Santiago calls for more teeth in UN tax treaty

 The former Klang MP says countries should be required to align existing tax treaties and domestic laws with the convention.

Former Klang MP Charles Santiago spoke on behalf of an Asian people’s movement at negotiations on a new international tax treaty at UN headquarters.

PETALING JAYA:

Weak provisions in a draft international tax treaty could affect Malaysia’s ability to collect tax revenue from multinational companies, former MP Charles Santiago has warned in a speech at the United Nations.

Santiago called for stronger obligations to be imposed on countries to align existing tax treaties with the proposed UN tax convention, including the abolition or renegotiation of treaties that are in conflict.

He said the current provision requires countries only to take “progressive and meaningful steps” towards aligning their tax agreements.

“Malaysia cannot afford an international tax treaty that functions merely as an aspirational statement while existing, unequal tax treaties remain in force indefinitely,” he said during the negotiations on the convention being held at UN headquarters in New York.

“If Article 21 allows countries to stall implementation or preserve legacy tax arrangements, developing economies like Malaysia will continue to lose vital tax revenues needed for public infrastructure, healthcare, education and climate adaptation,” he said.

Santiago said the draft also did not set a deadline for countries to align their tax treaties with the convention but merely made an obligation “to take steps towards alignment”. Leaving implementation open-ended would allow delay to become a substitute for reform,” he said.

He called for an effective mechanism to deal with countries that refuse to negotiate or prolong the process indefinitely. Countries should also be required to align their domestic laws with the convention to ensure its obligations are reflected in laws governing multinational companies.

Santiago was speaking on behalf of an Asian peoples’ movement on debt and globalisation during the current negotiations which will run until Aug 13.

The proposed UN Tax Convention is aimed at enhancing global tax cooperation and create a more inclusive and effective tax system, particularly benefitting developing countries. The negotiations began in 2025 and are expected to continue until 2027.

The aim is to give all countries, especially low- and middle-income nations, a voice in shaping international tax rules and create a fair system that prevents tax abuse by multinational corporations and wealthy individuals. - FMT