The Way Of The Water: Defining A Global Tax Policy For Oceanic Resources

The exploitation of ocean resources has been under discussion since the Seventies and, with it, the need for proactive policies addressing the protection of natural resources due to the increasingly observable impacts of climate change, environmental degradation, and the resulting loss of biodiversity. The UN defines oceans as the «next great economic frontier» and several issues emerging from this understanding have been addressed so far. Tax policies are still undetermined, although they might play a role in the matter, allowing developing States to raise revenue by charging profits made by MNE:s in the exploration of their waters. The need for a fairer redistribution of wealth and taxing power amongst States, tabled by prominent organizations and international groups (UN, BRICS) is however clashing with an obsolete set of rules, based on the dichotomy Residence-Source State, which favours developed countries. The G-20, under the leadership of Brazil, should act swiftly, tabling principles addressing the redistribution oftax revenue and allocation of the power to tax oceanic resources. Thus, this proposal suggests to: o Clarify the extension of the taxing right in the Exclusive Economic Zone of the high seas. The G-20 should intervene, stating that the power to tax in these areas should mirror the principles of the Montego Bay Treaty, and be attributed to the country whose coastal line the sea is adjacent to. This would grant many States, most notably developing countries, an extra-jurisdiction to tax and the possibility to raise more revenues, particularly addressing MNEs which are exploiting resources tax-free so far. e Address the allocation of taxing rights on different income in cross-border circumstances, possibly introducing a new nexus rule dealing with the harvesting ofocean resources. It could be the occasion to introduce a new tax Treaty addressing this scenario or, as a second-best solution, to properly amend the UN Tax Model Convention concerning the blue economy, including oceanic resources-based income. This would help in pursuing a fairer and more cooperative tax approach to the blue economy.