateral and international arrangements, appears the most viable path for making international tax co-operation fully inclusive and more effective.”

This UN intergovernmental process would accept all the work previously done, and address gaps and weaknesses in current international tax co-operation efforts.

• To read the promotion of inclusive and effective international tax co-operation at the United Nations, a report of the Secretary-General in full, see “Related Media”.

Download PDF File

Gutteres- UN Report A-78-235_advance unedited version_0.pdf