International Tax Debate: Commonwealth Finance Ministers urge greater participation

(Photo courtesy of The Commonwealth website)

The Commonwealth Ministers of Finance meeting ended in the Peruvian capital of Lima with a renewed call for stronger Commonwealth presence in the contemporary international tax discourses. Coming on the heels of the UN meeting held in Addis Ababa in July to discuss domestic resource mobilization in the context of achieving the Sustainable Development Goals (SDGs), the Finance Ministers took cognisance of the several initiatives currently being undertaken by the global community to safeguard tax revenue and minimize leakages in the tax system. Chaired by South Africa’s Minister of Finance Nhanhla Nene, the meeting in Lima urged for stronger engagement with developing countries in the discussions and formulation of international tax standards. This they noted would make such initiatives more inclusive and easy to support and implement. This engagement, they added, must be on an equal footing.

Some of the initiatives identified which would require stronger Commonwealth presence and voice include the G20/OECD BEPs Project, the Global Forum on Transparency and Exchange of Information and the OECD proposed Automatic Exchange of Information. While acknowledging that these initiatives are noble and would alter the tax landscape for the benefit of all, the Minister identified lack of capacity, especially in the developing countries, as a major constraint in actualising these noble ideas. The Ministers stressed the need for appropriate legislative framework in the respective countries and strong political support for any success to be realized in the area of tax reforms. The Ministers also voiced their concerns on the blacklisting by the EU of some 14 Commonwealth jurisdictions considered as “tax havens” or “non-cooperative jurisdictions” adding that such a move would have adverse impact on some of these jurisdictions, the majority of whom are small and vulnerable countries.

To ensure a more structured participation of the Commonwealth in the international tax policy discourses, the Ministers agreed to establish “a Working Group of Senior Officials, supported by the Secretariat, to work on a range of international tax issues of importance”. This group would ensure a wide representation of Commonwealth members with “sufficient representation of small and vulnerable countries”.

The keynote address at the meeting that took place from 6th to 7th October, 2015 alongside the Annual IMF/World Bank consultative meeting, was delivered by Jose Ange Gurria, the Secretary General of the OECD.