Blow to big firms as UN emboldens the taxmen
Kenya is among the countries to benefit from a United Nations General Assembly (UNGA) resolution on global tax reforms, whose passage, enables the taxman to go after ‘undeclared’ corporate taxes by big firms.
For decades, countries have criticised the international corporate tax system arguing it was outdated and skewed in favour of multinationals, depriving them of the resources needed to combat poverty.
But at a Wednesday sitting, proposals for a repair of the existing global tax system got the much-needed lift after all UN member States approved and made “the first step towards an inclusive, democratic and transparent process to reform global tax architecture.”
This follows a culmination of more than 20 years of lobbying by developing countries calling for an intergovernmental tax negotiation process at the UN, which would allow all countries to participate in discussions and decision-making related to tax on an equal footing.
New grain reserve model
“This is a historic win for tax justice and the broader economic justice movement and a big step forward to combat illicit financial flows and tax abuse,” said Dereje Alemayehu, Executive Coordinator of the Global Alliance for Tax Justice (GATJ).
African countries and various civil organisations in Africa including the Tax Justice Network Africa (TJNA) have rallied for the abolition of the separate entity principle, arguing that it allows big firms with footprints spread across the globe to dodge their tax obligations.
This structure, they say, has seen such firms shift their profits to countries with low or zero tax rates. In May, African Ministers of Finance, Planning, and Economic Development adopted a resolution calling on the UN Secretary-General to begin negotiations on tax matters with the participation of all member states.
“Africa Group’s leadership has paved the way for starting an inclusive process at the UN to build a fair and effective international tax system. This resolution heralds a great opportunity for all UN Member States to move beyond words to action for the much-needed reforms of the global financial architecture,” explained Chennai Mukumba.