Editorial
The United Nations Framework Convention on International Tax Cooperation recently revealed an ambitious draft during its ad hoc committee meeting. The draft, a testament to the UN’s commitment, aims to foster more inclusive and effective international tax cooperation. It enables member countries to address existing tax challenges stemming from digitalization and the global operations of large multinational enterprises. Additionally, it seeks to mobilize domestic resources and utilize tax policy for sustainable development, reinforcing the UN’s crucial role in addressing global economic challenges.
While the draft is indeed a step in the right direction, it is important to note that there are some concerns that members of affected parties need not overly worry about at this time. The negotiating committee, established by the UN General Assembly, is set to convene in 2025, 2026, and 2027, with at least three sessions per year. However, the final draft may potentially be weakened before its implementation, as observed in previous UN proposals on issues such as Kashmir and Palestine.
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It is crucial to consider three specific observations pertaining to Pakistan, and many other developing countries, before finalizing the draft. Firstly, it is vital to address the exploitation of tax laws by accountants employed by multinational corporations in developed countries, as well as the detrimental impact of certain policies established by developing countries’ policymakers. Equally important is the need to reform the current tax structure, which disproportionately burdens the poor, and to address major leakages caused by practices such as under- and over-invoicing.
The draft’s potential impact on developing countries, particularly Pakistan, demands thorough scrutiny to ensure it effectively addresses the aforementioned concerns and contributes to sustainable development and equitable tax practices.
