The proposed OECD Pillar One and Two reforms mark a significant shift in the way large multinational enterprises are taxed on their global incomes. However, while considering the reform at the proposed scale tax administrators must be able to compare the revenue gains with alternatives. This paper uses open-source data to provide tentative estimates of the impact of Pillars One and Two. The methodology has been detailed so that administrators can replicate it for comparison. Further, the paper provides an assessment from the perspective of developing countries of some of the key design elements of the proposals so as to understand whether they are administrable and to foresee possible challenges.
Impact of a Minimum Tax Rate under the Pillar Two Solution on Small Island Developing States
By Kuldeep Sharma
The Research Paper commences with an overview of Pillar One and Pillar Two followed by detailed discussions on salient provisions of Pillar Two.
Pillar Two is envisaged to have a widespread impact on Small Island Developing States (SIDS) which are a distinct group of 38 United Nations (UN) Member States and 20 Non-UN Members/Associate Members of UN regional commissions that are exposed to unique social, economic and environmental vulnerabilities. In all, 36 SIDS that are members of the Group of Seventy-Seven (G-77) have been analysed, namely, Antigua and Barbuda, Bahamas, Bahrain, Barbados, Belize, Cabo Verde, Comoros, Cuba, Dominica, Dominican Republic, Fiji, Grenada, Guinea-Bissau, Guyana, Haiti, Jamaica, Kiribati, Maldives, Marshall Islands, Mauritius, Federated States of Micronesia, Nauru, Papua New Guinea, Samoa, São Tomé and Príncipe, Seychelles, Singapore, Solomon Islands, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Timor-Leste, Tonga, Trinidad and Tobago, and Vanuatu.
Brazilian Competition Law and Access to Health in Brazil: Exploitative Pricing in the Pharmaceutical Sector
By Bruno Braz de Castro
This paper aims to analyze the interfaces between Brazilian Competition Law and the issue of access to medicines, with a special focus on abuse of industrial property rights and related exclusionary and exploitative effects. The paper analyzes the case law of Brazilian Administrative Council for Economic Defense (CADE) in the pharmaceutical sector and discusses abusive practices such as illegitimately imposing non-existent or invalid intellectual property rights with anticompetitive purposes. It then addresses abusive strategies in the exercise of industrial property rights which are, in essence, valid: i.e., exclusionary practices, aimed at artificially raising barriers to entry; and exploitative practices, directly translated as the exercise of market power to the detriment of the consumer. The latter ultimately result in exploitative excessive prices; contractual, quality or privacy degradation; and restrictions on supply, such as by hoarding/preventing the exploitation of industrial property rights. The paper concludes that the prohibition of exploitative pricing under the current competition law is legally valid and effective, with certain methodological concerns towards reducing the risk of wrongful convictions (for instance, by applying screening tests to determine the markets that are candidates for intervention). In view of such guidelines, the pharmaceutical industry appears to be an important candidate for antitrust attention, given the magnitude of the harm potentially derived from non-intervention against the practice. Remedies in this area, importantly, should focus on identifying and solving the sector’s structural competitive problems. In the case of medicines subject to price regulation by the Drug Market Regulation Chamber (CMED), the technical expertise of the competition authority may be of great value in terms of competition advocacy, a fact that is demonstrated in light of recent discussions on extraordinary price adjustments because of competitive problems in certain markets.
¿Una elección difícil? Comparación de los ingresos fiscales que recaudarán los países en vías de desarrollo a partir de los regímenes del Monto A y del Artículo 12B de la Convención Modelo de las Naciones Unidas
Por Vladimir Starkov y Alexis Jin
En este documento de investigación, pretendemos calcular los ingresos tributarios que obtendrán (o perderán) los Estados miembros del South Centre y la Unión Africana con arreglo a los regímenes del Importe A y del Artículo 12B. En nuestro análisis hemos recurrido a fuentes de información disponibles para el personal investigador del sector privado, aunque no ha conllevado el examen de ninguno de los datos que los contribuyentes proporcionan a las autoridades fiscales. Nuestra investigación demuestra que los efectos comparativos en los ingresos obtenidos con los regímenes fiscales del Importe A y el Artículo 12B dependen en gran medida de a) los detalles de diseño del régimen del Artículo 12B; b) si el país es sede de empresas multinacionales que puedan estar dentro del ámbito de aplicación de los regímenes fiscales del Importe A o del Artículo 12B; y c) la desgravación a partir de la doble tributación, de haberla, que conceda el país a los contribuyentes nacionales sujetos al pago de tributos en virtud del régimen del Importe A o del Artículo 12B.
The Human Right to Science: From Fragmentation to Comprehensive Implementation?
By Peter Bille Larsen and Marjorie Pamintuan
In times when the role of science in society is more debated than ever in polarized, politicized and partial terms, what is the role for the human right to science and rights-based approaches? The right to science remains poorly understood and neglected in both national and global human rights processes. Beyond defending the freedom of scientific expression, upholding the right to science is arguably fundamental to resolving key sustainability challenges of our times from climate change and the biodiversity crisis to global health and pandemics. The global COVID-19 pandemic has revealed persistent global inequalities not least in terms of how the privatization of science and current intellectual property regimes hinder just and equitable responses to access science and its benefits. This prompts the need for a shift from single-issue approaches to comprehensive and systematic treatment of the right to science as a bundle of human rights across multiple arenas to counter fragmentation and silo-tendencies.
The Proposed Standing Multilateral Mechanism and Its Potential Relationship with the Existing Universe of Investor – State Dispute Settlement
by Danish and Daniel Uribe
The reform option on the Standing Multilateral Mechanism (SMM) currently under discussion at UNCITRAL’s Working Group III (WGIII) has raised a number of important, systemic concerns for the procedural reforms of investor-State dispute settlement. This paper first seeks to situate the discussions on the SMM within its historical and contemporary contexts. Then it considers UNCITRAL Working Paper 213 and the legal provisions it contains, which form the basis of ongoing discussions of this reform option at WGIII. Further, it explores the potential relationship of this proposed SMM with different facets of the existing international investment law regime. The paper concludes by providing some elements which require further consideration in this process, particularly for safeguarding the interests of developing countries.
Two Pillar Solution for Taxing the Digitalized Economy: Policy Implications and Guidance for the Global South
by Irene Ovonji-Odida, Veronica Grondona, Abdul Muheet Chowdhary
The taxation of the digitalized economy is the single most important topic in international tax negotiations today. The OECD has devised a “Two Pillar solution” to the problem. Pillar One is focusing on a reallocation of taxing rights to market jurisdictions, which are largely expected to be developing countries, and Pillar Two is instituting a global minimum tax. The Pillar One solution, known as Amount A, will be codified into a Multilateral Convention (MLC) and is expected to be placed before countries for signature in early 2023. The solution ushers in a new paradigm in the taxation of multinational enterprises but has immense complexity and likely minimal revenue gains for most developing countries. It will also require them to give up the right of unilateral tax measures on all out-of-scope companies, meaning they will only be able to tax the fewer than 100 companies likely to be in-scope, if at all. The decision to sign or not is thus a historic one, as it will lock developing countries into a constricted new framework, at a time when revenue needs are especially critical to recover the economies from COVID-19 in the context of a turbulent state of the global economy.
However, the United Nations too has a solution, known as Article 12B. This operates in a different manner and is a minor modification to the existing decentralized international tax system which is based on bilateral tax treaties, and which developing countries are more familiar with. It is also likely to generate far higher revenues than Amount A, and does not restrict any of their sovereign taxing rights. This Research Paper assesses the various implications for developing countries from adopting the OECD’s or the United Nations’s respective solutions and concludes with a possible global South response to the Two Pillar solution.
Movement Forward on ABS for the Convention on Biological Diversity: Bounded Openness Over Natural Information
by Joseph Henry Vogel, Manuel Ruiz Muller, Klaus Angerer, and Christopher May
“Access to genetic resources” and “fair and equitable sharing of benefits arising [from their] utilization” is the third objective of the 1992 United Nations Convention on Biological Diversity (CBD). The expression is included in the full title of the 2010 Nagoya Protocol (NP). Neither agreement defined “material” in the phrase “genetic material” which resulted in misinterpretation that the object of access for R&D is tangible. Unfairness ensues: competition among provider Parties leads to the elimination of economic rents, which is desirable for tangibles but undesirable for intangibles. Once interpreted as natural information, the economics of information justifies a Global Multilateral Benefit-Sharing Mechanism (GMBSM) (Article 10 NP) which collects and distributes rents on value added to genetic resources. “Bounded openness over natural information” is the modality proposed for the GMBSM. The Executive Secretary of the United Nations Secretariat of the CBD recognized the argument in the 2021 Note “Digital Sequence Information on Genetic Resources”.
Reaping the Fruits of Research on Microorganisms: Prospects and Challenges for R&D and Industry in Sri Lanka
by Ruwan Fernando
When the Intellectual Property Bill designed to secure compliance with the Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS Agreement”) was challenged in the Supreme Court of Sri Lanka, the Court determined that the patenting of naturally occurring microorganisms by right holders would result in the increase of the prices of diagnoses and cures. The Supreme Court found that in the absence in the Bill of mitigatory measures -as allowed by the TRIPS Agreement- and of a working definition of the term “microorganism”, there was a violation of the right to equal protection under Article 12 (1) of the Constitution. In the circumstance, the patent protection for microorganisms was narrowed down to transgenic microorganisms.
The policy makers do not appear to have disregarded the positive impact of the Supreme Court determination by making the necessary statutory provisions and policy changes to facilitate the patent applications on transgenic microorganisms, while ensuring that local researchers are not restrained from gaining access to naturally occurring microorganisms for research and development.
Comparaison des recettes fiscales à engranger par les pays en développement au titre des régimes du Montant A et de l’Article 12B du Modèle de convention des Nations Unies
Par Vladimir Starkov et Alexis Jin
Le présent document de recherche se propose d’estimer le montant des recettes fiscales qui seraient engrangé (ou perdu) par les pays membres du Centre Sud et de l’Union africaine dans le cadre de la mise en œuvre du Montant A et de l’Article 12B. Notre analyse s’appuie sur des sources d’information accessibles aux chercheurs du secteur privé et non sur les informations communiquées par les contribuables aux autorités fiscales. Elle démontre que les effets comparatifs sur les recettes de la mise en œuvre du Montant A et de l’article 12B dépendent en grande partie (a) des détails de conception du régime mis en place par l’article 12B, (b) du fait que le pays accueille ou non le siège d’entreprises multinationales susceptibles d’être imposées au titre du montant A ou de l’article 12B, et (c) de l’allégement éventuel de la double imposition qui sera accordé par le pays aux contribuables nationaux imposés au titre du Montant A ou de l’article 12B.
Twenty Years After Doha: An Analysis of the Use of the TRIPS Agreement’s Public Health Flexibilities in India
By Muhammad Zaheer Abbas, PhD
The World Trade Organization (WTO) linked intellectual property protection with trade. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), however, included a number of public health flexibilities in order to provide latitude to the Member States to tailor their national patent laws to fit their individual needs. In 2001, the Doha Declaration further clarified and reaffirmed the existing TRIPS flexibilities. This paper argues that India has taken the lead role in enacting the TRIPS Agreement’s substantive and procedural patent flexibilities by introducing unique legislative measures to deal with the problem of access to medicines. This article evaluates India’s use of section 3(d) as a subject matter exclusivity provision. It examines constitutional validity and TRIPS compliance of section 3(d). It also evaluates India’s use of the flexibility to define the term “inventive step”. Moreover, this article evaluates India’s use of compulsory licensing, the most notable exception to patent rights provided under the TRIPS Agreement. This empirical study is important in the context of the COVID-19 pandemic, which has once again highlighted the same public health issues that the Doha Declaration sought to address twenty years ago.
WTO Moratorium on Customs Duties on Electronic Transmissions: How much tariff revenue have developing countries lost?
By Rashmi Banga
This research paper highlights the adverse impacts of the continuing WTO moratorium on customs duties on electronic transmissions on the developing and least developed countries. The rapidly progressing digitalization along with the ongoing pandemic and the food crisis are creating multiple demands on the government revenues. However, because of the moratorium almost all developing, and least developed countries are losing tariff revenues especially at the time when they are most needed. Not only are they losing the fiscal space but are also losing their regulatory space as they are unable to regulate the growing imports of digitizable products, especially of luxury items like the movies, music and video games. It is estimated that in the period 2017-2020, developing countries and LDCs lost $56 billion of tariff revenue, of which $48 billion were lost by the developing countries and $8 billion by the least developed countries. It is interesting to note that this loss of tariff revenue is from the imports of just 49 products (at HS six-digit). With no clarity on the definition of electronic transmissions (ET) and thereby on the scope of the moratorium, the continuation of the WTO moratorium on customs duties on ET can lead to substantive tariff revenue losses for developing and least developed countries in the future.
