Current Affair 1:

News:

UN’s Ad Hoc Committee to Draft Terms of Reference for a United Nations Framework Convention on International Tax Cooperation approved a package of guidance for UN Global Tax Convention.

It aims at establishing a UN Global Tax Treaty for legitimate, fair, stable, inclusive and effective international tax system.

Is there consensus on a global tax treaty?

No. Developing countries largely support it, but some industrialised nations have expressed reservations, as reflected in the vote held in the Ad Hoc Committee on Friday.

A total of 110 Member States voted in favour of the terms of reference for a new treaty, with 44 abstentions and eight nations voting against it (Australia, Canada, Israel, Japan, New Zealand, Republic of Korea, United Kingdom and the United States).

What are the next steps?

1. The Ad Hoc Committee’s terms of reference will be sent to the General Assembly, which will hold a vote during the world body’s 79th session that begins in September.
2. If adopted, the Assembly would have the convention and two protocols drafted by a Member State-led negotiating committee, which would meet annually for the next three years.
3. The negotiating committee would then submit a final text to the General Assembly for its consideration in the first quarter of the 82nd session, according to the terms of reference.
4. That would mean that all 193 UN Member States could vote on a finalised UN global tax treaty in 2027.
5. The UN treaty would need to be adopted by the General Assembly, after which it would be opened for signature and ratification to all Member States.

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