This article first appeared in the March 16, 2015 edition of Tax Notes Today.
U.N. Secretary-General Ban Ki-moon on March 11 recommended that consideration be given to moving the annual meetings of the U.N. Committee of Experts on International Cooperation in Tax Matters from Geneva to New York.
The committee, which is part of the Economic and Social Council, holds a five-day meeting every year in Geneva, normally in October. The committee's main focus is on the U.N. model tax treaty, which is intended as an alternative to the OECD model treaty and is widely considered to be more favorable to developing countries. The committee in 2013 also published a transfer pricing manual that is designed to provide practical guidance for implementing the arm's-length standard in developing countries.
Ban's report comes in response to a request by the Economic and Social Council for recommendations to better integrate the committee's programs into the work of the council. Ban says one of the perceived weaknesses in the committee's working methods is that its Geneva meetings take place during the main part of the General Assembly, making it impossible for most council members to actively participate in its deliberations.
"Should the Committee meet in New York, such interested delegates would be able to participate in its sessions, which are open to observers, as decided by the Committee in an effort to ensure transparency and show its willingness to seek inputs and perspectives from beyond its membership," the report says.
It goes on to highlight the contributions of observers representing governments, businesses, and nongovernmental organizations, which it says "add extra legitimacy to the committee's outputs."
Shifting the meetings to New York will also forge a stronger relationship between the committee and the council and "give more authority" to the U.N. model tax treaty and its manuals on bilateral tax treaties and transfer pricing, the report says.
It cites administrative advantages for the move, especially because the committee's secretariat is based in New York. "The committee session, if held in New York, could be provided with better support, obviating the need for staff travel to Geneva, including the possibility of drawing on additional staff . . . of the Financing for Development Office," the report says.
The committee's staff consists of only three permanent employees. Germany has funded one additional staff member on a temporary basis since 2012.
Staff members were not available at press time to respond to e-mailed questions regarding when a decision on the recommendation is expected or what cost savings would be achieved by moving the meetings to New York.
One long-time attendee at the committee's meetings said that while moving the meetings to New York would improve its effectiveness, lower costs, and allow for improved briefing of U.N. delegations, the switch has its disadvantages as well.
"It would be unfortunate if such a move were to lead to countries replacing observers from national capitals [with] representatives from the New York delegations who generally have no expertise in tax," said Jeffrey Owens of Vienna University, a former head of the OECD's Centre for Tax Policy and Administration. "The U.N. would do better to focus on the issue of how it can provide more resources for this group."
Proposals to Improve Committee's Work
Ban's report also provides details about comments received through March 8 from member states on their views for improving the output and "operational capacity" of the committee. It says eight countries responded, with many emphasizing the need to enhance the involvement of developing countries in international forums, including the OECD, and to strengthen international tax cooperation and increase the committee's interactions with those groups.
Among other responses received, the report notes suggestions to double the number of committee sessions each year, to provide the secretariat with additional staff with expertise in tax matters, and to increase the number of committee members from 25 to 40.
There were also recommendations to convert the committee into an "intergovernmental body with experts representing their respective governments in a truly global forum with universal relevance and participation," the report says.
While those recommendations are consistent with proposals made by many developing countries in the past, some member states objected to the proposals out of concern that such a body would duplicate the efforts of existing international organizations, that existing forums already consider the policy positions of developing countries, and that such a conversion would require additional resources.
"Tax is an issue of growing importance and developing countries need to have a stronger voice in the global debate," said Owens. "The U.N. is the natural forum where this can occur, but it will not be effective without more resources."