UN MTC Article 26: Inequitable Exchange of Information Regime—Questionable Efficacy in Asymmetrical Bilateral Settings

Muhammad Ashfaq Ahmed ()
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Muhammad Ashfaq Ahmed: Federal Board of Revenue, Islamabad 44000, Pakistan

Laws, 2022, vol. 11, issue 5, 1-23

Abstract: The United Nations Model Tax Convention between Developed and Developing Countries (UN MTC) Article 26 charts out an exchange of information (EOI) regime “between developed and developing countries”, feigning that it is more favorable to the latter set of nations. Contrarily, the Organization for Economic Cooperation and Development (OECD) MTC Article 26, is professedly geared to protect and promote interests of OECD members—“the club of the rich”. Even a cursory comparative look at the two MTCs intriguingly reveals a lack of dissimilarities, and irresistibly leads to the conclusion that, materially, both provisions are identical. The situation gives rise to a paradox, whereby developing countries that are completely at different levels of development have broken governance structures, convoluted fiscal and criminal justice systems, and struggling tax administrations, and have been yoked into a multilayered EOI regime, which stemmed from an intra-OECD statecraft imperative, and is pre-dominantly beneficial to developed countries. The new normal contributes towards enhancement and deepening of the embedded inequities in the neocolonial economic order. The paper seminally dissects the strains generated by absence of dissimilarities between the two MTCs vis-à-vis Article 26, and posits that, in fact, this fundamentally being a developed country project, developing countries have been exploited as ‘beasts of burden’ merely to promote the economic interests of dominant partners in the relationship, and by doing so, sheds light on and galvanizes the unjustness latent in the international taxes system—an inherently unequal and lopsided affair. It also delves deeper into an axiological normative evaluation of the extant EOI regime, and finding it untenable, urges a larger paradigm shift. In fact, the UN’s meek convergence with the OECD on EOI regime, ditching developing countries and leaving them to fend for themselves in this critical area of international taxation, is the scarlet thread of the paper.

Keywords: EOI; Article 26; information exchange; tax transparency; UN model (search for similar items in EconPapers)
JEL-codes: D78 E61 E62 F13 F42 F68 K0 K1 K2 K3 K4 (search for similar items in EconPapers)
Date: 2022
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