The current international financial and taxation systems, established in the 1920s and controlled mostly by developed countries, are in part responsible for growing inequality among both people and countries (many of which lack the resources to guarantee basic human rights). Paradoxically, international financial and taxation systems, which started benefiting developed countries over developing ones, are now being abused mostly by certain multinational entities and the top 0.1% of individual taxpayers, to enable these taxpayers not to contribute their fair share of taxes or to abuse debt restructuring processes, thus increasing inequality with a mutually reinforcing effect. For example, alarming levels of financial and tax secrecy are facilitating the growth of illicit financial flows, including money laundering and tax evasion.
The International Financial Architecture (IFA) working group will focus on the international financial and taxation systems and their relationship to five elements: 1) global inequality, 2) sustainable development, 3) resource mobilization, 4) harmful competition among countries and 5) the fight against illicit financial flows.
The IFA working group will address the new transparency developments, including automatic exchange of bank account information and beneficial ownership registration, as well as the identification and countermeasures against tax havens. In relation to taxation, we will discuss the new measures to tackle tax avoidance by multinational entities (e.g., the G20 OECD Base Erosion and Profit Shifting (BEPS) Action Points) and the challenges posed by the digital economy as well as the consequences of imposing arbitration on developing countries as a way to solve tax conflicts.
Technological innovation will be considered to identify new tools to help towards achieving our goals of enhancing financial and tax transparency (e.g., big data and artificial intelligence) as well as new risks created by crypto-currencies. The challenges of debt restructuring processes for vulnerable countries will also be addressed. In addition, we will consider whether the current international framework and institutions that govern and set international rules regarding these issues are fit for purpose, and how to ensure that all voices, including those of developing countries and civil society, are heard in a meaningful way.