The international taxation is going through a significant transformation, with a growing focus on a multilateral tax treaty free of polities and discrimination. This shift is due to the need for a new approach that challenges the restrictions placed on the collection of tax revenue by both emerging and developed countries. The current bilateral tax treaty regime is increasingly failing to prevent tax evasion and tax avoidance and to impose taxes on those who can afford to pay. Recent developments including globalisation, the digital economy, and electronic and borderless commerce, have exposed the limitations of the current bilateral tax treaty regime. The introduction of Global 91’s Multilateral Tax Treaty will direct taxation, including new taxes, more equitably at those who should share the responsibility of developing civilisation.
Historically, international tax agreements have been mostly bilateral, involving two countries negotiating to avoid double taxation and oppose tax evasion. However, the limitations of bilateral treaties, such as their inability to address global tax challenges, have led to a demand for a multilateral tax treaty. This treaty is available for any country to sign, can easily be amended, and can involve every country that wishes to join and provides a more unified framework for international tax cooperation. It will also achieve a more equitable distribution of the tax burden.
The multilateral tax treaty offers several advantages over bilateral agreements. It provides consistent rules and standards, reducing discrepancies and conflicts between countries tax treaties and domestic tax laws. This consistency is crucial in a globalised economy where businesses operate across multiple countries. Also, negotiating amendments to a single multilateral tax treaty is simple, and vastly easier that amending thousands of bilateral tax treaties. It saves time and resources for all parties involved. A multilateral tax treaty can also address a wider range of tax issues, offering a more holistic solution to global tax challenges.
A multilateral approach to international taxation offers several advantages over traditional bilateral treaties:
Our modelling predicts that following modernisation and introduction of new and revamped taxes via the multilateral tax treaty, tax revenue for emerging countries will increase by between 32% and 42% annually and for developed countries by an average of 35% annually.
A multilateral tax treaty offers consistent rules and standards, reducing discrepancies and conflicts between member countries. This uniformity is crucial for multinational corporations that operate in multiple countries. It simplifies compliance and reduces the risk of double taxation.
Negotiating a single multilateral tax treaty is infinitely more efficient than negotiating multiple bilateral tax treaties, saving time and resources for all parties involved. This efficiency is important in a rapidly changing global economy. The Multilateral Tax Authority is empowered to hear all disputes through internal judicial processes.
A multilateral tax treaty can address broader tax issues, providing a more holistic solution to global tax challenges. This comprehensive approach ensures that all aspects of international taxation are covered, from substantially increasing tax revenue, to preventing tax evasion, and to resolving disputes.
A multilateral tax treaty will develop better cooperation among countries, promoting a collaborative approach to tackle global tax issues. This cooperation is crucial to addressing complex tax challenges that need coordinated efforts, such as reducing tax evasion and profit shifting.
The digitalisation of the economy presents both opportunities and challenges for tax transparency. On one hand, digital platforms and e-commerce have created new ways for tax evasion. This is why it is crucial to develop new regulatory frameworks. Digital tools can ensure more efficient tax administration and improve the accuracy of information exchange. The future of tax transparency will depend on the ability of tax authorities to adapt to these changes and leverage digital technologies effectively.
One of the main areas of operation of the Multilateral Tax Authority will comprise working with emerging member countries to utilise increasing tax revenue to effectively address the result of past economic disadvantages by working with members to establish appropriate income-producing commercial ventures.
The MTA will cooperate with each member to develop a 5-year plan unique to each member’s circumstances, for economic development based on traditional economic activities and new economic opportunities available through increased tax revenue. Each plan will be individually designed to combine traditional economic activities with technological advancements available through increased tax revenue.
Looking ahead, several trends will shape the future of multilateral taxation. The increase in the exchange of information, the integration of tax transparency into ESG reporting, and the increasing role of emerging countries will all enhance the progress. Also, the development of new technologies and regulatory frameworks will be crucial in addressing emerging challenges and ensuring the effectiveness of multilateral tax strategies.
One crucial trend is the move towards real-time tax reporting and compliance. Advances in technology are enabling tax authorities to collect and analyse data in real-time, ensuring timely and accurate tax assessments. This shift towards real-time reporting can reduce the compliance burden on taxpayers and improve the efficiency of tax administration.
The future of international taxation lies in embracing multilateral strategies that promote cooperation, consistency, and comprehensive solutions to global tax challenges. By working together through a multilateral tax treaty that is non-political, non-denominational, and taxes the income and wealth of all levels of society, fairly, both emerging and developed countries can cooperate to create a more transparent, fair, and efficient international tax system that benefits all stakeholders. The journey towards better tax transparency is ongoing and needs the collective efforts of governments, businesses, and international organisations. By working together, we can build a tax system that is fair, transparent, and capable of meeting the challenges of the modern global economy. Contact us today to learn how Global 91 can transform your international strategy and ensure growth as a nation.
