About the Multilateral Taxation Treaty

THE CURRENT GLOBAL TAX REGIME

The current global tax regime was developed in the 1920’s when the four economists who drafted the original model tax treaty, opted for a bilateral model rather than a multilateral tax treaty. Both the Organisation for Economic Cooperation and Development, (OECD), and the United Nations (UN) adopted this bilateral model.

This bilateral model eventually resulted in a tax treaty regime consisting of thousands of tax treaties each between two countries. Each treaty was designed to address the specific requirements of each bilateral arrangement and encouraged countries to adopt tax laws that addressed the specific requirements of each countries specific tax laws.

Thus, each countries tax laws were generally uncoordinated with the tax laws of other countries. This regime operated successfully until the advent of the 21st Century with increasing tax inequality, globalisation, computerisation, the digital economy, tax evasion/avoidance by multinational entities and high-wealth individuals, crypto-currencies, artificial intelligence, and a raft of other tax-related issues.

This resulted in a decline in global tax revenue estimated at around US$500 billion annually. It is also estimated that tax havens hold trillions of untaxed wealth.

THE PROBLEM

The current global tax regime is still based on the bilateral model tax treaty developed in 1923 to meet the requirements of that era. The bilateral architecture of this model encouraged countries to develop their own tax laws uncoordinated with the laws of other countries. This provided gaps and frictions between the domestic tax laws and treaty provisions of many countries. The tax advisers to multinational entities (MNEs) utilise the gaps and frictions between the treaties and domestic laws of many countries to lawfully avoid tax.

Furthermore, multinational entities and other high wealth entities invest trillions of US$s in tax havens where these assets remain untaxed, and result in unlawful tax evasion. Several of the tax reports soon to be available from our Shop explains how MNE’s avoid trillions of US$s through global tax avoidance and tax evasion schemes.

Of increasing concern, this system has been manipulated to allow the wealthier countries to collect sufficient tax revenue to develop higher levels of civilisation generally than other less fortunate economically emerging countries. This system has also produced circumstances in which emerging (developing) countries have struggled to achieve a sufficient share of global tax revenue to enable them to provide higher educational standards, health care, education, and job opportunities such as to encourage their younger populations to remain at home rather than risking unsafe migrations to other countries.

This lack of sufficient tax revenue combined with governments of questionable integrity forces the populations of these developing countries to risk death by venturing in perilous land and sea voyages in the hope of finding a new home with more opportunities for establishing a satisfactory standard of living for their families. Under the current global tax system developing countries are destined to remain that way.

THE SOLUTION

The taxation specialists at Global 91 identifies the root cause of global tax evasion and avoidance several years ago as the bilateral architecture of the current global tax treaty regime. We have developed a multilateral tax treaty that will have many advantages over the bilateral regime that allows tax avoidance and tax evasion by multination entities and which costs governments US$ trillions annually.

Our multilateral tax treaty will enable developing countries with their emerging economies to attract foreign investment by lowering the minimum global tax rate for high-wealth MNEs from 15% to 5%.

The introduction of a tax on capital for entities with global assets exceeding US$ 1 billion will also ensure that the tax burden falls on all sections of our global society rather than predominately upon the working class.

These and other tax innovations contained in our multilateral tax treaty will level the playing field and provide sufficient annual tax for both developed and developing countries to achieve sustained economic advancement.

Our trained and experienced economic development consultants will work with treasury and other relevant government departments to conduct research and prepare 5-year economic developments plans for each emerging economy.

Economic development plans are essential for sustainable growth, job creation, and a thriving community. Without a plan, communities are forced to react to external economic forces rather than proactively shape their future. Having a strategic roadmap ensures that economic growth is intentional, measured, and community focused.

Economic development plans are essential for recognition of existing economic development opportunities, available and potential pathways for sustainable growth. A strong economic development plan considers:

• Availability of basic requirements of fresh water, sufficient food, and housing.
• Identification of traditional economic activities and current opportunities.
• Identification of available economic resources.
• Population demographic trends (growth or decline).
• Economic shifts (booms or stagnation).
• Workforce development and job creation.
• Public-private investment opportunities.
• Land use and sustainable housing growth.
• Arts, culture, and community amenities.