Nigeria supports the UN’s tax system for member states

Nigeria has made a fervent call for the support of Member States in endorsing a comprehensive UN Tax Convention, with the aim of establishing a more equitable global taxation system. The Permanent Mission of Nigeria to the United Nations released a statement, which was made available to the News Agency of Nigeria (NAN) in New York, emphasizing the need for continued backing of this initiative.

This call for global tax reform comes on the heels of a pivotal resolution introduced by Nigeria during the 77th session of the United Nations General Assembly (UNGA). The resolution, titled “Promotion of Inclusive and Effective International Tax Cooperation at the United Nations,” laid the foundation for a comprehensive international tax cooperation system with universal reach and a shared approach. For the first time, member states reached a consensus on establishing a convention for tax cooperation, where annual deliberations on global tax issues and advancements will be conducted.

Despite previous discussions that included a failed amendment, the African Group of States, represented by Nigeria and consisting of 54 member states, successfully introduced a motion that was ultimately adopted by consensus. This motion has paved the way for a comprehensive UN Tax Convention.

In their statement, the Mission stressed the importance of this initiative, pointing out its potential to address critical issues such as tax evasion, illicit financial flows, and the creation of a fairer taxation system both within national boundaries and beyond. The proposed UN Tax Convention is seen as an inclusive and transparent platform for significant reform, essential to fulfilling the United Nations’ commitments to the Sustainable Development Goals (SDGs).

The Mission reiterates the urgency of collective action, emphasizing that the world cannot afford further delays in addressing this pressing issue. Ambassador Tijjani Muhammad-Bande, Nigeria’s Ambassador to the UN, has also expressed a commitment to advancing discussions on tax conventions throughout the 78th session of the UN General Assembly (UNGA).

Muhammad-Bande highlighted the significance of this resolution within the context of financing for development, underlining the strong link between taxation and illicit financial flows. He acknowledged that while the process is still in its early stages, the mandate to create a convention or treaty is now in place. However, he also pointed out that this would involve complex negotiations, involving countries, blocs, and coalitions. Nevertheless, there is a global consensus on the importance of having a binding document that addresses taxation in a way that benefits all parts of the world simultaneously.

The United Nations General Assembly, the main policy-making and representative organ of the United Nations, is composed of delegates from 193 Member States and various entities. These delegates convene in dedicated sessions to discuss and deliberate on pressing global issues, with taxation and international tax cooperation being one of them.

As discussions around global tax reform progress, it is essential to understand the context of the UN Conventional Tax System. This system, often referred to as a double tax treaty, is designed to prevent the occurrence of unrelieved double taxation, with the broader goal of promoting cross-border economic activity and the transfer of technology.

Countries generally utilize established models as a starting point when negotiating tax treaties. The UN Model Double Taxation Convention between Developed and Developing Countries is often favored by developing countries because it tends to favor the retention of greater host country taxing rights compared to the OECD Model Tax Convention on Income and Capital.

The UN Model Taxation Convention includes articles outlining the scope and definitions to be used in the treaty. It allocates taxing rights for various types of income and capital before establishing mechanisms for eliminating double taxation when taxing rights are shared.

In essence, the call for a comprehensive UN Tax Convention is rooted in the need for a fairer and more effective global tax system, recognizing the interconnectedness of taxation, economic development, and the fulfillment of sustainable development goals. Nigeria’s leadership in this initiative highlights the country’s commitment to addressing critical issues related to international taxation and promoting equitable global economic cooperation.