At the Third Session of the Fiscal Commission, developed and developing countries agree on general rules to apply in tax relations between developed and developing countries; however, Britain adapts the Commission’s resolution to serve its preferences. The United Nations falls out of favour with the United States, and McCarthyism infiltrates the organization. The UN Secretariat ceases to promote tax treaties in its technical assistance activities.

The United States contemplates terminating the Fiscal Division and Fiscal Commission but relents. The financing of economic development in underdeveloped countries becomes a priority agenda item in the Economic and Social Council. Inter-American relations deteriorate and the US tax treaty programme with underdeveloped countries takes a nosedive.

The changed and changing global political economy and institutional order of the first postwar decade leads the envisaged workings of the Fiscal Commission and its secretariat arm, the Fiscal Division, even further away from the League’s practices. These geopolitical shifts would bear upon every global concern and the institutional machinery governing the international economic and political order, impacting not just the UN’s capacity for international tax coordination but also international financial flows. With foreign direct investment becoming the main source of financing for developing countries, double taxation questions in turn become enmeshed in serving development objectives.

Tensions soar to new heights between developing and developed countries in the debate over double taxation of foreign investment at the Fourth Session of the Fiscal Commission and later in the Economic and Social Council. The compromise resolution breaks no new ground in allowing developing countries more source taxing rights but is used by industry in Britain to support the reduction of British taxation of income arising from investments in underdeveloped countries.