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Overview
The United Nations General Assembly established the Intergovernmental Negotiating Committee, with the objective of drafting a United Nations Framework Convention on International Tax Convention and two early protocols. The proposed Convention seeks to position itself as an international instrument with the aim of improving global tax cooperation. This process is scheduled to run from 2025 to 20271. The draft text of the Framework Convention on International Tax released by the UN, on the 24th of October 20252 seeks to codify some of the articles in detail ahead of the third round of negotiations in Nairobi, scheduled for the 10th to 19th of November 20253.
Boutonnière of Provisions
Article 4
The co-leads have, in an effort to codify the rules to regulate the ‘Fair Allocation of Taxing Rights’ under Article 4, sought to identify that all source jurisdictions where the taxpayer conducts business and where the value is created will be able to tax the income generated from these businesses.
Article 5
Assuaging the concerns surrounding the taxation of the High-Net-Worth Individuals (hereinafter referred to as HNWIs) the draft article 5, starts with recognising the need for the prevention of HNWIs from avoiding and evading taxes. These though seems to be a trivial detail to identify, it is critical to appreciate the efforts of the UN towards penning the concerns raised by several States in the context of HNWIs. It hinges on the importance of Exchange of Information (hereinafter referred to as EOI) to combat the menace of the effective taxation on HNWIs. In this context, the Co-Leads have recognised the expansion of EOI, to additional forms of assets and instruments and in regard to the structures and techniques employed by HNWIs to avoid and evade taxes, by including the need for appropriate disclosures of these structures and techniques by the taxpayer, advisors and all the intermediaries involved in developing them. The article finally underlines the need for cooperation among the States, to ensure effective taxation of the HNWIs.
Article 6
Article 6 seeks to identify the concept of ‘Mutual Administrative Assistance’ (hereinafter referred to as MAA). In this context, the draft recognises the need for effective MAA to achieve the broader goal of Domestic Resource Mobilisation (hereinafter referred to as DRM), by augmenting a State’s ability to enforce their domestic tax laws. The article also provides a non-exhaustive list of aspects that should form part of the administrative assistance to be provided by the States. The draft also identifies state cooperation as critical to identifying and eliminating administrative barriers that prevent effective mutual administrative assistance, including transparency and EOI in the realm of taxation. The article further recognizes the rights of the supplying State towards the protection of the personal data; it identifies that it would be the prerogative of the supplying State to dictate the manner in which the data provided under articles 5 and 6 would be protected with due regard to the domestic laws of the state. The draft also identifies that it would mandate the States to increase assistance in the collection of the tax debts, to any extent possible considering the needs and the capacities of the States and having due regard to the national constitutional restrictions.
Article 7
The draft convention seeks to mitigate the concerns surrounding the issues of ‘Illicit Financial Flows, Tax Avoidance and Tax Evasion’ under Article 7. The Draft underlines “State cooperation” as the foundation for effectively combating the issue of tax related illicit financial flows. In this context, the draft provides for the development of effective tools for the identification of tax-related illicit financial flows to be enforced through international cooperation and transparent reporting standards as a precondition to ensure the effective taxation of income and profits from the tax related illicit financial flows. It further provides for information sharing in the context of structures and techniques used by the taxpayers to avoid and evade their taxes.
Article 8
Article 8 identifies the issue of ‘Harmful Tax Practices’ as the cause that undermines the ability of all the countries to be able to tax in a fair manner. The draft article provides that the tax incentives should be substance-based and should be linked to investment or performance and will merely be profit-based. The article thus provides for the States to cooperate in the development of effective tools in order to combat the harmful tax practices, this would include information sharing and introducing appropriate measures including minimum taxes on the business activities originating from the jurisdictions with harmful tax practices.
Article 9
Article 9 marks the first effort of the UN towards legislating the issue of Sustainable Development that has stayed at the helm of international organisations over the last decade, especially following the efforts undertaken by the United Nations Framework Convention on Climate Change (UNFCCC). In this context, it would be opportune to appreciate the opening lines of the article, that considers the “differing capabilities” of States, a doff to the pulchritude that smaller States and island economies in particular face. It effectively addresses the need for approaches towards international tax cooperation that would contribute to sustainable development, holistically.
Article 10
Article 10 of the draft Convention purposes the clandestine issue of ‘Prevention and Resolution of Tax Disputes.’ It identifies the speedy resolution of disputes as a precondition to the promotion of investment and trade. The article mentions that States should endeavour to minimise the potential for disputes by identifying clear and accessible rules and interpretative guidance in the context of tax obligations. It also provides an avenue for the States to be able to implement their domestic dispute resolution mechanisms.
Articles 11 to 21 – Not inserted
Article 22
Article 22 is a key determinant towards the effectiveness of the Convention and more broadly in ensuring tax certainty. It provides for the interaction of the Convention with the Protocols. The Article provides for the Convention to be accompanied by one or more protocols. The Article mentions that the requirements for the entry into force of any of the protocols has to be established by that instrument. The Article very critically identifies that for the State to become a party to a protocol, the state must be a party to the convention. The Article further establishes that for a State that is a party to the Convention, to be a party to the protocol, it is pertinent for the State to explicitly become a party to the protocol, in accordance with the provisions of the Protocol.
BMR Legal Analysis
The Draft Convention is indicative of the need felt to fundamentally reassess the allocation of taxing rights between countries. In the context of Article 4, it would firstly be right to appreciate the background of the inclusion of the term ‘fair’. One of the important themes of the UN multi-stakeholder discussions towards the inclusion of the term ‘fair’, the underlying reason was in order to promote an inclusive framework consolidating the needs of the Global South4. The draft article has mitigated the criticisms of the broad construction of the term ‘fair’. The draft should try to incorporate the standards of fairness and equity5. The work of the Committee should factor in the considerations of the Draft Convention and should not be held down to a static functionalist approach, instead there should be enhanced stakeholder consultations during and post the sessions in Nairobi, to crystallise the final text of the Convention. However, the approach enshrined in the article is a marked departure from the extant norms under international tax law, because it gives taxing rights for every jurisdiction where business is conducted, in the explicit supposition: “where (…) markets are located and revenues are generated”. In other words, jurisdictions shall be allowed to tax, even if the value is not created there. The prescient architecture of double tax treaties would generally not allow for such economic dalliance and create conflict of approach. This further strengthens that the UN Convention increases taxing rights, meaning it seeks to dismantle current protections against double taxation.
In the context of Article 5, though it recognises the need for the effective taxation of the HNWIs towards contributing to the DRM in the States, this was a concern that was voiced by the states in the INC meetings that has been effectively captured by the Draft Article. However, the Article predicates the need for States to share information regarding structures or techniques used by HWNIs, necessitating the imperative for duplicitous mechanism, akin to the OECD’s Common Reporting Standard (CRS). With the US seemingly plugging out of the UN push on international tax cooperation, questions around the feasibility of taxing HNWIs, especially considering the Delaware dilemma, merit discussions.
The impetus on tax incentives notwithstanding, the idea of substance-based tax incentives is mired in abstraction. Pertinent policy questions linger: should there be a carve out from minimum tax on countries with non-harmful tax incentives? How will States define a standard or principle on what is non-harmful or wasteful? How to assess whether the tax incentive provided by a State is wasteful or not? The lack of an effective guidance for the assessment of incentives is a chink which would need to be fixed in the revised draft.The stakeholder inputs underlined the need for stronger tax systems to bridge the gap in the attainment of Sustainable Development Goals (SDGs)6. The fact that Article 9 pens the issue of Sustainable Development is a historic and commendable move, formalising the issue of Sustainable Development in the realm of international taxation. The Convention should build on the merits of the article, and ensure it is wholesome. The Convention should, therefore, identify a protocol particular to sustainable guidance, or publish allied guidance and build regulatory other tools, within its competencies, regarding climate taxation. For example, but not limited to, the co-leads could, in pursuance of the cornerstone under Article 9, issue: i) an authoritative guidance explaining the relationship between the imperative of climate taxation in light of current existing frameworks such as the WTO and the ICJ Advisory Opinion and/;or, ii) a sustainable tax administration and due diligence toolkit and/or, iii) guidance on ear-marking, transparency and reporting for climate consciousness, etc.
One of the pertinent issues that the Draft Convention should seek to potentially address is the issue of the application of the Protocol. An issue that was highlighted by a number of stakeholders at the Intergovernmental Negotiating Committee Meetings7 was the potential issue of Dispute Resolution Mechanisms. In the event that the present Draft Article 22, were to take effect the issue that would arise would be binding the states by the Dispute Resolution Mechanisms. Some of the members had also opined that in the event that the Protocols would not be binding on the states (mandatorily on the condition of them being parties to the Convention) it would be rightly positioned for the provisions of Dispute Resolution to be included in the Framework Convention 8.
Conclusion:Article 4 is arguably the most important objective that developing countries are seeking to attain under the UN umbrella. If one were to draw a parallel, the 1923 report of the league of nations had endorsed a similar taxing principle: “The oranges upon the trees in California are not acquired wealth until they are picked, and not even at that stage until they are packed, and not even at that stage until they are transported to the place where demand exists and until they are put where the consumer can use them. These stages, up to the point where wealth reaches fruition, may be shared in by different territorial authorities.”9 If the Pillar One discussions were any indication, even assuming the framework is agreed upon, translating and quantitatively allocating taxing rights based on “where value is created, markets are located and revenues are generated” into objective treaty commitments may still remain a distant goal.
1 https://financing.desa.un.org/unfcitc
2 https://financing.desa.un.org/sites/default/files/2025-10/WSI%20Co-Lead%27s%20Draft%20FC%20template%20-%2024%20Oct.pdf
3 https://financing.desa.un.org/unfcitc
4 The 2025 update of the UN Model Tax Convention – Tax Justice Network
5 https://law.asia/un-international-tax-fairness-convention/
6 https://financing.desa.un.org/sites/default/files/2025-07/OECD%20CTPA%20%28WS%20I%29.pdf
7 Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation, Second Substantive Session 2025, 5th and 6th Meetings, on the 13th of August 2025.
8 Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation, Second Substantive Session 2025, 7th and 8th Meetings, on the 14th of August 2025.
9 League of Nations Document E.F.S.73.F.19 Economic and Fiscal Commission, ‘Report on Double Taxation’ (1923)
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