Governments will begin discussing an international tax cooperation framework at the U.N. after the consensus adoption of the resolution, which was supported by the 54 nations in the African Group. During a virtual broadcast, a representative from Nigeria, which led talks, said 10 years of attempting to reform the international tax system has shown there is "no substitute" for the inclusivity and transparency provided by the U.N. system. Several representatives from countries in the Organization for Economic Cooperation and Development, however, said the U.N. resolution could overlap with the OECD's work.
Representatives' names were not disclosed during the meeting.
In October 2021, the decade-long efforts of the Group of 20 nations and OECD's inclusive framework on base erosion and profit shifting initiative to revamp the global tax system for the digital age culminated in 137 of 141 members endorsing the two-pillar plan. Pillar One involves reallocating some taxing rights to countries where large companies lack the physical presence to trigger liabilities under the current rules, while Pillar Two is a plan to enforce a 15% minimum corporate tax rate.
The U.N. resolution adopted Wednesday is "a milestone toward ensuring a high standard of transparency," a representative of Eritrea said on behalf of the African Group after the vote.
"The resolution aims to ensure cooperation among all member states to establish one coherent global system designed to work for all countries, and not just a few," the representative said.
While the resolution was adopted by consensus, many OECD member countries made it clear they had reservations about duplicating ongoing work to adopt the two-pillar plan. The U.S. led a failed attempt to amend the resolution's call for the U.N. to begin discussing "the possibility of developing an international tax cooperation framework or instrument that is developed and agreed upon through a United Nations intergovernmental process."
"It is simply not consistent with implementation of the two-pillar solution to decide to begin intergovernmental discussions on ways to strengthen the inclusiveness and effectiveness of international tax cooperation," the U.S. representative said.
Ninety-seven countries voted against the amendment at the U.N. General Assembly's Economic and Financial Committee, with 55 voting in favor and 13 abstentions. Afterward, the U.S. representative lodged a formal dissociation from the resolution's operative paragraph addressed by the amendment, saying it implied there wasn't already a "highly inclusive" forum for international tax diplomacy, namely in the OECD's inclusive framework on base erosion and profit shifting.
A representative of the U.K. said the commonwealth hoped the U.N. secretary-general's follow-up report called for in the resolution focuses on strengthening the OECD's progress rather than recommending overlapping initiatives.
"We voted in favor of the amendment because the original language in [operative paragraph two] prejudges new initiatives at the United Nations which could duplicate and potentially undermine existing OECD work at a crucial point in implementation of the two pillar solution," the U.K. representative said.
Those concerns were echoed by a representative of the Czech Republic, speaking on behalf of the European Union, as well as Turkey, Montenegro, Serbia, Albania, Ukraine, Moldova, Georgia and Bosnia and Herzegovina.
"Creating a new parallel track of discussions is not the right answer to the objective of strengthening cooperation and would jeopardize this common objective," the Czech Republic representative said.
To be represented effectively under a new U.N.-led framework, already cash-strapped developing countries would have to allocate significant resources to negotiations, a representative of Switzerland said.
"We doubt the resolution today will be able to increase inclusiveness in the field of international taxation," the representative said.
Negotiations at the U.N. on the resolution, which proposed exploring binding multilateral changes, were marred by a lack of transparency about who was being consulted and criticized as unfair, said a representative of South Korea.
"All delegations were not treated fairly," the representative said in reference to a delay in producing a budget impact analysis.
Nevertheless, the outcome was welcomed as historic by Alex Cobham, executive director of the Tax Justice Network.
"We commend U.N. members on their bold action today to move rulemaking on global tax into the daylight of democracy at the U.N.," Cobham told Law360 on Wednesday.
In a news release Tuesday, Cobham's organization claimed the OECD had held a "campaign of meetings" and applied pressure to ambassadors, including by sending letters that questioned "the U.N.'s fitness to oversee international tax discussions."
The OECD did not respond to requests for comment.
The U.N. secretary-general's office did not respond to a request for comment.
Nigeria's mission to the U.N. did not respond to a request for comment.
South Korea's mission to the U.N. did not respond to a request for comment.
--Additional reporting by Matthew Guerry. Editing by Roy LeBlanc.
For a reprint of this article, please contact reprints@law360.com.