Daily Current Affairs : 24-November-2023

In a significant move, the United Nations General Assembly (UNGA) recently approved a resolution aimed at fostering international tax cooperation. This initiative, spearheaded by the Africa Group, garnered support from 125 member states, with 48 voting against and 9 abstaining. India notably stood in favor of the resolution.

Key Provisions of the Resolution
  1. Formation of an Intergovernmental Committee
    • The resolution outlines the creation of an intergovernmental committee tasked with developing protocols and measures to counteract tax-related illicit financial flows.
    • The committee is to consist of a maximum of 20 members, chosen based on balanced geographical representation, ensuring equal participation from the UN’s five regional groups.
    • Emphasizes the importance of considering the needs of developing countries within the committee’s deliberations.
  2. Voting Dynamics
    • The resolution’s approval signifies a global consensus, with a significant majority supporting the initiative.
    • Noteworthy is India’s endorsement of the resolution, highlighting a diverse range of nations aligning in the pursuit of fair and effective international tax policies.
Significance of the Proposed Convention
  1. Combatting Illicit Financial Flows
    • Illicit financial flows perpetuate cross-border tax evasion, exacerbating economic inequalities between high-income and low-income countries.
    • The convention aims to curtail these flows, fostering a more equitable global economic landscape.
  2. Shifting Global Tax Policy Focus
    • The proposed convention seeks to redirect the locus of global tax policy decisions from the Organisation for Economic Cooperation and Development (OECD) to a more inclusive platform.
    • Concerns about the fairness of existing regulations, biased towards developed and wealthy nations within the OECD, underscore the need for a more balanced and inclusive approach.
Important Points:
  • Key Provisions of the Resolution:
    • Formation of an intergovernmental committee to combat tax-related illicit financial flows.
    • Committee to have a maximum of 20 members with balanced geographical representation.
    • Emphasis on considering the needs of developing countries.
  • Voting Dynamics:
    • Global consensus with 125 member states supporting the resolution.
    • India’s endorsement highlights diverse support for fair international tax policies.
  • Significance of the Proposed Convention:
    • Illicit financial flows contribute to cross-border tax evasion, widening economic inequalities.
    • Convention aims to curb illicit financial flows for a more equitable global economic landscape.
    • Shifts global tax policy decisions from OECD to a more inclusive platform.
    • Concerns about the fairness of existing regulations within the OECD, favoring developed nations.
Why In News

The United Nations General Assembly (UNGA) recently adopted a resolution to move forward with a proposal for a UN tax convention to promote international tax cooperation, recognizing the crucial need for a unified framework to address global economic challenges and foster equitable and sustainable development.

MCQs about UNGA Paves the Way: A New Era in International Tax Cooperation

  1. What does the UNGA resolution primarily aim to achieve?
    A. Strengthening regional alliances
    B. Curbing illicit financial flows through international tax cooperation
    C. Enhancing economic cooperation within the OECD
    D. Promoting exclusive tax policies for developed nations
    Correct Answer: B. Curbing illicit financial flows through international tax cooperation
    Explanation: The UNGA resolution focuses on combating tax-related illicit financial flows globally.
  2. How many members are proposed to be in the intergovernmental committee as per the resolution?
    A. Up to 15
    B. Exactly 20
    C. Over 25
    D. A minimum of 10
    Correct Answer: B. Exactly 20
    Explanation: The resolution suggests a committee with a maximum of 20 members for balanced geographical representation.
  3. Why is the shift of global tax policy decisions significant ?
    A. To favor OECD’s exclusive influence
    B. To strengthen economic disparities between nations
    C. To address concerns of bias towards developed nations in OECD
    D. To reduce the role of developing countries in decision-making
    Correct Answer: C. To address concerns of bias towards developed nations in OECD
    Explanation: The shift aims to address concerns about the fairness of existing regulations within the OECD.
  4. What is the key motivation behind endorsing the UNGA resolution?
    A. Promoting tax evasion
    B. Fostering a more inclusive and equitable global economic landscape
    C. Strengthening the dominance of high-income nations
    D. Supporting OECD’s exclusive control over global tax policies
    Correct Answer: B. Fostering a more inclusive and equitable global economic landscape
    Explanation: The resolution aims to curb illicit financial flows, fostering a more equitable global economic landscape.

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