Support measures to assist parties, particularly developing countries, in building their capacity to implement the treaty effectively, including technical cooperation in sharing expertise
High-level commitment of parties, wherever possible, to key issues like: i. Fair distribution of taxing rights; ii. Tax-related Illicit Financial flows (IFFs); iii. Environmental and Carbon taxation; iv. Base Erosion and Profit Shifting; v. Tax Transparency and exchange of information for tax purposes; vi. Tax Incentives; vii. Taxation of the digital economy; viii. Taxation of high-net-worth individuals; ix. Taxation of Cross-border Services; x. Mutual administrative assistance; xi. Technical cooperation with respect to the exchange of expertise and best practices; xii. Commitment to specific treatment of developing countries
Take into account the needs, priorities and capacities of all countries, in particular developing countries, and include special considerations for them
Addressing issues such as historical imbalances in taxing rights, Illicit Financial Flows (IFFs), aggressive tax planning, tax evasion, Base Erosion and Profit Shifting (BEPS), and other factors hindering revenue mobilization
Include provisions related to funding mechanisms, contributions, and financial assistance to support the implementation of the Convention and the operation of the Framework
Reflect commitments expressed in previous relevant resolutions and incorporate a holistic, sustainable development perspective that considers interactions with other policy areas
Specify a number of areas on which protocls will be elaborated including: i) Tax-related aspect of Illicit Financial Flows (IFFs); ii) Base Erosion and Profit Shifting; iii) Tax Transparency and exchange of information for tax purposes; iv) Harmful Tax Regimes; v) Taxation of the digital economy; vi) Taxation of high net wealth individuals; vii) Taxation of cross-border services; viii) Technical cooperation with respect to exchange of expertise and best practices; ix) Mutal administrative assistance; x) Taxation of Blockchain Technology; xi) Tax Treatment of Artificial Intelligence
Requirements for parties to submit regular reports, data, or updates on their implementation of obligations under the Convention, as well as provisions for monitoring compliance
Convention should provide the treatment of the existing instruments, rules or standards developed by existing platforms as well as the relationship with the platforms themselves
Ensure that a future Convention is aligned with and helps to achieve the Sustainable Development Goals (“the SDGs”), inter alia by promoting (more) equitable and sustainable approaches to international tax cooperation and by formulating tax policies that support the achievement of the SDGs.
Gather all UN Member States to exchange effective practices on mobilising domestic resources through tax policy formulation and strengthening of enforcement mechanisms.
A future United Nations Framework Convention on International Tax Cooperation should seek to catalyse global dialogue and create policy synergies, without duplicating ongoing efforts for international tax cooperation.
Consistency with ongoing works and consensus achieved in other international fora such as the Inclusive Framework on BEPS and the Global Forum on Transparency and Exchange of Information for Tax Purposes should be a guiding principle
Adressing the potential negative consequences of tax competition through international cooperation and coordination, transparency and information exchange, reporting requirements, focus on fair taxation and administration at a domestic level
Consider alternatives to public beneficial owner registers such as centralized registers accessible only to competent authorities (i.e., law enforcement agencies, tax authorities, and financial intelligence units); strengthening existing Know Your Customer (KYC) and Anti-Money Laundering (AML) laws that are universally applied
The UN Framework Convention should facilitate the following: A more collaborative and inclusive approach to international tax policymaking, with active participation of developing countries; A re-evaluation of the current tax treaties between developed and developing countries (these treaties are often drafted in favor of developed countries; a focus on domestic tax policies in developing countries); a focus on the unique challenges faced by developed countries including the impact of the climate crisis and resources needed to achieve the UN Sustainable Development Goals.
Promote an inclusive and effective international tax cooperation framework that facilitates the realization of the Sustainable Development Goals (SDGs) considering the unique characteristics of the Global South
Acknowledge the right of countries to determine their own tax policies; Tax competition; Place developed countries and developing countries on an equally footing
Require the use of tax preferences and incentives in a transparent and fair manner in the following ways: defined eligibility criteria; non-discriminatory granting of preferences; transparency of information on availability of tax preferences and incentives; monitoring and evaluation of the impact of tax preferences and incentives; compliance/enforcement with the rules
Acknowledge the benefit of FTZs whilst including mechanisms to mitigate BEPS (i.e., strengthening domestic tax laws and regulations, disclosure requirements, cooperation between competent authorities, monitoring, and reporting).
The UN Framework Convention should consider alternatives to transfer pricing including but not limited to the following: a) Formulary Apportionment; b) UnitaryTaxation; c) Advance Pricing Agreements; d) Digital Taxation. To mitigate manipulation of the arm’s length principle, the following measures should be considered: a) Reconsider transfer pricing rules (above); a process for the exchange of information between tax authorities; the use of digital taxation as a means to address the issue of taxing right between countries
A multi-faceted approach to dispute resolution (e.g. diplomacy, negotiation, and dialogue between competent authorities). In cases where a neutral third party is needed; arbitration and conciliation can be employed to facilitate a fair and binding decision. As a final resort, the International Court of Justice can serve as an option for dispute settlement.
Effective enforcement protocols are essential for the successful implementation of any international tax framework. These protocols should include mechanisms for resolving disputes between countries, as well as penalties for non-compliance.
A Protocol should reflect the obligation to redistribute part of the profits of transnational corporations (TNCs) to the jurisdictions in which they extract their income or part of it (hereinafter referred to as market jurisdictions). Belarus believes that the establishment of fair taxation in market jurisdictions is an urgent and priority task of the international tax community.
Define the development of publicly accessible and transparent mechanisms of taxation and administration in the context of digitalization of the economy, as well as the organization of international cooperation on the exchange of tax experience in the context of digital transformation.
Include obligations to implement international cooperation in the form of the implementation of tax mechanisms adopted pursuant to the Convention, in particular, the digital economy, as well as the exchange of experience and information in the scope and manner as defined in the Convention.
Obligation of the parties not to levy taxes on digital services (DST) and related similar unilateral measures with a list of imposed measures to be abolished.
Creation of a platform under the auspices of the United Nations for the exchange of experience and best practices in taxation in the context of digital transformation, meeting the interests of market jurisdictions, among others.
It is necessary to fix simple and understandable profit redistribution mechanisms in a Protocol and reflect unified approaches to determining the global (world) income of TNCs,
which serves as a criterion for determining those TNCs that fall under the obligations of profit redistribution.
Reduction in the threshold level compared to the threshold set by Pillar 1 within the framework of BEPS. It is proposed to initially set a lower threshold in order to ensure that the mechanism covers not only giant corporations - the largest and most profitable multinational enterprises, but also other large corporations operating in the international arena. Establish a scale of thresholds depending on the ranges of GDP size.
Develop as an Annex to the Convention and its integral part a Protocol on the taxation of income of Transnational Corporations derived from the provision of cross-border services in the context of increasing digitalization and globalization of the economy.
Monitor the application of the Convention and the fulfillment by the parties of each of the obligations under the Convention, as well as the possibility for one of the institutional bodies to provide advisory opinions on any issue related to the interpretation of the Convention.
Ensure that the Convention is in line with the Sustainable Development Goals (SDGs), promoting a more equitable and sustainable approach to international tax cooperation.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
High-level commitment of parties, wherever possible, to key issues like: i. Fair distribution of taxing rights; ii. Tax-related Illicit Financial flows (IFFs); iii. Environmental and Carbon taxation; iv. Base Erosion and Profit Shifting; v. Tax Transparency and exchange of information for tax purposes; vi. Tax Incentives; vii. Taxation of the digital economy; viii. Taxation of high-net-worth individuals; ix. Taxation of Cross-border Services; x. Mutual administrative assistance; xi. Technical cooperation with respect to the exchange of expertise and best practices; xii. Commitment to specific treatment of developing countries
Setting transfer pricing rules, eliminating tax havens and harmful tax practices, and improving the alignment of tax rules with sustainable development.
Operationalizing equity and common but differentiated responsibilities and respective capabilities, in light of different national circumstances, through taxation in order to enhance just environmental and climate action.
Taking into account historical responsibilities and operationalizing equity and common but differentiated responsibilities and respective capabilities, in light of different national circumstances.
Ensure that digital companies contribute their fair share of taxes in the countries where they operate and generate profits, including by exploring new approaches to taxing digital transactions, data, and user participation in digital platforms.
Ensure the fair allocation of taxing rights among countries, particularly in the context of digitalized and globalized economies, including by revising existing international tax rules to better reflect the value created, aggregated and transferred by digital businesses and other multinational enterprises in different jurisdictions.
Combat and prevent illicit financial flows and improve transparency in the global financial system, including by addressing stolen assets, money laundering, financing of activities against international law.
Holistic, sustainable development perspective that considers interactions with other important economic, social and environmental policy areas, especially poverty eradication and inequality reduction.
Promote international tax cooperation to ensure that tax systems are fair, equitable, progressive, transparent and effective; and to combat tax-related illicit financial flows, with a view to reducing inequality within and among countries and mobilizing financing for governments to fulfil their goals, obligations and commitments, including those relating to the achievement of the Sustainable Development Goals.
E\stablish common principles and best practices for international taxation to ensure fairness, transparency, and consistency across jurisdictions, including those related to the allocation of taxing rights, the determination of taxable income, the treatment of cross-border transactions, and the resolution of tax disputes.
International tax cooperation to transfer technology, including by stablishing technology mechanisms, training programs, and knowledge sharing initiatives.
The framework convention shall be negotiated through delegates from Member States and its intergovernmental nature needs to be preserved. Consultations with UN bodies, UN agencies, international organizations, academia and other relevant stakeholders should be facilitated in parallel
Bolivia
Procedural
Dispositions on the Drafting phase of the Convention
The text of the framework convention should be drafted through an intergovernmental negotiating Committee, adapting of rules of procedure of other UN framework conventions, particularly the UN framework Convention on Climate Change (A/AC.237/9)
Bolivia
Procedural
Dispositions on the Drafting phase of the Convention
Grant Member States the opportunity to sign the convention to indicate their intention to be bound by its provisions. Ratification, acceptance, or approval by the respective national authorities would follow, depending on each country's constitutional procedures. The convention would enter into force upon a specified number of ratifications
Parties to the Framework Convention would be responsible for implementing the provisions of the convention and its protocols into their domestic legal systems
The framework convention shall be finalized seeking general agreement as much as possible, and the work of the Committee and its subsidiary organs shall follow the rules of the General Assembly and its committees, respectively.
Technical groups to discuss the Early Protocols should focus on specific topics even if the broader coordination or the initial approval of the initial draft of such Protocols to the UNFCITC can be attributed to one body.
ToR should present the guidelines to be used in the absence of consensus in a reasonable timeline, including the use of the majority voting system, and define “a reasonable timeline”.
ToR should address whether the UNFCITC would establish other types of instruments or recommendations (other than the Protocols) instead of, or in addition to, issuing Protocols for topics that are discussed in other forums or that at that moment could not be addressed in a Protocol.
Delegates of the subsidiary bodies or technical groups, including those in charge of the discussion of Early Protocols, should work in their capacity as government representatives.
Work on Early Protocols simultaneously to the drafting of the UNFCITC. Brazil suggests focusing on a selected number of subjects for the Early Protocols while keeping a flexible framework in the UNFCITC to be able to incorporate new subjects in the future. Suggested topics for early protocols include: 1. Taxation of super-rich individuals; 2. Illicit Financial Flows; 3. Taxation of cross-border services; and 4. Global Cooperation on the Efficiency of Tax Benefits
We must consider during the ToR discussions whether the UNFCITC should establish monitoring bodies to assess the implementation of the Protocols to the UNFCITC.
Support greater international tax cooperation by ensuring the inclusiveness and effectiveness of multilateral tax policy discussions and establishing general principles to guide these discussions.
We believe that the Framework Convention could allow for the development of best practices and non-binding standards on issues relevant to domestic resource mobilization and other relevant issues, but that new binding standards under the Framework Convention should not be developed in respect of purely domestic tax policy issues. Binding coordination arrangements at the international level should be used exclusively where international coordination is necessary, e.g., cross-border issues. We also believe that customs tariffs and duties on imported and exported goods should be specifically excluded from the scope of the Framework Convention. Customs tariffs and duties relate primarily to trade policy and are typically not considered taxes; as such, they are dealt with in separate agreements and by other organizations such as the World Trade Organization.
It would be useful to stipulate conditions that an issue would need to meet to be in-scope of the Framework Convention. Such conditions could include: 1) Addressing this issue requires coordination among a large number of States and would benefit those States; 2) The issue could best be addressed by way of either non-binding standards, or binding obligations, under this Framework Convention; 3) Other multilateral instruments or arrangements do not exist that address the same issue.
The adoption of the Framework Convention shall not be adopted by a vote until all efforts at consensus have been exhausted and the Chair, upon a decision of the Bureau, has informed the Committee that all such efforts have been exhausted. If the Framework Convention is then adopted by a vote, such a vote shall require a two-thirds majority of representatives present and voting.
Establish a a Member State-led, open-ended ad hoc intergovernmental committee with the mandate of negotiating a Framework Convention on international tax cooperation. The Committee shall convene in [New York] for up to [10] working days at a time, within available time frames, and shall hold its organizational session as soon as possible. The bureau of the Committee shall be made up of not more than 20 members, consisting of a chair, vice-chairs and a rapporteur, elected on the basis of balanced geographical representation and taking into account gender balance, with each of the five regional groups equally represented. The Secretary-General must allocate the necessary resources to support the work of the Committee and its secretariat.
CANZ
Procedural
Dispositions on the Drafting phase of the Convention
The Committee shall make every effort to reach agreement on substantive matters by way of consensus, there shall be no voting on such matters until all efforts at consensus have been exhausted, and if there is a vote on substantive matters after all efforts at consensus have been exhausted, then such a vote shall require a two-thirds majority of representatives present and voting.
CANZ
Procedural
Dispositions on the Drafting phase of the Convention
International organizations and civil society should be allowed to contribute to the work of the Committee, in accordance with established practice and with no decisional powers or rights to vote
CANZ
Procedural
Dispositions on the Drafting phase of the Convention
The ToR should request that the Committee arrange for research and analysis to be undertaken in support of the negotiation of the Framework Convention and underlying future protocols. Such research and analysis should go further than the July 2023 Secretary-General report and comprehensively document the state of existing international tax cooperation initiatives and gaps that may exist in that respect. It should also explore more comprehensively the options that are available to countries to improve domestic resource mobilization. It should be conducted by individuals and organizations with the proper technical expertise and adequate resources to carry out this research and analysis, and States participating in the negotiation of the Framework Convention should be given the opportunity to review and comment on the research outputs before finalization and publication. CANZ provides a list of questions under this research should be undertaken
CANZ
Procedural
Dispositions on the Drafting phase of the Convention
The mandate of the Committee shall be limited to negotiating the Framework Convention, leaving the negotiation of protocols under the Framework Convention to the Conference of the Parties to be established under the Framework Convention. The terms of reference could include a list of issues for potential future protocols, specifying that this list is indicative only and non-binding on the Committee or the Conference of Parties to be established under the Framework Convention.
Develop policies to aim for the SDGs, designed to achieve the highest sustainable economic growth and development in order to achieve a rising standard of living in the world economy, with particular focus on policies that ensure a fair allocation of taxing rights for developing countries.
UN Convention protocols could be developed to in particular address various policy issues, like: 1) a more equitable distribution of taxation rights between developed and developing countries; 2) creation of a platform for global governance and coordination on tax matters; 3) Illicit financial flows; 4) Taxation of high net worth individuals; 5) Enhance transparency; 6) Environmental taxes that finance the protection of ecosystems.
The Ad Hoc Committee should strive for consensus but if not possible a majority vote may be taken, in accordance with General Assembly procedural rules.
Work and developments discussions held in other international fora should be taken into account, in particular when the policy objectives are the same, in order to avoid and duplication.
The ToR could mention that a Framework Convention should enable capacity building of developing countries in tax collection and strengthen international cooperation in this aspect, especially between tax administrations.
Pool taxing rights at the global level to mobilize financial resources to fund the new institutional arrangement and to finance global public goods such as climate action.
A UN tax convention should address the large inequalities that have emerged not only between the richest individuals and companies and poorest citizens and legal entities, but also between the taxing powers assigned to traditional residence and source states.
The guiding principles for a more even distribution of resources and taxing powers should be the progressivity, inclusiveness, fairness, transparency, and ability to pay. Ensuring an effective, fair and inclusive governance on tax cooperation, with the meaningful participation of developing countries in decision making and agenda setting, as well as contributing to the achievement of the Sustainable Development Goals and future endeavors for the sustainable development agenda, should also be considered as a principle.
We suggest that the ToRs indicates that the Convention will consider the design and implementation of a global corporate income tax based on unitary taxation principles
Colombia supports addressing both substantive and procedural elements in the Framework Convention that could be further developed in early protocols. Substantive issues that require urgent detailed commitments are: 1) Taxation of high net worth and ultra-high net worth individuals; 2) Non Pigouvian tax measures to finance climate action, such as a global corporate income tax; 3) Measures to curb illicit financial flows related to tax and trade; 4) Taxation of services; 5) Tax incentives; 6) Measures to enhance transparency, the exchange of information and mutual administrative assistance.
The Terms of Reference (ToRs) should indicate that the UN Convention's decision-making modalities on matters related to its implementation and follow-up will follow the UNGA procedural rules, exhausting all possible efforts to achieve consensus, but allowing for voting when consensus has not been achieved. In any case, the modalities should not be based on arrangements that favor States lowering standards and sacrificing legitimate aspirations for the sake of consensus.
The ToR should mention the need to create a mechanism to verify the fulfillment of member states ́ rights and obligations under the convention and protocols
The ToR should establish the need of creating a trust fund to finance the participation of representatives of developing countries during the process of negotiation of the Framework Convention.
Establish a Conference of the Parties (COP) as a decision-making body where all states can constantly meet to update existing standards and agree to further commitments to address emerging tax challenges.
The ToR should establish that the UN committee of experts on tax matters will serve as an advisory body to the COP, issuing non-binding summaries and advice on the impact of proposed commitments.
Establishment of a secretariat and a proper institutional architecture for the implementation of the convention, including its functioning and nature, with responsibilities such as providing technical support to the Conference of the Parties to facilitate the implementation. The administration, operation, funding, budgetary matters, and dispute resolution mechanisms for this institutional architecture should be also addressed in the Convention.
ToRs should indicate that the convention will address synergies and coordination mechanisms in relation to existing tax cooperation efforts and arrangements.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
We believe that the Framework Convention could allow for the development of best practices and non-binding standards on issues relevant to domestic resource mobilization and other relevant issues, but that new binding standards under the Framework Convention should not be developed in respect of purely domestic tax policy issues. We have identified four areas of work that we see could benefit all the Member States:Dispute avoidance and resolution; Digitalization and other opportunities to improve tax administration; Increasing tax transparency; Capacity-building
Potential binding commitments should be set out in protocols rather than in the Framework Convention itself. This would provide more flexibility for jurisdictions to assess their interest in participating in any particular protocol. It might be difficult to find an agreement on such protocols while the Framework Convention is still being negotiated.
Suggest to work on the following issues: 1) a standard and global transaction price initially tested in the air and maritime sectors; 2) the taxation of air transport, either by taxing fuel used for international flights, or airline tickets; 3) a tax on heavy fuer used in international shipping transport
A key function of the Secretariat should be to create a roadmap for capacity building with special focus on capacity constrained jurisdictions, both during negotiations on substantive commitments as well as for implementation of any agreement reached as a result of such negotiations. A substantive protocol could focus on capacity building initiatives, providing technical assistance and support to help countries strengthen their tax administrations.
The Framework Convention should underscore its commitment to broad issues such as transparency, equitable cooperation in tax administration, information exchange, and fairness in the allocation of taxing rights over international business. Being a constitutive document, the UNFCITC may not necessarily specify exhaustive commitments from Member States on technical matters, but it should include general commitments from Member States to abide by the objectives and principles, and to engage in negotiations, with no necessary interdependence on the Protocols that are being developed.
The preamble should recognize that corporate taxation is a cross border issue, especially so because of increasing globalization and digitalization. Framing tax within a developmental context is essential.
Creating a framework for inclusive and effective international tax cooperation, with a focus on accelerating revenue mobilization for developing countries to meet their developmental goals.
There is a need for agreement on the overarching principles governing international tax cooperation. Some of the principles that could be mentioned in the ToR itself are “respect for tax sovereignty”, “fair and equitable allocation of taxing rights”, “countering abuse of domestic, bilateral, multilateral tax law provisions”, and “combating illicit financial flows” etc. One important principle for the convention would be to prevent disputes by ensuring that the norms/rules developed are simple to implement and administer.
The UNFCITC would need to prescribe a mechanism to establish linkages between the multilateral process at the UN, and existing bilateral and multilateral instruments for international tax cooperation, such as those negotiated and adopted under the OECD-BEPS Framework. One option is for the framework convention to serve as an umbrella for existing activities and international agreements, while enabling a more inclusive and effective creation of new measures and initiatives.
A UNFCITC could formalize a lasting tax cooperation body where all member states are represented, and the negotiation processes are inclusive. Importantly, the framework convention must transcend previous initiatives that predominantly address concerns of developed countries. The new framework under the UN should ensure that developing countries not only participate on an equal footing but also directly benefit from a more equitable and inclusive system.
The ToR should outline how the protocols to the convention would be developed, negotiated, agreed and implemented. Items may be listed for the framework to consider for early development once it starts functioning. We identify some of these below, though this is not an exhaustive list. While some could be “protocols”, some could be used as “best practices”: 1) Taxation of High Net Worth individuals (HNWIs); 2) Non-Pigouvian tax measures for climate financing; 3) Tax Havens and Jurisdictional Competition: A protocol could focus on curbing the harmful effects of tax havens and discouraging jurisdictions from engaging in harmful tax competition to attract businesses; 4) Illicit Financial Flows; 5) Information Exchange and Transparency: A UN convention could promote standardized practices for the automatic exchange of information between countries, ensuring greater transparency in financial transactions. 6) Fair and Sustainable Taxation: The UN framework could promote the principles of fair and sustainable taxation, ensuring that the burden of taxation is distributed equitably and that tax policies contribute to sustainable development goals; 7) Addressing Inequality: The UN framework could contribute to reducing global economic inequality, ensuring that individuals and businesses contribute their fair share to public finances.
The framework convention should prescribe decision making rules that are consistent with the rules used for subsidiary bodies of the UN General Assembly, ensuring complete participation of all member states in decision making.
The COP would also serve as an umbrella for a variety of instruments, ranging from Protocols on specific issues, to Codes of Conduct which can establish standards directly for legal persons. The CoP could similarly decide to add new protocols or Codes of Conduct to further its larger objectives, principles and commitments
Inclusive agenda setting may be realized through a High-Level Advisory Group that dynamically sets the agenda for the Plenary to take forward. The advisory body will also serve as a quality control platform over the technical work of the Secretariat.
Conference of Parties. The CoP will gather periodically to review the implementation of the Convention and any other legal instruments that the CoP adopts and take decisions necessary to promote the effective implementation of the Convention, including institutional and administrative arrangements.
The effectiveness of the CoP could be enhanced through the establishment of subsidiary bodies including a High-Level Advisory Group, technical committees and subject related working groups
Well–resourced standing Secretariat, with balanced representation from developed and developing Member States. he role of the Secretariat should encompass preparation of technical papers/ draft protocols on identified topics and facilitating meeting and negotiations on them. The Secretariat should assist Member States in achieving the objectives of the framework convention and also aid capacity building initiatives
The UN Committee of Tax Experts can be transformed into an intergovernmental body that plays technical role i.e. informs governments about the state of knowledge of international tax cooperation.
Tools for socially just domestic resource mobilisation and administrability without creating a negative impact on trade as well as investment, and thereby increasing inequality. In this context, capacity development and international exchange plays a pivotal role;
A more general consideration could be given to domestic revenue mobilisation as
many countries have a low minimum tax ratio in relation to GDP; promoting a robust minimum tax-to-GDP ratio in a socially-just way could be one possible aspect.
A consensus-driven approach should be championed throughout the drafting process of the terms of reference. Taking into account the particularities of international tax policy, a higher standard should be applied in the elaboration of the UN Framework Convention itself.
Unite all expertise and knowledge, drawing upon existing work and analyses by other major stakeholders such as the OECD, the World Bank and the International Monetary Fund.
Avoidance of inconsistent or competing standards. This entails refraining from multilateral harmonisation of issues where specific bilateral circumstances need to be considered in order to avoid any negative impact on trade and investment affecting all states
Guernsey believes that ensuring autonomous tax jurisdictions can participate directly in these international tax discussions and have a role in proceedings (not just through any associated UN Member State) would be in line with the resolution to promote inclusive and effective international tax cooperation.
Ensure that a future Convention is aligned with and helps to achieve the Sustainable Development Goals (“the SDGs”), inter alia by promoting (more) equitable and sustainable approaches to international tax cooperation and by formulating tax policies that support the achievement of the SDGs.
Gather all UN Member States to exchange effective practices on mobilising domestic resources through tax policy formulation and strengthening of enforcement mechanisms.
Hungary would welcome negotations focusing on: Dispute avoidance and resolution; Digitalization and other opportunities to improve tax administration; Increasing tax transparency; Capacity-building
Consistency with ongoing works and consensus achieved in other international fora such as the Inclusive Framework on BEPS and the Global Forum on Transparency and Exchange of Information for Tax Purposes should be a guiding principle
Create a roadmap for capacity building with special focus on capacity constrained jurisdictions – both during negotiations on substantive commitments, as well as for implementation of any agreement reached as a result of such negotiations.
The framework convention, being a constitutive document, may not necessarily specify exhaustive commitments from Member States on technical matters. Commitment to the framework convention may include general commitments from Member States to abide by the objectives and principles to engage in negotiations, with no necessary interdependence on the Protocols that are being developed.
The new framework under the UN should ensure that developing countries not only participate on an equal footing, but benefit directly in a more equitable and inclusive system.
Creating a framework for inclusive and effective international tax cooperation framework, with a focus on accelerating revenue mobilization for developing Member States to meet their developmental goals. Framing tax within a developmental context is essential.
“Respect for tax sovereignty”, “Fair and equitable allocation of taxing rights”, “Countering abuse of domestic, bilateral, and multilateral tax law provisions”, "dispute prevention", etc
The framework convention could consider the option of establishing a mechanism for publishing best practices that Member States can adopt on a voluntary basis.
Framework convention would be a constitutive document that would prescribe the broad set of objectives and principles that UN Member States would commit to, and which would in turn form the basis for substantive commitments in technical areas through Protocols.
Prescribe decision making rules that are consistent with the rules used for subsidiary bodies of the UN General Assembly, ensuring complete participation of all Member States in decision making. but which would incorporate some flexibility based on the technical complexity of the matter under discussion and the sovereignty of states in tax matters.
Member States to specify the geographic entities/jurisdictions represented by them so that the decision-making process is transparent and clear to all participating Member States.
The framework convention could also prescribe different categories of implementation arrangements. For example, while there could be some legally binding commitments which could be prescribed as minimum standards in the form of protocols, other solutions could be presented as best practices which can be adopted by Member States based on their tax policy goals and objectives
The functional approach to an inclusive agenda setting may be realized through a High-Level Advisory Group of interested jurisdictions that dynamically sets the agenda for the Plenary to take forward.
There can be a schedule to the framework convention listing the probable topics that would be taken up for developing as best practices or for protocols. However, some degree of flexibility should be built in to address emerging issues not initially foreseen.
Prescribe a mechanism to establish linkages between the multilateral process at the UN with other bilateral and multilateral instruments currently existing for international tax cooperation. Such interdependence/interplay may be suggestive/ optional for the Member States joining the Convention.
Devise an inclusive, fair, and effective international tax cooperation framework convention in addressing the tax challenges raised by the digitalisation of the economy, without reinventing the wheel, but to enhance the existing modalities and promote coordination among the global nations.
The Convention should enable capacity building of developing countries in tax collection and also strengthen international cooperation in this aspect, particularly between tax administrations.
The TOR needs to be built on Principles that help attain the basic developmental goals, equitable allocation of taxing rights, feasible access to exchange of information, promotion and development of mutual administrative assistance, knowledge sharing and exchange of best practices in tax collection anddispute settlement.
In our view regarding substantive issues, it is better to emphasize on building a strong Framework itself, then we can concentrate on negotiations regarding substantive issues and protocols. We need to provision a clause that outlines how the protocols to the convention are to be developed, negotiated, agreed and implemented. Substantive Issues may include: 1) Taxation of digital or non-digital services; 2) Beneficial Ownership issue; 3) Exchange of information and the regime for exchange of information on wealth, immovable property and services; 4) Taxation of high and ultra-high net worth individuals; 5) Tax Incentives; 6) Base Erosion and Profit Shifting; 7) Taxation of Cross-border activities; 8) Technical cooperation with respect to exchange of expertise and best practices; 9) Mutual administrative assistance
Dispute Resolution mechanism is required to be thought of in the TOR so that member states would be held accountable for fulfilling their rights and obligations under the convention.
The Terms of Reference could indicate how the Framework Convention wouldbe enforced to ensure that parties are held accountable to the rights and obligations under the Framework Convention.
TOR may have the possibility of creating an efficient decision- making body, such as the International Tax Organization that would be effective in responding to international tax problems.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
Request that the Committee take into consideraton and recognise that there are non-Member States that are separate tax jurisdicions and that there is, as a consequence, a need for this to be reflected in both the procedural and substantive elements of any UN Framework Convention on international Tax Cooperation
Ensure that the process is aligned with ongoing work and not merely duplicated. Examining how to support the impliementation of Two Pillars by all parties. Explore ways to promote effective implementation of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) by more parties.
Starting a reflection on possible standards in the field of environmental taxation and carbon pricing to help collect resources from polluting industries and products that may also be recycled to support the green transition.
A framework for further international cooperation in the area of Value Added Taxes (VAT) could be considered in particular to address the informal economy, to improve the tax
compliance, through wider and better use of technologies.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
Digitalisation of the tax administration and improvement of the cooperation tools for tax administrations of different countries represent another area where international cooperation can help all countries.
The focus should be on issues for which the reinforcement of the international cooperation framework may actually contribute to the domestic resource mobilisation, in particular for developing countries.
Avoid creating a framework that jeopardises the existing international standards and duplicate the ongoing streams of work. The Ad Hoc Committee should not address those topics on which global standards have already been agreed or that are currently treated in other fora
Take into account that the OECD/G20 Inclusive Framework on BEPS is about to finalise the work on the Two-Pillar solution, from which all countries would benefit.
The establishment of inter alia a subcommittee mandated to propose workable and realistic solutions addressing the current imbalance in the allocation of taxing rights between source and resident states.
Jamaica
Procedural
Substantive
Dispositions on the Drafting phase of the Convention
To provide effective and efficient capacity building programs, parties should share information on their tax administrations, highlighting specific areas that need assistance for improvement.
All parties shall: A) Improve DRM, including through support to tax administrations; B) Enhance the effectiveness and efficiency of tax administrations; and C) Take actions to prevent corruption by government officials so as to combat illicit financial flows
To facilitate effective international tax cooperation, parties should collect and analyse data related to tax administrations in each country, such as number of taxpayers, revenue share of taxes, tax administration capacity, etcetera. Statistical data and holistic objective analysis would be useful for identifying specific challenges and possible solutions in terms of developing protocols under the Convention.
The Convention should prioritize aspects of international tax cooperation which help countries to improve their domestic resource mobilisation (“DRM”), because strengthening DRM is one of SDGs targets.
The Convention should be concise and mainly outline procedural elements which can enhance potential international tax cooperation, following other existing framework conventions
The negotiation process should be conducted on a consensus basis so that the Convention can be sufficiently effective with a wide range of participation
The ToR should set out the negotiation procedure and outline the Convention at a high level, as the purpose of the ToR is to facilitate an effective and efficient negotiation process for the Convention.
Japan
Procedural
Dispositions on the Drafting phase of the Convention
Delegates with tax expertise should lead technical discussions on tax matters, taking into consideration domestic tax principles in each party of the Convention.
Japan
Procedural
Dispositions on the Drafting phase of the Convention
The Committee and a possible subsequent committee with the mandate of negotiating the Convention should complete their work swiftly with a wide range of participation so that the conference of the parties may proceed with the technical discussions.
Japan
Procedural
Dispositions on the Drafting phase of the Convention
We propose to include: “Amendments to the Convention”, “Annex and Protocols”, “Right to Vote”, “Signature”, “Ratification”, “Acceptance”, “Approval” or “Accession”, “Entry into Force”, “Reservations”, and “Withdrawal”. “Reservations” is an important clause for as many countries as possible to join the convention because some countries may have difficulties to accept all the clauses in the Convention.
The provision on “Conference of the Parties” should contain the principles of the decision-making process for the conference of the parties so that the first meeting of the conference of the parties can be conducted smoothly, while the conference of the parties can determine the details and amendments if needed.
This provision should not contain the specific policy areas of protocols but only contain general procedures related to protocols — as was done in the United Nations Framework Convention on Climate Change — such as who may be parties to a protocol. Decisions under any protocols should be taken only by the parties to the protocol concerned
The Committee should draft the ToR in collaboration with other international organizations which have already conducted activities in the area of international tax cooperation.
Propose that the terms of reference make explicit reference to ensuring that the Convention respects the legal and consitutional position of all tax jurisdictions which might wish to adopt it
Calls on the Committee to ensure that the work on the convention is truly inclusive, by ensuring that autonomous tax jurisdictions have a role in its proceedings
The current exchange of information standard is flawed because a number of the key economic players are exploiting loopholes within the standard to not share the information requested by another country. The uptake of this standard has also been slow among developing countries because of the high capacity and infrastructure costs associated with being able to receive the required information. The Framework Convention should address this by developing policies that will take into consideration the different capabilities of Member States and ensuring that there will be global adoption of the policies to ensure effective implementation.
The Framework Convention should develop policies promoting international cooperation and transparency to ensure effective regulation of the trade of carbon credits. International cooperation and transparency would ensure that once a carbon credit is transferred out of one jurisdiction to another, it should not be claimed in the first jurisdiction
The Framework Convention should contain provisions on tailor-made capacity building to Member States to ensure that their unique needs and priorities are met.
The Framework Convention should address the imbalance in the distribution of taxing rights between countries, especially within the framework of tax treaties. Countries should have the right to tax income that has been derived from the jurisdiction even where it is not based on physical presence within that jurisdiction.
The Framework Convention should develop a policy that will ensure effective international cooperation in the recovery of tax debt. It should also provide for technical assistance to ensure that proper structures and resources are developed for the management of cross-border tax collection.
Kenya fully supports the development of a structure that will ensure fairness in the distribution of taxing rights worldwide while respecting the sovereignty and developmental priorities of each nation.
The Framework Convention should promote the fight against illicit financial flows by increasing transparency and cooperation between governments and by creating more coherent and less complex global tax rules and standards.
The Framework Convention should develop common tax policies in the area of cross-border transactions that can be tailor-made and adapted according to the specific needs of countries or regions. The new system could allocate taxing rights between governments based on an agreed formula supplemented by a minimum effective corporate tax rate and minimum amount of tax on cross-border payments whether base eroding or not.
The Framework Convention should develop dispute prevention and resolution mechanisms that can be implemented on an equal footing taking into account the unique circumstances of each region. It should also provide for robust capacity building to developing countries in these areas to ensure that they have the required capability and resources to effectively implement these tools.
The Framework Convention should include a protocol that would ensure the adoption of taxing rights related to the taxation of cross border services, the taxation of offshore indirect transfers, and other areas into existing tax treaties which contain the imbalance in distribution of taxing rights
The Framework Convention should review recently developed international tax policies on a platform with more inclusive participation and consider the concerns and priorities of all countries, especially those who would be adversely affected by these policies but were not included in their development.
Tasks to be addressed by the ToR and the Framework Convention should be focused on the policy direction at a high level instead of the specific matters
The Parties to Framework Convention undertake to enhance capacities of the developing countries facing DRM issues, mainly tackling illicit financial outflows, underdeveloped tax infrastructure, and lack of international tax capabilities.
Under the exchange of tax information scheme, the Parties to Framework Convention undertake to pursue ways that countries (especially developing one) could enjoy effectiveness and further more benefits.
To support Domestic Resource Mobilization(DRM) of the developing countries by eliminating illicit financial flows and building capacities in tax policy and administration to the extent of aligning with economic growth.
Comprehensively engaging the Parties to the Convention, international organizations and private experts, thereby coming up with viable measures for international cooperation.
The existing conventions on international tax cooperation and other pending matters at the international organizations should be respected, with the duplicated discussions and violations thereon being prevented. Methods of international tax cooperation, in particular, should be reviewed to the extent of upholding tax sovereignty of the jurisdictions.
We believe that the United Nations Framework Convention on International Tax Cooperation could serve to promote an equitable and sustainable approach to international tax cooperation at the global level.
The proposed Terms of Reference should clearly outline the objectives, the timeline as well as drafting and decision-making modalities of the proposed United Nations Framework Convention on International Tax Cooperation.
Liechtenstein
Procedural
Dispositions on the Drafting phase of the Convention
A global UN Framework Convention on International Tax Cooperation must be in accordance with and build on established multilateral frameworks on the topic, such as the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. The consideration of the (factual) added value that can potentially be created needs to be the basis for any technical discussions and policy decisions.
The objectives of the Convention might be pursued as: 1) to activate global dialogue and create policy synergy; 2) to assemble countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms
Consistency with ongoing work and consensus achieved in the OECD and other international fora (such as the Inclusive Framework on BEPS and the Global Forum on Transparency and Exchange of Information for Tax Purposes);
The initial work could start with an analysis of issues that strengthen the inclusiveness and effectiveness and that support the Sustainable Development Goals and domestic resource mobilisation
Lithuania
Procedural
Dispositions on the Drafting phase of the Convention
Ensure that the Convention is in line with the Sustainable Development Goals (SDGs), promoting a more equitable and sustainable approach to international tax cooperation.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
Discussing substantial elements now might be detrimental to the drafting to the Terms of Reference. Moreover, the future discussions on the substantial elements of a future UN Framework Convention should focus on areas that do not already benefit from global solutions, such as those that have been or continue to be developed at the level of the OECD. The initial work could start with an analysis of issues that strengthen the inclusiveness and effectiveness and that support the Sustainable Development Goals and domestic resource mobilisation
Luxembourg
Procedural
Dispositions on the Drafting phase of the Convention
Luxembourg would like to reiterate the importance of putting in place adequate working methods that allow for hybrid participation so that all tax experts are able to provide their technical input and policy advice.
Luxembourg
Procedural
Dispositions on the Drafting phase of the Convention
Ensure that the Convention is in line with the Sustainable Development Goals (SDGs), promoting a more equitable and sustainable approach to international tax cooperation.
Exchange effective practices on mobilising domestic resources so that countries may be in a better position to formulate their own tax policies and stregthen enforcement mechanisms
The initial work could start with an analysis of issues that strengthen the inclusiveness and effectiveness and that support the Sustainable Development Goals and domestic resource mobilisation
Malta
Procedural
Dispositions on the Drafting phase of the Convention
It's advisable for the convention to establish a clear framework for timely information exchange between the tax authorities of the signing countries, without duplicating the work contained in other international instruments.
It is important to promote technical cooperation and capacity development among the signing countries to strengthen their tax systems and improve their ability to effectively implement the convention. This may include training programs, exchange of best practices, and technical assistance in areas such as tax administration, tax legislation, and tax risk management.
To facilitate the recovery of cross-border tax debts, it would be beneficial for the convention to contain mechanisms that enable cooperation in the execution of collection measures, including mutual recognition of court decisions and assistance in the execution of seizure orders, without duplicating work contained in other international instruments and with an emphasis on the provision of cross-border digital services, considering both direct and indirect taxes.
The convention could establish a framework for mutual administrative assistance between the tax authorities of the signing countries, facilitating collaboration in the investigation and prosecution of tax crimes, the monitoring of illicit financial flows, and asset recovery.
The convention must clearly establish its scope, defining the taxes covered, the taxpayers subject to the convention, and the key terms used in the text. It's essential to provide a solid basis for the uniform interpretation of the convention among the signing countries.
It is fundamental to establish effective mechanisms for dispute resolution between the signing countries in the event of divergent interpretations or conflicts in the application of the convention. This can include negotiation procedures, arbitration, or other dispute resolution methods that ensure a uniform and fair application of the convention.
The convention should be flexible enough to adapt to changes in tax practices and international standards. Provisions could be included that allow for the review of the convention and its updating to reflect the most recent developments in tax matters.
Ensure that the Convention is in line with the Sustainable Development Goals (SDGs), promoting a more equitable and sustainable approach to international tax cooperation.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
Urge the AHC to create clarity as soon as possible on the way the Framework Convention is meant to function. Based on Resolution 78/230 Netherlands propose two possible alternatives. In the first alternative the Framework Convention would include general principles on fair and effective tax policies and tax cooperation that would best support Domestic Resource Mobilization and the SDGs. We are of the opinion that such approach has great merit and that in collaboration with other international organizations (as the UN is currently doing in the Platform on Collaboration on Tax) and through the exchange of experiences and best practices within the broad membership of the UN this would contribute to the objectives formulated in the Secretary Generals Report and in the Resolution 78/230. Topics addressed in such general principles on fair and effective tax policy and tax cooperation that would best support Domestic Resource Mobilization and the SDGs could be: 1) the optimal tax mix of CIT, VAT, Income tax (including wealth tax) and environmental and Carbon taxes; 2) Effective exchange of information and other means to counter illicit financial flows; 3) digitalization of tax administrations. In the second alternative the Framework Convention could function like the Fast Track Instrument that is currently elaborated in the UN Committee of Experts on International Cooperation in Tax Matters. If that would be the objective we believe that “early protocols” to be developed should focus on issues that offer the best chance on consensus and where parallel work in other international fora would rather create synergy than inefficient duplication and fragmentation of work. In that light we would encourage the AHC to focus on:
1) tax certainty and dispute resolution; 2) taxation of income from natural resources and off shore activities; 3) the relation between tax treaties and trade- and investment agreements; 4) strategies for realizing taxation of HNWI.
Netherlands
Procedural
Substantive
Type of convention
Dispositions on the Drafting phase of the Convention
The initial work could start with an analysis of issues that strengthen the inclusiveness and effectiveness and that support the Sustainable Development Goals and domestic resource mobilisation before moving on to drafting specific early protocols.
Netherlands
Procedural
Dispositions on the Drafting phase of the Convention
Consistency with ongoing works and consensus achieved in other international fora such as the Inclusive Framework on BEPS and the Global Forum on Transparency and Exchange of Information for Tax Purposes should be a guiding principle
Support measures to assist parties, particularly developing countries, in building their capacity to implement the treaty effectively, including technical cooperation in sharing expertise
High-level commitment of parties, wherever possible, to key issues like: i. Fair distribution of taxing rights; ii. Tax-related Illicit Financial flows (IFFs); iii. Environmental and Carbon taxation; iv. Base Erosion and Profit Shifting; v. Tax Transparency and exchange of information for tax purposes; vi. Tax Incentives; vii. Taxation of the digital economy; viii. Taxation of high-net-worth individuals; ix. Taxation of Cross-border Services; x. Mutual administrative assistance; xi. Technical cooperation with respect to the exchange of expertise and best practices; xii. Commitment to specific treatment of developing countries
Take into account the needs, priorities and capacities of all countries, in particular developing countries, and include special considerations for them
Addressing issues such as historical imbalances in taxing rights, Illicit Financial Flows (IFFs), aggressive tax planning, tax evasion, Base Erosion and Profit Shifting (BEPS), and other factors hindering revenue mobilization
Include provisions related to funding mechanisms, contributions, and financial assistance to support the implementation of the Convention and the operation of the Framework
Reflect commitments expressed in previous relevant resolutions and incorporate a holistic, sustainable development perspective that considers interactions with other policy areas
Specify a number of areas on which protocls will be elaborated including: i) Tax-related aspect of Illicit Financial Flows (IFFs); ii) Base Erosion and Profit Shifting; iii) Tax Transparency and exchange of information for tax purposes; iv) Harmful Tax Regimes; v) Taxation of the digital economy; vi) Taxation of high net wealth individuals; vii) Taxation of cross-border services; viii) Technical cooperation with respect to exchange of expertise and best practices; ix) Mutal administrative assistance; x) Taxation of Blockchain Technology; xi) Tax Treatment of Artificial Intelligence
Requirements for parties to submit regular reports, data, or updates on their implementation of obligations under the Convention, as well as provisions for monitoring compliance
Convention should provide the treatment of the existing instruments, rules or standards developed by existing platforms as well as the relationship with the platforms themselves
An area that could be considered for closer analysis is the unlocked potential of building capacity in domestic tax systems and tax administrations to raise tax revenues and provide access to exchange of information in tax matters.
Norway believes that strengthening VAT systems is a good alternative to address the challenges digitalisation and globalisation of the economy pose for taxation of income from certain business models, in particular for developing countries. Work on this could be considered as part of the Framework Convention.
The Framework Convention could be a good vehicle to set out standards or best practices for reporting requirements on assets not already covered by existing standards for automatic exchange of information, which could be used for exchange of information in the existing framework.
We strongly believe that the decision-making in the negotiations on substantive issues should be based on consensus, and that this should be a part of the ToR
It is important that the negotiations are preceded by careful analysis – shared and agreed upon by as many Member States as possible – that identify areas where a Framework Convention can complement existing cooperation.
Norway
Procedural
Dispositions on the Drafting phase of the Convention
Whether or not negotiations proceed in the Ad Hoc Committee or in a new Committee, we think that it is important to ensure wide participation. To this end, a Bureau should consist of 20 members, 4 from each region. This ensures that a wide range of views will be brought into the preparatory work conducted by the Bureau.
Norway
Procedural
Dispositions on the Drafting phase of the Convention
Framework Convention should be negotiated by tax experts. Sufficient time must be allowed to conduct thorough analyses to form the basis of the negotiations, and meetings of the Committee should be limited to 5 days at a time. Furthermore, we consider it important that the negotiations take place in a hybrid format.
Norway
Procedural
Dispositions on the Drafting phase of the Convention
The ToR should provide for a sequencing of the work in front of us. First, there should be a phase of analysis to identify the needs and priorities to be addressed in the Framework Convention and its protocols. When this is available, we should proceed with the negotiations of the Framework Convention, and thereafter the negotiation of Protocols. Such sequencing is necessary to determine an appropriate scope of the Framework Convention and will facilitate the negotiations of Protocols to the Convention.
Norway
Procedural
Dispositions on the Drafting phase of the Convention
Leverage the knowledge and experience accumulated in other International Organisations, in particular the OECD, the IMF and the World Bank. The yearly Inter- Agency Report on Financing for Sustainable Development includes all these institutions and could be tasked to give more detailed input on the existing structures and possibilities for further coordination in the multilateral tax space.
The ToR should require that the negotiations take fully into consideration existing international frameworks for tax cooperation. In this regard, we believe that it is necessary to consult with IGOs, and in particular the OECD – when drafting the ToR, when analysing and identifying needs and priorities to be addressed, and in negotiating the Framework Convention.
The Secretary General may authorize that the operations and the work of the negotiating body should mainly be funded by the ECOSOC. The technical committees established for the purpose of developing Protocols to the Convention should also be funded by the ECOSOC.
The Operations under the Convention shall be funded as under: a. Annual Contributions from the member states to be allocated by the General Assembly on the basis of some agreed formula, and Donations from other international organizations, governments and other persons and businesses.
UN GA resolution 78/230; mobilizing domestic resources in line with Strategic Development Goals; boosting coordinated development and inclusive growth amongst the UN member states; tax sovereignty of all member states
Facilitate efficient exchange of information as well as the right to receive from other Member States on all cross border payments for whatever purpose including but not limited to services and movable and immovable properties in all its manifestations made by individuals, corporate entities and other legal structures.
Take appropriate measures to ensure that international tax laws be applied equally and without unjustifiable differentiation based on fair and equal taxing rights for all member states ensuring rightful tax collection for all its members
Include the taxation of all payments made in consideration for the use of, or the right to use, distribution rights in respect of a product or service, insurance and reinsurance premiums and fees to provide a financial guarantee, or other financing fees to be taxed
by the source state.
Encompass equitable and fair international taxation rules including but not limited to taxation of all cross border services provided physically or digitally, income generated from the supply of digital goods, cryptocurrency and block chain technology and environmental taxation.
Rights and obligations created by the Convention on fighting tax evasion, corruption and other illicit financial activities, including elimination of double taxation as well as double non-taxation.
Ssovereign equality of all its Members; Equitable international tax rules; fulfill in good faith the obligations; cooperate in the formulation of proposed measures, procedures and guidelines; contribute to building a growth-friendly tax environment through cooperation and sharing of best practices and enhancing tax capacity building; account for countries' different needs, priorities, and capacities; designate or establish one or more competent authorities and one focal point for the implementation
The Convention should include development of Protocols detailing the necessary commitments of the Parties inter alia on the following items: a. equal taxing rights for all member states ensuring rightful tax collection for all its members, b. taxation of all income or receipts generated through cross border goods and services, c. environmental taxation, d. exchange of information including automatic exchange of information, exchange of information on request and spontaneous exchange of information including information regarding movable and immovable properties; e. rules for enforcing mechanisms to increase accountability and transparency in the corporate sector, especially with regard to large MNCs, f. rights and obligations created by the Convention on fighting tax evasion, corruption and other illicit financial activities, g. taxation of cryptocurrency and block chain technology, h. treatment of illicit financial flows issues related to its taxation, i. transparency, compliance and reporting under the Convention, j. capacity building of member countries, and, k. Settlements of Disputes.
UN Capacity Building Body which will provide tax-related capacity which will provide tax-related capacity building trainings, courses and technical assistance to member countries on various issues related to international taxation. The body shall also carry out academic researches and exchanges of knowledge sharing and best practices to facilitate member countries in their capacity building.
The Convention shall authorize the establishment of technical committees to develop Protocols detailing specific commitments of the parties to the Convention. The Protocols should be an integral part of the Convention. The technical committees should be constituted during the seventy ninth session of the General assembly. The Protocols should be completed simultaneously by the technical committees and be presented in General Assembly during its 79th Session.
The Terms of reference on UN Framework Convention on International Tax Cooperation should take into consideration the work of other relevant forums, potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions involved in tax cooperation at the international, regional and national levels keeping in view that it should spearhead all initiatives and take its ownership.
The Convention shall modify the existing bilateral rights and obligations
of the Parties created by any other agreement or instrument to the extent provided for in the Convention.
We can adopt a multilateral treaty and protocols to contribute for obtaining additional resources to finance sustainable development of our countries, which are needed to implement the 17 sustainable development goals of the Agenda 2030.
A provision about how protocols will be developed, negotiated and agreed must be established, as well as the principles that will guide its development such as the equitable allocation of taxing rights that should contribute to achieving the sustainable development goals of the 2030 Agenda. Among the topics that we suggest to prioritize are the following: i) Taxation of cross-border services; ii) Exchange of information about taxation (automatic exchange on information of income obtained from the provision of cross-border services).
Although there must be an effort to achieve consensus, majority decisions should be allowed if this is not possible within a reasonable time to achieve consensus.
Development of a Tax Policy on Environmental Tax Issue focused on the potential impact of any Carbon Border Adjustment Mechanism on developinc gountries and their response to maintain a level playing field
The convention could further improve the current frameworks that facilitate the exchange of information and mutual assistance among tax authorities globally
Saudi Arabia proposes that the convention include provisions for comprehensive technical assistance, capacity building, and technology transfer to help these countries enhance their tax administration and compliance capabilities
Exploring innovative tax solutions that reflect the unique nature of digital economic activities. This could include mechanisms for the fair distribution of tax revenues derived from digital services, ensuring that countries, from which values is created, receive fair share. The Convention might consider recommendations for harmonizing tax rules related to difital services, aiming to reduce disputes and enhance compliance
The convention might advocate for the development of shared intelligence mechanisms and collaborative enforcement strategies, enabling countries to respond more effectively to sophisticated tax evation schemes
Adopting a holistic approach tto international tax governance has never been more crucial. Such an approach would recognize the interconnectedness of nations and the importance of aligning tax policies with broader economic and social objectives
The focus should be on mitigating challenges where certain businesses may currently evade taxation, without inadvertently disrupting the established tax framewotks that are working effectively for other sectors.
Establishing guidelines for healthy tax competition, so that the convention helps to ensure that countries' efforts to attract investment do not come at the expense of neccesary public revenues or economic equality
Develop a framework for evaluating tax incentives and policies, ensuring they align with broader conomic goals and international cooperation commitments
The convention could adopt a streamlined decision-making process that emphasizes consensus-building and accomodates differing viewpoints. Where consensus is not possible, transparent procedures should be sought, with clear criteria and thresholds for decision-making
Implementing structured consultation mechanism that ensures the voices of all nations are heard and considered in the decision-making process is essential. This could involve rotating representation, establishing working groups with diverse country participation, and using digital platforms to facilitate wider engagement
Offering training sessions and capacity-building workshops of UN negotiation processes can empower countries to engage more effectively in the convention's development
Saudi Arabia
Procedural
Dispositions on the Drafting phase of the Convention
Leveraging technology to facilitate virtual participation. Holding meetings in a more neutral time zone can also be explored (for example, the United Nations Office at Geneva)
By integrating the work already achieved by other international organizations, the Convention could ensure a unified approach to addressing the complexities of international taxation. The G20, with its diverse membership, can serve as the forum that ensures collaboration amonf these efforts
To strengthen the effectiveness and efficiency of domestic tax administrations, in order to improve domestic resource mobilisation, through capacity building measures
To take into account the needs and circumstances of all jurisdictions, and to respect jurisdictions’ sovereign right to assess and calibrate its tax measures based on its fiscal needs and capacities
1) To combat illicit financial flows and tax evasion, while creating and maintaining the conditions for global economic growth; 2) To enable effective domestic resource mobilisation by enhancing the tax administration capabilities of resource-constrained jurisdictions
The UN has an important role to play in complementing the existing work done by other forums for international tax cooperation such as the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”), and in doing so, contribute to a stable international tax landscape.
To ensure that all inputs are considered, and needs addressed, there should be sufficient time for negotiating the Convention so that the Committee can arrive at solutions that can best serve collective interests of the members
Singapore
Procedural
Dispositions on the Drafting phase of the Convention
The Committee should focus on the drafting of the TOR, to meet the target deadline of submitting the draft TOR to the UN General Assembly by August this year. In order to determine the protocols to prioritise, it is appropriate that the Committee first identifies existing gaps in international tax cooperation and agrees on issues to be addressed in the Framework Convention.
To take into consideration and address interactions with existing international agreements and rules, so as to provide certainty to businesses and avoid double, or multiple taxation, and to avoid duplication
Option to call on other organisations (e.g. OECD) / existing platforms (e.g. the Platform for Collaboration on Tax) to provide technical expertise to support the AHC’s work
Ensure that the Convention is in line with the Sustainable Development Goals (SDGs), promoting a more equitable and sustainable approach to international tax cooperation.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
Ensure that the Convention is in line with the Sustainable Development Goals (SDGs), promoting a more equitable and sustainable approach to international tax cooperation.
Support further cooperation of Governments in their efforts to generate financing for development, also by strengthening the mobilisation and use of domestic resources in terms of tax policy formulation as well as in terms of enhancing enforcement mechanisms.
International agreements produced through the Convention should be underpinned by a development oriented approach that helps attain the Sustainable Development Goals (SDGs)
The core requirement of the UN Tax Convention should be to solve the governance problem and create a genuinely inclusive rules-based architecture which can facilitate multilateral agreements on current and future international tax issues on the basis of fairness, equity, transparency, democracy and inclusiveness and bring coherence and efficiency to the international tax system.
Equity in allocation of taxing rights, special and differential treatment for developing countries, access to exchange of information, tax rules that prevent Illicit Financial Flows, mutual administrative assistance, knowledge Sharing and exchange of best practices in tax collection and dispute settlement, to name a few. Transparency, inclusivity, accountability and sustainability are some of the other key principles.
The Convention should be kept “light”, with a small number of articles. The core idea should be to create a strong Conference of Parties (COP) able to do ‘whatever it wants’, but especially setting the agenda, mandating the work to subsidiary bodies and having the power to decide through democratic voting whether the outputs produced are satisfactory or not.
The Convention should be designed in such a way that it can come into effect even if major developed countries – some well-known for their opposition to multilateralism despite rhetoric to the contrary - choose not to join it, and be open ended to include them later on if they wish to join.
The COP should be able to come up with whatever types of rules it sees fit. They could range from non-binding guidelines to international binding rules and treaties.
Specific substantive issues could also be negotiated and potentially incorporated through protocols, but this can only happen after the Framework is completed and has a process in place for how protocols should be negotiated.
Spain endorses the strengthening of transparency with the exchange of information. The exchange of information could be intensified to include such of beneficial ownership, ownership of real estate (fight against undeclared offshore assets) and trusts in the context of tax policy or tax control measures to combat inequality.
Training programs for officials and staff, as well as taxpayer education, are needed. This training could be carried out under the umbrella of the UN but through the different regional organizations or the Platform for Tax Cooperation in which several international organizations that carry out technical assistance and training actions participate.
Climate change, biodiversity loss and pollution must be addressed in a comprehensive and integrated way through enhanced multilateralism and global action
Tax authorities should be able to benefit from existing data and should share new data to improve the enforcement of tax rules and help combat tax fraud and evasion more effectively.
The Sustainable Development Goals encompass a wide range of policy objectives, including several with clear interlinkages to tax policy measures, such as reducing inequalities, good health and well-being, as well as protecting biodiversity and the environment, and ensuring a strengthened global response to the threat of climate change in line with the Paris Agreement.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
Ensure that tax administrations are modernized and digitized. Digital transformation is crucial in this regard. Knowledge Sharing Platform for Tax Administrations could provide shared tax knowledge around the world. Freeing up resources through technology to exploit data reducing the need for human intervention. Artificial intelligence and machine learning creating efficiencies, robotic process automation would allow staff to focus on more complex tasks.
Spain considers it could be useful to reflect also on how to improve strategies to realize taxation of high-net worth individuals. We believe that work can be promoted to achieve greater international cooperation in this area.
Consensus should be required in the negotiation and adoption of the text of the UN Framework Convention on International Tax Cooperation and its protocols, as well as for the work of the Committee. The legal basis lies in Rules 83 and 85 of the Rules of Procedure of the General Assembly, which provide for a 2/3 majority for important issues.
Helping countries to implement international standards would promote a common application and consistency and would encourage States to adhere to the international process and participate in new initiatives.
Ensure that the Convention is in line with the Sustainable Development Goals (SDGs), promoting a more equitable and sustainable approach to international tax cooperation.
Gather countries to exchange effective practices on mobilising domestic resources through both tax policy formulation and the strengthening of enforcement mechanisms.
The upcoming negotiations will require the participation of tax experts from member states, which will be demanding from an administrative point of view. We therefore think it is very important to allow for a hybrid negotiation format to be applied going forward (limited to a maximum of 5 days per session).
Sweden
Procedural
Dispositions on the Drafting phase of the Convention
Before discussions start on potential specific issues to be covered by the Convention (or by Protocols) the work should focus on analyzing what the overall purpose of the Convention should be. Thus, it is essential at this stage of the process to understand which problems, that have not already been addressed by other international fora, that are intended to be solved by the Convention.
The United Nations are due to the longstanding experience well placed to coordinate efforts of the various actors in the field of capacity building regarding taxation. An additional protocol could establish a forum for such coordination including mechanisms, for the monitoring of effectiveness as well as the funding of these activities by the signatory States.
Further research could be undertaken, on how to support domestic resource mobilisation by developing countries. An area where Switzerland has experience and would be happy to contribute, would be the implementation of VAT, which is not only an easy to apply tax to raise revenue with few economic distortions but also an effective instrument to control and integrate the informal economy.
Further contribute to the building of a reasonable and effective international tax system by ensuring the inclusiveness and effectiveness of international tax policy discussions and establishing a common understanding of the development of international tax policies.
In order to maximise the use as well as the inclusiveness of a Framework Convention, its scope should focus on the basic principles of international cooperation regarding taxation that represent a broad-based consensus and the necessary institutional framework.
Meetings of the body mandated to draft the United Nations Framework Convention on International Tax Cooperation held in different places could enhance inclusivity
Switzerland
Procedural
Dispositions on the Drafting phase of the Convention
It could be investigated whether the establishment of a respected and trusted permanent body for arbitration in tax matters could counter the current hesitation of many countries to agree on binding arbitration in conventions for the avoidance of double taxation treaties
The procedure for the drafting of the United Nations Framework Convention on International Tax Cooperation should also be transparent and should, while emphasising that it is an intergovernmental process, also be open to stakeholders from civil society including business sectors.
Eventual substantive provisions regarding the allocation of taxing rights between States, standards applicable on domestic legislation or transparency and exchange of information should be confined to additional protocols. Such a modular set-up would enhance acceptability of a Framework Convention and respect the sovereignty of States regarding taxation.
Strengthening capacity building Initiatives to ensure developing countries and least-developed countries can effectively implement both current and future international tax reforms.
Minimizing the additional burden on Tax Administrations and Businesses of all international tax reforms. This is important to ensure that the compliance burden for all stakeholders remains as low as possible whilst not hindering the integrity of the policy objective
Focus on gaps in effective international tax reforms to ensure tax policy makers and administrators efforts are appropriately targeted and to avoid any potential duplication of efforts with other ongoing international tax reforms.
We request that there is sufficient time for negotiating the Convention so that the Committee can arrive at practical and well thought through long term solutions that can best serve the collective interests of all member states to ensure coordinated policy objectives are met.
United Arab Emirates
Procedural
Dispositions on the Drafting phase of the Convention
Make use of other organizations (e.g. OECD) / existing platforms (e.g. the Platform for Collaboration on Tax) to provide technical expertise to support the AHC’s work
Applying efforts in the area of simplification and dispute resolution, for example by way of the application of safe harbors or transitional reliefs to complement the above two objectives and give all stakeholders sufficient time to fully comply with the rules.
The Convention provides an opportunity for all members to further develop their approaches to VAT, GST and other indirect taxes. The adoption of OECD International VAT/GST Guidelines delivers a solid framework for tax administrations in designing their VAT/GST systems. There is scope to focus on sharing of best practice and experiences through better administrative cooperation that supports developing countries to address their individual needs.
The Terms of Reference should look to identify which sorts of tax issues would benefit most from international cooperation and coordination, and what sort of international coordination is needed; and differentiate that from areas where the primary focus should be on sharing of best practice or capacity building, in particular in areas of tax administration.
Further consideration should be given to how non-state jurisdictions, such as the British Overseas Territories and Crown Dependencies, with separate tax administrations, can contribute, so that their views can be appropriately reflected in the development of the Convention as part of an inclusive process.
We would encourage a sequential approach, using the process of drafting the Terms of Reference, then the Convention itself, to discuss and resolve differences, and to then negotiate protocols from the strong foundation of a common approach. We think the short timeline this year also means this sequential approach would be sensible.
We are keen that the process both brings in the respective expertise of all relevant international organisations and builds on the progress made in other broad-based international fora. These include the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, and the Global Forum on Tax Transparency and Exchange of Information, both of which have over 140 member jurisdictions and have achieved considerable progress in combating offshore evasion and illicit financial flows. Furthermore, the OECD’s Forum on Tax Administration has developed an inclusive global response to identifying and supporting the delivery of international good practices to tackle tax administration issues, including sharing information.
The Framework Convention should build on the success of the joint United Nations Development Programme/OECD Tax Inspectors Without Borders initiative, as well as other work on Capacity Building and the Digitisation of Tax Administrations undertaken by the UN Committee of Experts on International Cooperation in Tax Matters. The Platform for Collaboration on Tax can play a role in further strengthening capacity building efforts, with the UN taking a greater lead to ensure that the support is well targeted towards developing countries’ needs. It could also include promoting Domestic Resource Mobilisation through assistance in tax reform and through supporting the development of sustainable long-term sources of revenue, for example through well- designed and well-administered consumption and excise taxes.
The Terms of Reference should provide for the UN secretariat, working together with other organisations and experts, to produce a research product on the existing, effective work of other international fora and how any legally binding obligations under the UN Framework Convention would fit within the existing international tax architecture. The Terms of Reference should also require that the text of the Framework Convention itself contain articles establishing its relationship with existing international tax norms.
Significant progress could be made in achieving the SDGs through international tax cooperation to build capacity through the digitalization of tax administration and indirect tax systems and administration.
The scope of the terms of reference should focus on areas where the UN has significant expertise and a long and distinguished track record. For example, the terms of reference could focus on (i) promoting capacity building through equipping countries with necessary skill sets and sharing relevant expertise, and (ii) promoting domestic resource mobilization through marshalling resources, assisting in the development of medium-term and long- term revenue strategies, and providing support for automating tax systems
A key focus of the initial stages of this work should be identification of areas of convergence that can form a sound foundation on common ground for approaching negotiations with a view to forging a better approach to international tax cooperation.
United States
Procedural
Dispositions on the Drafting phase of the Convention
Both the objectives and scope of the terms of reference should include every effort to ensure a process that is complementary not duplicative of existing processes in other fora
We wish to propose slight amendments to paragraph 7(a) to read as follows: Establish fully inclusive and more effective international tax cooperation in terms of substance and procedures and set out the fundamental principles of such cooperation for all parties, including developing countries”. We suggest this amendment recognizing that the developing countries have been historically excluded in the existing frameworks.
We propose the edits to paragraph 7(b) to read as: Establish a system of governance for international tax cooperation capable of identifying and addressing existing and future tax and tax-related challenges on an ongoing basis, while respecting the tax sovereignty of each Member State
We also propose slight edits to paragraph 7(c) to read as follows: Establish an inclusive, fair, transparent, efficient, equitable, and effective international tax system for sustainable development, with a view to enhancing the legitimacy certainty, resilience, simplicity and fairness of international tax rules, while addressing tax-related illicit financial flows and other challenges to strengthening domestic resource mobilization
We wish to stress our strong opposition to the inclusion of any element relating to “complementarity” in the objectives. The inclusion of such elements would permanently reduce the Convention to a second-tier instrument filling gaps left by other fora.
The guiding principles of the United Nations Framework Convention on International Tax Cooperation should encompass both substantive and procedural elements.
the principles should aim to avoid double taxation, double non-taxation, tax avoidance, and evasion. They should further economic neutrality and provide a robust framework to prevent profit shifting and harmful tax competition.
Parties to the Framework Convention should be at liberty to make commitments on broad themed issues. Paragraph 10 as drafted seems to have limited issues to which parties could have commitments. We suggest that this 3 be redrafted to make the paragraph open-ended allowing for opportunities for broader level of commitment during negotiations.
We propose that paragraph 11 be amended to read “Recognizing that respect for tax sovereignty implies inclusive and effective participation in international tax cooperation requires procedures anchored on procedures that take into account the different needs, priorities and capacities of all countries to meaningfully contribute to the norm-setting processes, without undue restrictions, and support also supports them in doing so, including giving them an opportunity to participate in agenda-setting, debates and decision-making, either directly or through country groupings, according to their preference´.
On paragraph 12, we propose that the convention should seek to or coordinate all capacity building efforts of the United Nations. This will ensure the effectiveness and inclusiveness of such an effort.
We suggest the addition of an advisory body to the structure of the framework. Such a body should have technical supervision of the work of the framework on behalf of the CoP which is necessarily high-level and would sparingly meet to give mandates or approve the work done.
We call for prioritization of “tax-related illicit financial flows” “the taxation of the digital economy” and cross-border services as the early protocols.
We call for prioritization of “tax-related illicit financial flows” “the taxation of the digital economy” and cross-border services as the early protocols.
The taxation of the digital economy as one of the early protocols has become necessary because hope seems to have dimmed for an effective and timely implementation of Pillar 1 Amount A leading countries to start proliferation of rules to tax the digital economy by way of intruding Digital Service Taxes or some form of significant economic presence rules. As such, prioritizing the taxation of digital economy will be a quick win for all parties as it will stop fragmentation of international tax rules in this respect and provide respite for countries unable to tax this sector owing to the ineffectiveness of the existing rules.
We therefore reiterate our position that the rules of procedure of the Assembly apply (A/520/Rev.20) should continue to apply to any subsidiary body of the General Assembly.
Developing countries suffer most from the current financing gap, and the convention should be developed as early as possible to help reduce this gap. We believe 18 months for developing the convention and the early protocols is sufficient.
African Group
Procedural
Dispositions on the Drafting phase of the Convention
We request the Secretary-General to provide the intergovernmental negotiating committee with the necessary facilities and resources to support the work of the Committee. We stress that these resources must include a technical secretary from the Department for General Assembly and Conference Management (DGACM) as well as a substantive secretariat from DESA.
African Group
Procedural
Dispositions on the Drafting phase of the Convention
Algeria supports the contribution made by the African Union (AU), on behalf of the African Group, and wishes to add the following comments, in its national capacity.
In order to strengthen the presence and effectiveness of participation by Member States in the work to develop the framework convention, it is proposed to add to paragraph 9, the following paragraphs: - enable inclusive and effective participation in setting the agenda; -strengthen the negotiating capacity of Member States, in particular developing countries.
this paragraph as drafted risks restricting the scope of application of the framework convention, in terms of international tax issues that can be addressed and thus limiting the commitments of the States parties to the Framework Convention on future themes to be identified. As such, it is proposed to reformulate this paragraph in such a way as to allow opportunities for broader engagement during the negotiations.
Algeria is of the opinion to limit the number of the first protocols to two (2), giving priority to “tax-related illicit financial flows” and “taxation of the digital economy”. This limitation will make it possible, firstly, to direct available resources towards priority work, namely the framework convention and the preliminary protocols on issues deemed urgent by Member States due to the damage it causes to efforts to mobilize fiscal resources by States.
That the number and duration of sessions of the Intergovernmental Committee be as short as possible in order to reduce the costs of participation in these sessions for developing countries and the excessively long mobilization of experts from Member States
Algeria
Procedural
Dispositions on the Drafting phase of the Convention
Make available to countries, in advance, the documentation necessary for the preparation of negotiations and in all official languages of the United Nations.
Algeria
Procedural
Dispositions on the Drafting phase of the Convention
There is a need for the international tax system to accept there are legitimate reasons for tax competition. The discussion and negotiation of the “Zero Draft” ToR should facilitate some dialogue, cooperation, and a commitment to crafting solutions that promote both fiscal stability and economic growth in a globalized world.
The specific mention of domestic resource mobilization is not appropriate in the “Zero Draft” ToR. Resolution 28/230 specifically addresses international tax cooperation.
It is recommended that the language be amended to specifically refer to the different “resources” of countries. There is a reference to “capacities”. However, these concepts are distinct and understanding their diNerences is crucial for eNicient planning and decisionmaking. Resources refer to the assets a nation possesses while capacities represent the skills and systems that transform those assets. The “Zero Draft” ToR specifically addresses capacity building.
Although we agree with the mention of “countries in special situation”we would want that to be further expanded and provide an example of what these special situations might encompass. For example, we believe small island developing states have unique challenges, priorities and limited capacities and resources that should be acknowledged. The suggested wording is as follows: - be universal in approach and scope and should fully take into account the different needs, priorites, resources and capacities of all countries, in particular countries in special situations such as small island developing states;
We likewise agree with the recognition of fairness in allocation of taxing rights that contribute to achieving sustainable development, however, we think this section should specifically reference achieving the Sustainable Development Goals.
It is recommended that this be headed “Participation and Decision Making” as opposed to “Capacity Building” to allow for focused attention on eNective and inclusive participation with specific discussion and negotiation on the voting system and voting rights.
We do believe, however, that “tax measures on environmental and climate challenges” listed in paragraph 15 should be moved and included as an early protocol and be identified as a priority issue to be addressed through such early protocols.
We suggest that the intergovernmental negotiating committee should meet for a minimum of eight (8) sessions, of a duration of ten (10) working days each.
Bahamas
Procedural
Dispositions on the Drafting phase of the Convention
We agree that a request should be made for the necessary facilities and resources to support this important work. In addition, it is imperative that developing countries be assisted to ensure their full and eNective participation in the negotiation of the framework convention. We also recommend that countries in special situations also be included for special assistance.
Bahamas
Procedural
Dispositions on the Drafting phase of the Convention
We would like to emphasise the need to strengthen the ambition in terms of tax measures contributing to addressing environmental challenges. We note that paragraph 10 of the Zero Draft, which refers to such measures, remains into brackets. Moreover, we note that environment and climate related tax measures are not listed as priority areas to be addressed in early Protocols, but only as additional topics. We believe these topics should be among the top priorities of UN action and leadership in international tax, given the urgency to fight the climate crisis.
It is suggested that the phrase “addressing tax-related illicit financial flows and other challenges to” is deleted from this paragraph. The specific reference to tax-related illicit financial flows and other challenges narrows the scope of this paragraph. The proposed amendment widens the scope without excluding the option of addressing tax related IFF.
“Establish an inclusive, fair, transparent, efficient, equitable, and effective international tax system for sustainable development, with a view to enhancing the legitimacy, certainty, resilience, and fairness of international tax rules, while [addressing tax- related illicit financial flows and other challenges to] strengthening domestic resource mobilization.”
The Framework Convention should provide for rules that are not only simple and easy to administer as the subject matter allows, but that also take into consideration the respective capabilities of developing countries.
The following additional wording (shown in yellow highlighting) is proposed as an addition to paragraph 4: “The framework convention should include commitments on: [fair allocation of taxing rights, including equitable taxation of multinational enterprises; effective taxation of high-net worth individuals; ensuring that tax measures contribute to addressing environmental challenges; transparency and exchange of information for tax purposes; and effective prevention and [fair, clear and transparent] resolution of tax disputes.]”
It is suggested to reformulate this paragraph for clarity. The suggested reformulation is shown below. “Recognizing that respect for tax sovereignty implies that inclusive and effective participation in international tax cooperation requires procedures that are:
(i) [not burdensome and that are responsive to] take into account the different needs, priorities and capacities of all countries, especially developing countries,
(ii) [aimed at allowing countries, especially developing countries, to meaningfully contribute to the norm-setting processes, [without undue restrictions];
(iii) [supportive of developing countries’ meaningful participation, and that support them in doing so, including giving them an opportunity to participate in agenda-setting, debates and decision-making, either directly or through country groupings, according to their preference.”
The additional wording shown in blue is suggested for this paragraph. “Early protocols on a small number of specific priority areas should be developed simultaneously with the negotiation of the framework convention, [while taking into account the need to ensure inclusiveness and the effective participation of all Member States].”
Additionally, it was suggested in the First Substantive Session that the Dispute Resolution Mechanism should be one of the early protocols to be prioritised, in order to clearly set out a dispute resolution mechanism as soon as possible.
This paragraph states that “the intergovernmental negotiating committee should begin negotiating the early protocols described above at the same time as it begins the negotiation of the framework convention”. The proposed timing and concurrent negotiation of the Framework Convention might be problematic in conducting an inclusive process, particularly for delegations with resource constraints.
Belize
Procedural
Dispositions on the Drafting phase of the Convention
We propose that the preamble first set out the purpose for the terms of reference:
These terms of reference are intended to support the negotiation of the framework convention by establishing guidance for the negotiation process and setting broad directions for the structure and contents of the convention.
CANZ
Substantive
Dispositions on the Drafting phase of the Convention
The preamble should also make explicit the fact that the terms of reference are not binding in respect of the rules of procedure that will govern the negotiations nor the substance of the convention. We propose the following provision:
It is acknowledged that the present terms of reference are indicative only and are not binding with respect to the substance of the framework convention to be negotiated and the rules of procedure the Intergovernmental Negotiating Committee decides to adopt. For the same reason, we recommend that the terms of reference avoid prescriptive formulations (e.g., “should”).
CANZ
Procedural
Dispositions on the Drafting phase of the Convention
Consistent with the request by a number of states at the last session, the terms of reference should address procedural issues and stipulate:
In light of the importance of international tax cooperation, it is recommended that every reasonable effort be made for the adoption of the Framework Convention to take place by the consent of the States participating in its drawing up. If all efforts at reaching such consent have been exhausted and the Chair, upon a decision of the Bureau, has informed the Intergovernmental Negotiating Committee that all such efforts have been exhausted, it is recommended that, as a last resort, the adoption of the Framework Convention take place by the vote of two thirds of the States present and voting.
Seeking the broadest possible consensus on the Framework Convention is essential to support its adoption and implementation, and thereby its inclusiveness and effectiveness. The rule proposed above is consistent with the General Assembly rules of procedure, and there are precedents for its adoption at the UN, most recently for the adoption of the UN cybercrime convention.
The terms of reference should stipulate:
It is recommended that protocols under the Framework Convention not be negotiated prior to the adoption of the Framework Convention.
The terms of reference should include a provision regarding the scope of protocols under the convention:
It is recommended that the Framework Convention set out criteria for the selection of topics for protocols under the convention. In that regard, the Intergovernmental Negotiating Committee could consider the following:
Protocols to be adopted under the Framework Convention should concern issues that:
- require widespread multilateral coordination among Member States that cannot otherwise be achieved than through legally binding instruments; and
- have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach.
The terms of reference should recommend the following objectives for the Framework Convention:
-To strengthen international tax cooperation and the mobilization of fiscal resources in Member States in support of the public mission of States, including achieving sustainable social and economic development and growth;
-To promote the development of tax policies that achieve an appropriate balance between the relevant policy objectives of taxation, including revenue generation, fairness, economic efficiency, ease of administration and compliance, integrity, certainty, predictability, adaptability, revenue stability, and transparency;
-To combat international tax evasion and aggressive international tax avoidance;
-To set out principles to guide efforts to achieve greater cooperation and coordination among Member States in the development and implementation of tax policies and to support the inclusiveness and effectiveness of such efforts;
-To establish a Conference of the Parties and associated subsidiary bodies capable of taking actions in support of the achievement of the above objectives.
Consideration should be given to the following guiding principles:
Participation in the development of tax policy standards and other multilateral tax cooperation initiatives should be open to all Member States when intended to be universal in scope;
Broad consensus should be sought among Member States involved in the development of tax policy standards, in support of the adoption and implementation of these standards;
Not all international tax cooperation issues are relevant to all Member States. The degree to which international tax cooperation has to be universal depends on the specific issue that is to be addressed as well as the specific action being considered. At the same time, all Member States should be able to participate in the development of standards that are intended to be universal in scope, and broad consensus should be sought among participating Member States.
Consideration should be given to the following guiding principles:
When developing tax policy standards and other multilateral tax cooperation initiatives, consideration should be given to the different circumstances of the Member States for which the standards and initiatives are intended, in particular with respect to their capacities to implement and administer a given standard or join a given initiative; In lieu of the expression “needs, priorities, and capacities of countries in special situations”, the particular needs/priorities that are to be taken into account should be specifically identified.
Consideration should be given to the following guiding principles:
The development of tax policy standards and other multilateral tax cooperation initiatives should take into account the economic, social, and environmental impact of such standards and initiatives;
This formulation avoids terms like “holistic” and “sustainable development perspective” that are more vague. Supporting sustainable development should be presented as an objective rather than a principle (as is proposed above).
Consideration should be given to the following guiding principles:
Tax policy standards should reflect an appropriate balance between competing policy objectives;
Simplicity, certainty, resiliency, etc. are better presented as normative objectives for tax systems (again, see above proposal). The corresponding principle should be that there should be a proper balance among competing objectives – it is not the case that one objective must always be prioritized in all circumstances.
Consideration should be given to the following guiding principles:
Tax policy standards should respect the sovereignty of each Member State in fiscal and taxation matters;
Tax policy standards should respect the rights of taxpayers, including the right to privacy, and recognize the rule of law as the foundation of tax regimes;
These two principles underline the fundamental need for any multilateral actions to respect the rights of States and taxpayers.
Consideration should be given to the following guiding principles:
The development of tax policy standards and other multilateral tax cooperation initiatives should take into account existing standards, instruments, other arrangements and institutions to ensure consistency and complementarity with these standards, instruments, arrangements and institutions;
The need to ensure consistency and complementarity with existing institutions, standards, instruments and arrangements is an important guiding principle that should be set out in the terms of reference.
Consideration should be given to the following guiding principles:
The form of a tax policy standard should be compatible with the objective(s) being pursued and the issue(s) to be addressed, and in particular tax policy standards with respect to domestic tax policy issues should not be legally binding.
The need for policy levers to be congruent to the issues they aim to address is also an important principle that should guide policy actions.
Concerning the allocation of taxing rights across jurisdictions, two principles are generally recognized as underpinning this allocation: the rights of countries to exercise their tax jurisdiction on a source or residence basis (or both), and the notion that the allocation of taxable profits should reflect the value-creation process. We do not see a need to depart from these recognized principles.
The terms of reference should stipulate:
It is recommended that the Framework Convention only include commitments and obligations that are directly related to the implementation of the Framework Convention, such as reporting on the implementation of the Framework Convention or the resolution of disputes that arise in respect of
this implementation.
It is proposed that high-level commitments that are political in nature should rather be presented as objectives or topics for future protocols. This would support the broader adoption of the Framework Convention.
Commitments and obligations to be included in the Framework Convention can only be binding on Parties to the convention. As such, the text proposed in paragraphs 11 and 12 of the Chair’s proposal does not seem appropriate, as it is targeted at international and regional tax organizations. A commitment to support capacity building should also cover all relevant functions, and not be limited to just the capacity to participate in multilateral policy discussions. A possible formulation for such a commitment could be as follows:
Parties commit, through their membership and involvement in relevant international and regional organizations, to promote the provision of technical and capacity-building assistance with respect to tax policy development and tax administration, in particular to developing countries.
With respect to the operation of the Intergovernmental Negotiating Committee, the terms of reference should recommend that:
A preliminary agenda and programme of work for each negotiation session be drafted and communicated to the Negotiating Parties at least thirty days before the start of the negotiating session.
Negotiating Parties be allowed to provide written comments on all text that is proposed for inclusion in the Framework Convention, as well as on any other documents produced by or for the Intergovernmental Negotiating Committee, and that such written comments be communicated to all other Negotiating Parties without undue delays.
All efforts be made to circulate documents and drafts to Negotiating Parties at least fourteen days prior to the start of the negotiation session at which these documents and drafts are to be considered or fourteen days prior to the deadline to submit comments on the documents and drafts.
Analysis be prepared to inform the negotiation process, in particular to research the issues that might require action and to identify and evaluate options to address these issues, in accordance with a program of research to be approved by the Intergovernmental Negotiating Committee.
Throughout its work, the Intergovernmental Negotiating Committee take into consideration existing standards, instruments, other arrangements and institutions that support international tax cooperation efforts, to ensure that the Framework Convention and its protocols are consistent with and complement such existing standards, instruments, arrangements and institutions.
CANZ
Procedural
Dispositions on the Drafting phase of the Convention
It is not feasible to have five specific priority issues to be developed simultaneously with the Framework Convention within a limited time frame. We suggest placing the focus on one or two specific priority issues, and concentrating efforts to achieve requisite quality in developing Framework Convention and one or two early protocols.
The Bureau of the intergovernmental negotiating committee: we suggest taking reference from the composition of the Bureau of the Ad Hoc Committee to drafting ToR, namely to be elected on the basis of balanced geographical representation, with each of the five regional groups equally represented. And the number of Bureau members per region should be no less than four, to better reflect the demands and policy positions of different Member States from different regions and with different stages of development, and to enhance the inclusiveness and effectiveness of the Framework Convention
Ghana believes that the objectives of the ToRs as drafted are generally strong and open and provide a solid basis for permanent action under the Convention.
While we support the objectives, we wish to propose minor amendments to paragraph 7(a) to read as follows: Establish fully inclusive and more effective international tax cooperation in terms of substance and procedures and set out the fundamental principles of such cooperation for all parties, including developing countries”
We also propose slight edits to paragraph 7(c) by adding the word “simplicity”. The paragraph will thus read as follows: Establish an inclusive, fair, transparent, efficient, equitable, and effective international tax system for sustainable development, with a view to enhancing the legitimacy certainty, resilience, simplicity and fairness of international tax rules, while addressing tax related illicit financial flows and other challenges to strengthening domestic resource mobilization.
We wish to stress our strong opposition to the inclusion of any element relating to “complementarity” in the objectives. The inclusion of such elements would permanently reduce the Convention to a second-tier instrument filling gaps left by other fora.
Ghana
Substantive
Objectives
Relationships with other institutions/instruments
20/6/2024
Second session inputs
While Ghana shares the view that the right to privacy is important, this should be balanced with the need for transparency and access to information. It should not be used as a built up barrier towards access to information on country-by-country reports, beneficial ownership information and public reporting of tax information.
Ghana
Substantive
Taxpayer rights
Right to privacy
Human Rights
Beneficial Ownership
Disclosure
Principles
20/6/2024
Second session inputs
Specific language proposal: The last bullet point of paragraph 9 should be amended as follows: require transparency and accountability of all taxpayers.
Ghana
Substantive
Human Rights
Principles
20/6/2024
Second session inputs
Specific language proposal: We propose the inclusion of substantive tax principles on issues of tax abuses such as “avoiding double taxation, double non-taxation, tax avoidance and evasion,” “furthering economic neutrality and providing a robust framework to prevent profit shifting and harmful tax competition,” “aiming at special and differential treatment of developing countries that takes into account the respective development stages;” and procedural principles such as: “ensure that all parties to the Convention can meaningfully participate in setting the agenda and in determining the outcomes of the processes under this Convention
Ghana
Substantive
Principles
Differential treatment
20/6/2024
Second session inputs
Aside being broad-based, paragraph 10 must include a commitment on IFFs and recovery and repatriation of taxes relating to such illegal transfers.
Ghana
Substantive
Commitments
Illicit Financial Flows
20/6/2024
Second session inputs
On paragraph 13 we propose the inclusion of ‘procedures for development, adoption and amendment of protocols.’
Ghana
Procedural
Institutional structure
20/6/2024
Second session inputs
We call for the prioritization of ‘tax-related illicit financial flows’, ‘the taxation of crossborder services’ and ‘the taxation of the digital economy’ as the early protocols to consider.
Ghana
Substantive
Protocols
Illicit Financial Flows
Digital Economy
20/6/2024
Second session inputs
Paragraph 20 should be slightly amended by replacing the word “should with “may”: “Throughout its work, the intergovernmental negotiating committee may take into consideration the work of other relevant forums, potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions involved in tax cooperation on at the international, regional and local levels.
Ghana
Substantive
Relationships with other institutions/instruments
20/6/2024
Second session inputs
All countries share the common goal that there is the need for a coherent and stable international tax system that is acceptable to as many participants in the global economy as possible. We reiterate that UN rules of procedure are inherently aimed at consensus but are built on the recognition that the majority of countries need to be able to address issues, if differences prevail. As a subsidiary body of the General Assembly, this principle guides the work of this Committee as reflected in Annex I of A/AC.295/2024/2. We therefore reiterate our position that the rules of procedure of the Assembly apply (A/520/Rev.20) should continue to apply to any subsidiary body of the General Assembly
Ghana
Procedural
Decision making rules
Approaches and time frame
20/6/2024
Second session inputs
In terms of timeframe, Ghana believes that 18 months would be sufficient for simultaneously developing the framework convention and the early protocols.
Ghana
Procedural
Approaches and time frame
20/6/2024
Second session inputs
We request the Secretary-General to provide the intergovernmental negotiating committee with the necessary facilities and resources to support the work of the Committee. We stress that these resources must include technical secretary from the Department for General Assembly and Conference Management (DGACM) as well as a substantive secretariat from DESA.
Ghana
Procedural
Dispositions on the Drafting phase of the Convention
20/6/2024
Second session inputs
the TORs should define the broad contours for the UNFCITC. In our view, at this stage, we need to identify tax related issues that are of the greatest concern to a large majority of Member States and include those in the TORs. However, we do not need to prescribe technical solutions to such problems at this stage. That would be the mandate of future intergovernmental committees which would negotiate the UNFCITC and its protocols.
in view of the limited time available to us to draft the TORs, we must focus more on substantive items, rather than procedural aspects relating to negotiation of the UNFCITC. This is not to undermine the importance of procedural aspects, but merely to highlight that we would have other opportunities, such as in the upcoming General Assembly (GA) session or in the organizational session of the next intergovernmental committee, to address these procedural issues.
Paragraph 6 of the zero draft states that the “text of the framework convention should be reflective of the following General Assembly resolutions..”, and specifies UN GA resolutions 78/230, 77/244, and 69/313 in the list of such resolutions. While we support the reference to these resolutions, it may be useful to specify in the TORs that such resolutions shall be referenced in the preamble of the UNFCITC, which shall set the context for negotiation of the UNFCITC. We propose that the first sentence of paragraph 6 of the zero draft may be reworded as follows:
“The United Nations framework convention on international tax cooperation shall include a preamble which shall reflect the following General Assembly resolutions...:”
Paragraph 7 of the zero draft states that the UNFCITC should include a clear statement of its purposes. However, while subparagraphs (b) and (c) in this paragraph relate to specific objectives, such as establishing a system of governance, or establishing an inclusive system for international tax cooperation, subparagraph (a) is more vaguely worded, and refers to “set(ting) out the fundamental principles that ensure the full inclusiveness and effectiveness of international tax cooperation in terms of substance and process” (emphasis added). Further, the use of the word “principles” here creates some confusion, as “Principles” is also a separate section in the zero draft. To avoid ambiguity and ensure that subparagraph (a) reflects a clear statement of purpose, we propose the following modification to subparagraph (a) of paragraph 7: “a. Establish a framework that ensures the inclusiveness and effectiveness of international tax cooperation in terms of substance and process”. This would also align the primary objective of the UNFCITC with the topic of UN GA resolutions 77/244 and 78/230, namely “Promotion of inclusive and effective international tax cooperation at the United Nations”.
Also, in subparagraph (c), we note that the last sentence refers to “addressing tax- related illicit financial flows and other challenges to strengthening domestic resource mobilization”. Here, we feel that specifically mentioning tax-related illicit financial flows may not be necessary, as the language of this section is generic in nature, and specifically highlighting one challenge may indicate that it is more important than the others for domestic resource mobilization, which may not necessarily reflect the views of the AHC. Therefore, while “tax-related illicit financial flows” is an important issue, which is highlighted elsewhere in the zero draft also, we propose removing it from paragraph 7, and rephrasing subparagraph (c) of paragraph 7 as follows:
“c. Establish an inclusive, fair, transparent, equitable, and effective international tax system for sustainable development, with a view to enhancing the legitimacy, certainty, resilience, and fairness of international tax rules, while addressing the challenges to strengthening domestic resource mobilization.”
We strongly support paragraph 8 of the zero draft, which states that “A United Nations framework convention on international tax cooperation should include a clear statement of its guiding principles.”
paragraph 9 lists some broad principles that the UNFCITC can adopt, which includes, as the last item “transparency and accountability of taxpayers, while respecting the rights to privacy and other fundamental human rights” (emphasis added). Here, the phrase “other fundamental human rights” seems vague and may be subject to unintended interpretations that could potentially thwart this principle. We wholeheartedly support the principle that taxpayers’ rights must be respected. For this purpose, India also has a taxpayers’ charter which lays down the government’s commitments towards the taxpayer, as well as expectations from the taxpayer. However, the phrase “other fundamental human rights”, unless specifically defined, may create an unintended hindrance, especially in tax-related exchange of information, which in our view, is the primary thrust of this clause in the zero draft. Further, the phrase “other fundamental human rights” may mean different things in various jurisdictions, which would lead to interpretational challenges. Therefore, to avoid ambiguity, we propose to reword this clause as follows:
“-require transparency and accountability of all taxpayers, with adequate safeguards to protect taxpayers’ rights and confidentiality”
We note that the head “substantive elements of the framework convention” in the zero draft identifies some topics for commitments in the UNFCITC. We support the topics included in this section, as they reflect some of the most pressing issues in international taxation at present. However, we propose to rename this section as “Commitments in the framework convention”, as this section presently contains only topics for commitments, and no other substantive item.
Paragraphs 11 and 12 of the zero draft discuss capacity building as a separate section, which in our view suitably underlines its importance in international tax cooperation. We support these paragraphs in the zero draft, in their present form.
Structural elements of the framework convention: We understand that the elements included in paragraph 13 under the head “structural elements of the framework convention” are identical to those included as Annex-1 to the draft skeleton shared with Member States prior to the 1st substantive session of the AHC. We feel these are important items, and several of them were included in India’s written inputs shared earlier, such as relationship with other agreements, instruments, and domestic law, governance structure (such as a Secretariat and Conference of the Parties), implementation arrangements, etc.
Paragraph 14 of the zero draft notes that “early protocols on a small number of specific priority areas should be developed simultaneously with the negotiation of the framework convention”. We support this proposal, as UN GA Resolution 78/230 calls upon Member States to consider simultaneous development of early protocols on two specific subjects, and inclusion of the same in the TORs would be in pursuance to this resolution. The priority areas identified for early protocols in paragraph 14 includes the two topics from Resolution 78/230 – namely tax-related illicit financial flows, and taxation of income derived from cross-border services and some other topics. India supports the inclusion of these as priority areas for early protocols, based on their importance to inclusive and effective international tax cooperation.
Here, we note that the phrase “small number” signifies that a limited set of subjects can be taken up for negotiation of early protocols. However, in addition to specifying these subjects, we believe it is also important to ensure that at the very least, the topics identified in operative paragraph (OP) 6 of Resolution 78/230 – namely tax-related illicit financial flows, and taxation of income from cross-border services – should be taken up by the committee negotiating the UNFCITC for simultaneous development of early protocols. We accordingly propose to add the following sentence at the end of paragraph 14 of the zero draft:
“The intergovernmental committee that negotiates the framework convention should, at a minimum, develop protocols on tax-related illicit financial flows, and taxation of income from cross-border services, simultaneously with the framework convention.”
Further, paragraph 15 of the zero draft identifies additional topics for “future” protocols, which are to be distinguished from “early” protocols. India supports the inclusion of these topics for future protocols. Additionally, to cater to the possibility that some of the priority areas included in paragraph 14 (beyond the minimum number proposed above) may not be concluded through early protocols, the following sentence may be added at the end of paragraph 14:
“In case the committee negotiating the framework convention is unable to negotiate early protocols on one or more priority areas identified in paragraph 14, those priority areas can be addressed through subsequent protocols along with protocols on topics identified in this paragraph.”
Paragraphs 16 to 20 of the zero draft discuss approaches and time frame for negotiation of the UNFCITC and early protocols. We support the proposal in paragraph 16 that the UNFCITC should be negotiated over a two-year time frame and complete its work in time for it to be considered by the GA at its 81st session.
We object to including "establish a system of governance" as an objective. Our mandate should focus on establishing a "framework" for international cooperation.
Further, paragraph 17 of the zero draft prescribes that negotiation of early protocols should be completed within 6 months from the conclusion of negotiations of the UNFCITC. As discussed at the 1st substantive session, we believe this is a reasonable timeline and can be adhered to, especially if we are limiting the early protocols to a “small number”.
Further, paragraph 18 states that the bureau of the intergovernmental negotiating committee for the UNFCITC shall consist of only 5 members – 1 Chair, 3 Vice-chairs, and a rapporteur. In our opinion, only five countries in the bureau would make it too unrepresentative and would not serve the purpose of the bureau. We propose to either not specify the bureau strength in the TORs or increase it to include at least 4 Member States from each of the five regional groups, like for the present AHC. We feel that a large (though not unreasonably large) bureau would be important, as the next intergovernmental committee that would negotiate the UNFCITC will likely discuss complex technical topics that would require support from its bureau. We would thus need a greater spread of expertise and broad-based views from the bureau.
Finally, we support paragraph 19 and 20 of the zero draft. Paragraph 20 correctly identifies “taking into consideration the work of other relevant forums..” as an approach rather than a principle or objective, and is in our opinion, suitably placed in the zero draft of the TORs.
Resources to support the work of the negotiating body: We endorse the text in paragraphs 21 and 22 of the zero draft. India has consistently maintained that a well-staffed and adequately resourced Secretariat is critical to the work of the intergovernmental committee that would draft the UNFCITC. To that end, it is important for Member States and other stakeholders to assist developing countries, particularly the least developed countries, in negotiation of the UNFCITC.
A similar paragraph was also agreed in the text of “Annex-I” to the report of the organizational session of the present AHC.
India
Procedural
Dispositions on the Drafting phase of the Convention
Indonesia agrees that the UN framework convention should clearly define its purposes. We are of the view that one of the immediate purposes of the framework is to establish a global tax solution that is executable without necessarily creating a new problem for the stakeholders, in particular in the areas of taxation of the digitalized and globalized economy. The development of the UN framework convention on international tax cooperation should take into consideration the projects of the OECD that also aims for similar objectives and involves global commitments. In light of this situation, we would like to suggest adding one more objective, which is to establish a room for coordination, consultation, or collaboration with other international/global tax frameworks/initiatives with a view to creating an effective and efficient international tax cooperation landscape.
Indonesia fully agrees with the addition of the Capacity Building provision in the UN framework convention. Given the novelties of the framework in the international tax cooperation landscape, having adequate capacity, particularly for the domestic preparation of the framework, would be a critical aspect for each authority. The Capacity Building should ensure a standardised or common understanding of the framework convention among the countries.
Given that one of the principles of the UN framework convention is to increase certainty for taxpayers and governments (Para.9 bullet 4), we suggest adding “dispute prevention mechanisms” next to “dispute settlement mechanisms”.
Consensus-based decision-making process: It was evident during the first session of negotiation that defining the decision-making process is crucial. We are concerned about engaging in a process that might compromise states’ sovereignty and jeopardize their right to tax. We thus reiterate the importance of a consensus-based process that will ensure an inclusive and effective process and lead to an agreed outcome. It is essential that the ToR includes a clear reference to a consensus-based decision-making process in the negotiations and the adoption of the framework convention.
Legal status of protocols: it is essential that the ToR will clarify the legal status of the protocols of the framework convention. In our view, the ToR shall state all protocols will be optional. Once their legal status is established, we surmise that participants would be more willing to consider early protocols and their simultaneous development.
Respect existing commitments and other forums: We stress the importance of respecting the commitments of countries and the work of other forums. This has been a repeated point throughout our work on the framework convention and during the initial negotiation rounds.While article 20 mentions that the committee should "take into consideration" the work of relevant forums, we find this language insufficient. We propose strengthening this article to reflect stronger commitment to align the work with existing processes, commitments and forums.
Mandate for Informing Analysis: The work of the AHC should be guided and informed by reliable economic and technical analysis. The ToR should include a mandate for such an analysis as part of the negotiation process.
Transparency and Involvement: We request that the work of the member state-led negotiating committee be shared with all states and made transparent throughout the process to facilitate broader involvement. Moreover, decisions should be taken by a forum of all member states.
Israel
Procedural
Dispositions on the Drafting phase of the Convention
sub para. b: In addition to the inclusion of “respecting the tax sovereignty of each Member State", we wish that the objective will also mention the work of the OECD on the Two Pillar initiative, which was agreed by more than 140 states.
sub para. c: The text refers to an "International tax system". We do not think the aim of this framework is to establish an international tax system. Rather, tax systems are subject of domestic law. Our aim should be to build a tax cooperation framework that would improve and complement domestic tax systems.
We prefer to allow more discretion in the negotiation process, as not all principles listed may be essential for a successful solution. To avoid being too prescriptive and reflect this flexibility, we suggest replacing "should" with "could"
We request replacing the phrase "Undermine the effectiveness of the tax base or system of any other Member State" (the 6th bullet) with less ambiguous language. Any incentive to promote investment, policy to promote sustainable development or other positive objective could potentially undermine the tax base of another country while effectively reaching the goal in others. In a broader sense, any system for elimination of double taxation inherently undermines the effectiveness of another tax system.
It is premature to state that the framework convention "should include commitments" without knowing the outcome of negotiations. To avoid prejudging the outcomes of the negotiations, we suggest avoiding determining the nature of commitments, including potential cooperation on issues beyond those listed in the ToR.
We oppose discussion of protocols before the legal and procedural rules governing the process and substance are established. Parallel work on protocols along with the convention would also be difficult for many delegations who face resource constraints. This has been flagged as an area of concern for many countries.
In addition, as in Paragraph 8, We prefer to leave more discretion to the negotiation process and avoid prescriptive language. We propose replacing “should” with "could".
In particular, we object to an early protocol on taxation of digitalized and globalized economy. This has been thoroughly discussed by the Inclusive Framework and a Two Pillar Solution was agreed upon. Many states enacted new legislation according to this solution and we must allow time for current mechanism before trying to find a different solution.
We prefer that the work on prevention and resolution of tax disputes, which has been addressed in other frameworks, will not take form as a separate protocol but rather expand existing standards. In any case, we do not support the development of a binding protocol regarding the prevention and resolution of tax disputes.
Member State-Led Negotiating Committee: We should clarify whether these committees include representatives from all Member States or the proposed composition of representatives
As general comments, we would like to emphasize that the ToR should ensure inclusive andeffective participation and reflect diverse views. In this regard, it is essential to expand the membership of the negotiation body to include the participation of non-state jurisdictionsin the negotiation of the Convention given their tax autonomy, as well as to have three cochairs in the negotiation body.
As we agreed in the first session, improving domestic resource mobilization ("DRM”) should be incorporated in the chapeau of the Convention, because strengthening DRM is one of the explicit targets of the SDGs
We suggest removing “77/244 of 30 December 2022 on “Promotion of inclusive and effective international tax cooperation at the United Nations”; and”, as well as “69/313 of 27 July 2015 on the Addis Ababa Action Agenda of the Third International Conference on Financing for Development”. We think a reference to 78/230 would be sufficient, because the resolution cites 77/244 and 69/313.
In paragraphs 7(b) and 7(c), “system of governance” and “international tax system” should be replaced with “framework” in alignment with the resolution 78/230
In paragraph 7(b), "with due consideration to the value of coherent and consistent international tax rules" should be added after “on an ongoing basis” according to the PP6 of 78/230. The discussion of first session supported this point.
In paragraph 7(c), “while” should be replaced with “contributing to” in order to clarify the relationships between illicit financial flows and other challenges and the international tax system.
In paragraph 9, “be made to” should be added after “more effective should” for grammatical correction, and “should” should be replaced with “could” to keep flexibility.
We suggest the deletion of paragraph 10. Many states are confused by the concepts of objective, principle, commitment, early protocols and approaches. Probably, it would be better not to discuss the details of commitments. If we include this, the chapeau should discuss DRM and the paragraph should be replaced with “The framework convention could include commitments on enhancing domestic revenue mobilization through tax measures such as:
[fair allocation of taxing rights;
indirect taxation
environmental taxation;
strengthening institutional capacity; and
dispute prevention and resolution.]”
In paragraph 11, “norm setting process” should be replaced with “enhancing international tax cooperation” because a broader term would be appropriate in this context, as capacity building is related to various areas, including improving administrative capacity.
In paragraph 13, “should” should be replaced with “could” to keep flexibility. Also, “right to vote, signature, ratification, entry into force, reservations, withdrawal, and interim arrangement” should be added into the paragraph, because these provisions are usually included in treaties. Moreover, “adoption of protocols” should be replaced with “protocols”, because procedures for protocols are not the only matter for adoption, so we should use just the general word "protocols" as in other conventions.
In paragraph 9, “be made to” should be added after “more effective should” for The following bullet should be added to paragraph 9 to align with our general comments: “ensure comprehensive participation so that the convention reflects diverse views and interests”.
In paragraph 9, “be made to” should be added after “more effective should” for The following bullet should be added to paragraph 9 to align with our general comments: “ensure comprehensive participation so that the convention reflects diverse views and interests”.
The second bullet of paragraph 9, “covers in a balanced and integrated manner” should be replaced with “considers interactions with other important” in alignment with paragraph 6(b) of resolution 78/230.
The fifth bullet of paragraph 9 should be replaced with “ensure sufficient flexibility and resilience, and agility to the evolution of technology and business models and the international tax cooperation landscape” because the phrase “equitable results” is unclear. We would like to ask the Secretariat to answer what you intend to describe in this sentence.
The seventh bullet of paragraph 9 should be replaced with “enhance domestic resource mobilization through taxation measures which could include allocating fair taxing rights, reforming domestic taxation systems, and strengthening institutional capacity”. In the first session, most jurisdictions agreed on the importance of DRM. However, there were divergent views on how DRM should be achieved. So, we tried to formulate a reflection of the discussion in a fair manner.
The eighth bullet of paragraph 9 should be replaced with “ensure tax transparency of all taxpayers, while respecting the right to privacy and duty of confidentiality, and other fundamental human rights” because we have never discussed the accountability of taxpayers and it is unclear what it means. In addition, when we consider transparency, we need to pay attention to the duty of confidentiality to avoid impairing taxpayers' trust as well as right to privacy.
“Or other agreements” should be added to all references to protocols in the ToR to give flexibility to the negotiation body. Which instrument provides a better solution varies issue by issue, and we need to choose the option that resolves the issue more effectively and efficiently
In the first sentence of paragraph 16: “, which should consider expanding its membership to non-state jurisdictions given their tax autonomy” should be added after “a Member State-led negotiating committee” because we raised this issue at the first session, and some Member States supported this idea for inclusiveness and effectiveness for international tax cooperation;
In the first sentence of paragraph 16: “, in accordance with established practice” should be removed because this phrase is unclear and also unnecessary here
In the second sentence of paragraph 16: - “New York” should be replaced with “a place which the negotiation committee agrees on” because some countries argued for different locations, so the specific location should not be addressed, and rather we should leave the decision to the negotiation committee;
In the second sentence of paragraph 16: - “for [number] sessions, of a duration of [number] working days each” should be removed, because how many sessions and days will be needed depends on how the negotiations will proceed;
In the second sentence of paragraph 16: - “and submit the final text of the framework convention and of early protocols to the General Assembly for consideration [at its [81stXX] Session]” should be removed. In particular, “for consideration” seems to mean that the General Assembly could amend the decision of the negotiation body although it should be the final decision.
Paragraph 17 should be replaced with "In parallel with the negotiation of the convention, the negotiation body should conduct analysis for deciding the topics of early protocols so that the conference of the parties can begin to draft those protocols or any other instruments in a timely manner".
In paragraph 18, “a chair” should be replaced with “three co-chairs” and “three vicechairs” should be replaced with “sixteen vice-chairs”. We believe that in order to ensure an equitable balance of representation by geographic location, economic size, and development stage, there should be three co-chairs, such as one each from a developing country, a small island country, and a developed country.In addition, “and economic size and development stage” should be added after “equitable geographical representation” to ensure a balance of the bureau members.
A placeholder for the decision-making process should be inserted into the section on “Approaches and time frame for negotiation” to include this discussion as a dedicated agenda in the second session.
However, the last principle that reads ‘require transparency and accountability of all taxpayers, while respecting the rights to privacy and other fundamental human rights’ could negatively affect the effectiveness of international tax cooperation. The second part of this principle (in bold) is very wide in scope and could be used to circumvent the requirement for transparency and accountability. The words in bold should therefore be deleted
Kenya proposes the inclusion of a commitment by Member States to ensure that taxes are paid to the Governments of countries where economic activity occurs, value is created and from where revenues are generated. This issue is reflected in Resolution 78/230 as a recognition by the General Assembly that there is a need for all countries to work together to eliminate tax evasion, tax base erosion and profit shifting.
Kenya also proposes the amendment of the proposed commitment on ‘transparency’ to read ‘Effective transparency and exchange of information for tax purposes’. Existing frameworks for exchange of information have not been fully effective, especially for developing countries, even where the required standards have been met.
Kenya supports the efforts to build the capacity of Member States, especially developing countries, on relevant international tax policies and practices, as well as their capacity to effectively participate in the negotiation and implementation of the Framework Convention.
Capacity building should however not overshadow the main concerns of developing countries that will be addressed practically in the Framework Convention and its protocols.
Kenya supports the development of early protocols on a small number of priority areas and that these protocols should be developed simultaneously with the negotiation of the Framework Convention.
Given the proposed time frame below for the negotiation and conclusion of the early protocols, Kenya proposes that the early protocols should focus on the taxation of the digitalised and globalised economy and taxation of income derived from cross-border services as the priority issues.
Kenya supports the proposal to begin the negotiation of the early protocols at the same time as the negotiation of the Framework Convention, and to complete them no later than six months after the conclusion of the negotiation of the Framework Convention.
Kenya also supports the inclusion of taking into consideration the work of other relevant forums as an approach to the development of the Framework Convention. This should be neither an objective nor a principle of the Framework Convention. Resolution 78/230 emphasized that the tax-norm shaping process would leverage the existing strengths and address the gaps and weaknesses in the current international tax cooperation efforts. The negotiating committee should therefore have the flexibility to review the existing frameworks as one of the approaches to developing the Framework Convention without being unduly bound by them
Kenya supports the call to the Secretary-General to provide the intergovernmental negotiating committee with the necessary facilities and resources to support their work. The negotiating committee should be allocated with sufficient and dedicated secretariat staff to support the heavy workload that lies ahead. This will be crucial to the achievement of the objectives and time frame set out in the Terms of Reference, and to fulfilment of the goals of Resolution 78/230.
Kenya
Procedural
Dispositions on the Drafting phase of the Convention
Paragraph 7 – opening statement and part (a) thereof should be drafted in clear manner by the use of “Establish” which will also be consistent with the clear and precise language in paragraphs (b) and (c).
Paragraph 9 – bullet on transparency and accountability: Lesotho views the inclusion of the phrase “while respecting the rights to privacy and other fundamental human rights” as risky and presenting high potential for abuse by taxpayers and or member states. It is Lesotho’s view that “genuine taxpayers’ rights” should be respected and therefore the Framework on Tax should not go beyond that and address human rights that are otherwise already covered by appropriate legislations, thus, the inclusion has the potential to complicate matters for both taxpayers and revenue administrations. This phrase is not the language used in the standard tax treaties articles on “exchange of information,” it is only a suggested option by DTA model conventions commentaries that member states may adopt bilaterally. The removal of bank secrecy laws in many jurisdictions, as requirement for meeting the transparency standard, makes reference to human rights even look out of place in a Framework that deals with international tax issues.
Paragraph 9 – new commitment on where taxes are to be paid: Lesotho proposes that a new commitment should be inserted to the effect that “taxes are to be paid where values is created and economic activity takes place, with special attention to exploration and exploitation of natural resources.” Emphasis in relation to natural resources is meant to bring about fairness, especially to developing countries, whose natural resources have been enjoyed by the developed countries through unjust allocation of taxing rights, much to the detriment of developing countries. Re-allocation of such taxing rights would even be an ideal move to redress the historical wrongs.
Paragraph 10 – The list is reflective of the discussions and points of convergence during the meetings and as such all the bracketed issues are worth going into the list of substantive items and as such the brackets should be removed as they are no longer necessary.
Paragraphs 11 and 12 – on capacity building - Lesotho feels that the UN should establish mechanisms, financial resources, and structure to ensure that capacity needs of Member States related to the Framework Convention are met. The issue of capacity building should however not be prioritised over the real topical tax issues that should constitute the Framework Convention, it should only be viewed as an ‘enabler’ and not a revenue raising mechanism on its own. By definition, capacity building is not a tax handle, and therefore should not be taken to be a substantive item for domestic revenue mobilisation.
Paragraph 13 – “data collection and analysis” – Lesotho’s view is that there already exist sufficient reports, based on sound data and analysis, including the UN’s 2022 one, and all those reports provide rationale for putting in place the Framework. Any data collection and analysis work should be for purposes of informing future inclusion of items (either in the amended Framework or future protocols) that have so far not been part of the current debates. There is sufficient data and analysis that led to the need to develop and conclude the long overdue Framework Convention on International Tax Cooperation.
Paragraph 13 – “subsidiary bodies” should include an “advisory committee” that will review much of the technical work on behalf of the Conference of Parties (CoP) which in turn will make informed political decisions, by virtue of their (CoP) positions. “Technical working group” should also be one of the subsidiary bodies. The UN is to establish a fund out of which the work of these two bodies will be financed.
Paragraph 14 – early protocols – On review, and in particular paying attention to timeframes and limited resources, Lesotho submits that two early protocols should be considered, and this will mean merging the first proposed topics in the Zero Draft. The suggested protocols therefore become;
▪ Taxation of cross border services, digitised and global economy, and
▪ Taxation of tax related illicit financial flows
Paragraph 15 – future protocol list to include those dropped from paragraph 14 by Lesotho;
▪ Prevention and resolution of tax disputes, and
▪ Taxation of high-net-worth individuals.
Paragraph 20 – work of other relevant forums – the draft indicates that the Drafting Committee “should” take into account work of other relevant forums. This formulation has the potential to deny the Drafting Committee the flexibility to finalise the work within the suggested timeframes as it might need more consultation to consult Member States who not been part of the process by design or otherwise. Furthermore, such usage subjects the entire process of the Framework Convention formulation subsidiary to existing work, which work has been proven not to be catering for the needs of all member states, in particular developing countries. The word “MAY” is therefore appropriate to allow for such flexibility and proper placement of the UN as the supreme organisation.
Mauritius is of the view that the objectives of the Convention to be reflected in the TOR should
be as per resolution 78/230 and in particular the Convention should:
- not impinge the sovereign right of members to design and implement their tax policies
under their respective domestic laws;
- bring more fairness in the allocation of taxing rights; and
- be drafted in a way which would provide flexibility to adapt to changes in technology
and the economic landscape.
As regards the principles to be reflected in the TOR, Mauritius supports the inclusion of the principle respecting the rights to privacy and other fundamental human rights of taxpayers as set out in paragraph 9 of the zero draft TOR.
Mauritius concurs with the structural elements enunciated in the zero draft TOR. While being fully supportive of the inclusion of “dispute settlement mechanisms” among the structural elements of the Convention, Mauritius would in addition like to propose that the term “dispute prevention” be also factored in structural elements.
Mauritius supports the development early Protocols simultaneously with the Convention as this will ensure that once the Convention is finalised, accompanying Protocols which address priority issues are also finalised. This will contribute towards making the Convention comprehensive, effective and inclusive.
Mauritius wishes to make the following observations:
(a) given that Resolution 78/230 stresses on the importance of promoting tax transparency in our tax systems through exchange of information mechanisms, such an important topic like exchange for information has been classified as a second priority instead of being the first priority;
(b) the taxation of high-net worth individuals is a complex issue which needs preferably be addressed at domestic level rather than multilaterally.
(c) one of the overarching objectives of the Convention and its protocols as a whole is to combat harmful tax practices, having a separate protocol on harmful tax practices may lead to duplication of contents of other protocols and does not bring clarity on what are we trying to achieve.
The zero draft TOR proposes that the bureau of the intergovernmental negotiating committee should consist of a Chair, three Vice-chairs and a rapporteur, elected on basis of equitable geographical representation.
Mauritius considers that the volume of work for the bureau during negotiation of the Convention and its early Protocols will be highly substantial, as such the number of vice-chairs and rapporteur need to be increased to ensure that the bureau is adequately capacitated to deliver on its mandate. Furthermore, more vice-chairs and rapporteur will better enable all regions to be equitably represented.
Taking into account the ambitious target of two years to complete negotiation of the Convention and the limited human resources of developing members, it is important that some of the meetings on the Covention be conducted in a hybrid format.
Mauritius proposes that mention of hybrid meetings be made in the zero draft TOR and that the number of days for physical meetings per session be shortened given that the administration of many members function with limited human resources and that their technical staff need to balance between participation in these physical meetings and attend to their ongoing duties in their respective offices
Mauritius
Procedural
Dispositions on the Drafting phase of the Convention
Paragraph 9 (1st point): Morocco considers that the expression “in particular countries with specific situations” is not clear and suggests redrafting it as follow: “be universal in approach and scope and should fully take into account the different needs, priorities, and capacities of all countries, in particular developing countries;”
Paragraph 11: Morocco considers that inclusive and effective participation in international tax cooperation and capacity building do not find their basis in the principle of “tax sovereignty” but rather in the 1st principle mentioned in paragraph 9, namely “the universal approach”. Therefore, Morocco suggests replacing the expression “Recognizing that respect for tax sovereignty implies…” with “Recognizing that fully inclusive tax cooperation implies…”.
Morocco also suggests adding reference to “Technical Subcommittees” in charge of elaborating protocols, given that these protocols are highly technical and need to be negotiated by experts in each field.
Morocco suggests to provide for the creation of an advisory body in charge of consultancy and technical supervision of the work on the Framework Convention and the early protocols.
With regard to the negotiation of early protocols simultaneously with the Framework Convention, Morocco reiterates its support for this approach and agrees that the terms of reference should specify the modalities for negotiating, adopting and implementing these early protocols.
Morocco also considers that tax systems should keep pace with the evolution of new technologies in international tax cooperation landscapes. In this regard, Morocco deems that it is important to include taxation of Blockchain technology, Cryptoassets and Artificial Intelligence.
Paragraph 16: Morocco considers that more precision is required about the composition of the intergovernmental negotiating committee to make clear if this committee would be composed of all member States, or elected members representing the different regions.
Paragraph 18:
-Morocco supports the suggestion that the Bureau should have only one Chair;
-Morocco suggests that the Bureau be composed of 15 members elected on the basis of equitable geographical representation.
We assert that the preamble is crucial for setting the context and understanding the work's background. By linking the convention to its founding resolutions, the preamble provides a strong foundation, anchoring the framework to initiatives like those articulated in resolutions 78/230, 77/244, and 69/313. Thus, we support the inclusion of a preamble in the draft.
Nigeria suggests refining paragraph 7(a) to read: "Establish the fundamental principles that ensure the full inclusiveness and effectiveness of international tax cooperation for all parties, including developing countries, in terms of substance and
process."
Additionally, paragraph 7(b) should be revised to state: "Create a governance structure for international tax cooperation that can identify and address both current and future tax-related challenges, while upholding each Member State's tax sovereignty."
We also propose revising paragraph 7(c) to: "Form an inclusive, fair, transparent, efficient, and effective international tax system for sustainable development, aimed at enhancing the legitimacy, certainty, resilience, simplicity, and fairness of international tax rules, while tackling illicit financial flows and other challenges to strengthening domestic resource mobilization." We strongly oppose incorporating "complementarity" within the objectives, as this would downgrade the Convention to a supplementary instrument addressing gaps left by other bodies.
The objectives presented in paragraph 7 are not entirely clear and could be more streamlined. While sub-paragraph (b) addresses a system of governance, sub-paragraph (c) addresses the international tax system, i.e. rules and standards flowing from international tax cooperation. From an Austrian point of view, the adjectives “inclusive, transparent, efficient and effective” as well as the goal of “enhancing legitimacy” seem to fit better under sub-paragraph (b) than under (c). Furthermore, Austria would welcome a focus on sustainable development as well as on strengthening domestic resource mobilization in sub-paragraph (c). Addressing taxrelated illicit financial flows is already relatively specific and it should therefore rather be listed as a potential high-level commitment (as addendum to paragraph 10)
Propose the following drafting for sub-paragraph (c):
“c. Establish a framework for a fair and equitable international tax system for sustainable development, with a view to enhancing certainty and resilience while strengthening domestic resource mobilization.”
The Zero Draft Terms of Reference omits to mention that efficient international tax cooperation needs to recognize and be based on the principle that duplication of existing rules and standards should be avoided. This approach to efficient international tax cooperation has already been included in OP 6 sub-paragraph (d) of Resolution 78/230 and its inclusion in the Terms of Reference should therefore be undisputed. Therefore, we propose to add the following item in paragraph 9:
“take into consideration the work of other relevant forums, potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions involved in tax cooperation at the international, regional and local levels”.
It is our understanding that the list of commitments put forward in paragraph 10 is purely indicative for a future negotiating committee and does not pre-empt the outcome of negotiations of a future framework convention. Therefore, they suggest to reframe par. 10 so that it states that "the framework convention could include high-level commitments" rather than "should"
The commitments described in paragraph 10 should neither supersede nor overwrite the commitments that Member States have already adhered to in the context of existing international tax cooperation mechanisms. Commitments described in paragraph 10 should therefore be complementary to existing international tax cooperation mechanisms.
Paragraph 13 mentions “procedures for amendments and adoption of protocols”. So far this point does not mention a need to design the relationship between a future framework convention and future protocols. In our opinion, this needs to be added.
Furthermore, protocols may not be the only instruments which might be adopted by the parties to a future framework convention to achieve its objectives. Therefore, we propose to add the following item in paragraph 13: “relationship with protocols and other instruments provided for by the framework
convention”.
We understand that a possibility of developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by Member States. Further, it is our understanding that the list of priority areas put forward in paragraph 14 is purely indicative for a future negotiating committee and does not pre-empt the outcome of
negotiations of a future framework convention. Therefore, we suggest the following drafting change: “Early protocols on a small number of specific priority areas could be discussed (…) rather than "should"
Depending on the time frame for negotiation, it would further be prudent to indicate in the Terms of Reference that early protocols – if they are to be negotiated at all – should be limited
in number. The topics of such protocols should focus on areas with the broadest consensus and agreement, avoiding controversial topics and issues already under negotiation.
Paragraph 14 does not indicate the purpose of protocols and their relation to the high-level commitments described in paragraph 10. It would be helpful to clarify these two issues based on the Report of the Secretary-General (A/78/235) in order to put the topic of early protocols into a proper context. According to the Report, protocols could help to agree on more detailed commitments on particular topics, giving Member States the ability to opt-in and/or to opt out on the basis of their priorities and capacities
Paragraph 15 mentions additional topics for future protocols that might be negotiated under a future framework convention. While the Ad-Hoc Committee could theoretically provide for a list of additional topics, we do not understand why and to what extent this would be helpful. The Terms of Reference should rather state that a future framework convention should comprise provisions for establishing a procedure regarding future action items that could be agreed on by the parties to a future framework convention.
In general, the Terms of Reference need to be clearer on the procedures that will be followed by the negotiating committee, similar to what has been done in other UN processes (e.g. UNGA Resolution 72/249, paragraphs 17-19). We reiterate the importance of consensus based decision making and this should clearly be reflected in the Terms of Reference. We believe that decision making based on a simple majority is not appropriate for a future negotiating committee since international tax rules cannot be imposed by a majority over a minority of Member States.
Timeline will place excessive demands on Member States’ resources. We thus suggest extending the deadline to allow all Member States to fully participate in the works of a future negotiating committee, and, as a result, to be able to agree in an informed manner on the outcomes of such negotiations. This is vital for establishing a long-lasting and resilient international tax cooperation framework.
Negotiations of protocols – which need to be embedded in a future framework convention –can be started only once the “constitutional elements” of such a convention are fairly stable.
We thus urge to apply a sequential approach and complete discussions on a future framework convention before starting to negotiate early protocols. If, however, discussions regarding
early protocols would be started before a future framework convention is complete, we propose to start negotiating early protocols with a sufficient delay after starting negotiations
of a future framework convention.
The time frame for negotiating early protocols will depend on the number of protocols and on the subjects they cover so that there should not be a single deadline for finalising all protocols at the same time.
We see a need to better understand the meaning of certain concepts used in the Zero Draft Terms of Reference. We therefore suggest that guiding notes on topics and/or terms used in the Zero Draft of Terms of Reference should be prepared in advance of the Second (Substantive) Session to facilitate an informed discussion during the upcoming meeting.
Austria
Procedural
Definitions
Approaches and time frame
Dispositions on the Drafting phase of the Convention
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes (UNGA Resolution 72/249, par 17-19). We reiterate the importance of consensus-based decision making and this should clearly be reflected in the terms of reference. Consensus should be
required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of achieving a generally accepted result.
Developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. We recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: “If there is sufficient agreement on certain action items, some of these protocols could be negotiated at the same time as the framework convention.” This option was merely suggested as a possible course of action and should be reflected as such in the draft terms of reference.
We strongly prefer that only a limited number of early protocols be developed after the negotiations of the framework convention are concluded. Therefore, we propose the following amendment to the draft terms of reference: “Early protocols on a small number of specific priority areas could be developed after the negotiation of the framework convention.”
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe to be foreseen for the negotiations of early protocols will depend on the number of protocols and on the subjects they cover. There should not be a single deadline for finalising all substantive protocols. The topics of protocols should focus on areas with the broadest consensus and agreement, therefore, least controversial topics, avoiding issues that are already under negotiation or those with internationally agreed standards. Therefore, it is appropriate to first conduct an assessment and discuss an exhaustive analysis of a small number of issues and prioritise certain topics over others.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums. It should consider potential synergies and leverage the existing tools, strengths, expertise and complementarities of the
multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
The commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore we would suggest including domestic resource mobilization, capacity building and fostering tax compliance.
Considering the lack of a common understanding of certain concepts of the draft terms of reference among UNMS to date, there is a need to delineate these concepts in the terms of reference, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee
The terms of reference should reflect that they do not prejudge the outcomes of the negotiating committee and should clarify that the work of the negotiating committee should be based on substantive technical analysis before starting to work on any
potential measures in a targeted and efficient manner. In addition, other instruments besides protocols should be explored (e.g. best practices or soft law).
Belgium
Procedural
Dispositions on the Drafting phase of the Convention
Czechia would like to make a general remark that the Zero Draft uses several undefined terms, for instance, tax-related illicit financial flows, fair allocation of rights, and domestic resource mobilization. These terms are vague and have different
meanings depending on the context (e.g., tax-related illicit financial flows can include tax evasion as well as tax avoidance). Therefore, it seems reasonable to include a glossary of these terms' definitions in the Zero Draft or to explicitly state that these terms do not have a specific meaning, and thus the meaning can be decided during the upcoming negotiations.
Regarding the objectives, Czechia would like to appreciate the inclusion of full inclusiveness amongst the principles that should be reflected in the Framework Convention (par. 7, letter (a)). This principle ought to be the basis of future negotiations, so the Framework Convention reflects the needs of all Member States
Concerning the principles, Czechia would like to particularly support the principles of simple administration, tax sovereignty, and respect for the rights to privacy and other fundamental human rights. Czechia would also like to suggest adding the
principle of complementarity to the current international tax initiatives amongst the principles enumerated in the Zero Draft (par. 9).
As regards the substantive elements, Czechia would like to emphasize that any potential commitment (par. 10) should be high-level and complementary to already existing commitments. The list of possible commitments mentioned in the Zero Draft
(par. 10) does not correspond to the list of possible commitments summarized by the chair after the discussion. Czechia would therefore like to know why the list includes
(i) transparency and exchange of information and (ii) effective prevention and resolution of tax disputes since these were not mentioned in the chair’s summary
Czechia would suggest including amongst the high-level commitments only those commitments that will be reflected in the Framework Convention or its protocols to avoid the existence of commitments without corresponding rules to implement these commitments.
Pertinent to capacity building, Czechia suggests adding the words “and low-capacity countries” after the words “especially developing countries” in par. 12. Drawing on Czechia’s experience from international tax negotiations, many low-capacity countries would benefit from capacity building, and the negotiation’s capacity is not necessarily related to how a country is developed but to many other variables.
On the matter of specific priority to be addressed in early (priority) protocols, Czechia would like to propose that the list of possible areas for early protocols should include guidance for the future committee stating that the committee should choose only one or two topics for any early protocols not to overwhelm Member States’ negotiating capacities. On top of that, Czechia would like to note that the list of possible topics to be covered in future protocols includes harmful tax practices which was not
mentioned in the chair’s recapitulation of the discussion.
Relating to the approaches and time frame for negotiation, Czechia would like to reiterate, while respecting the procedure of the General Assembly of the United Nations, that Terms of Reference should contain a provision clearly stating that any
successful international tax reform should be based on consensus. This matter should be inserted in the principles as well as in the part of the Zero Draft that discusses the approaches for negotiation. Overcoming the inability to achieve consensus by voting should be avoided as long as possible since only a consensus-based approach respects tax sovereignty and leads to full inclusivity.
Czechia would also like to add that the timeline of negotiations seems to be too ambitious. The current negotiations of the Zero Draft as well as negotiations on other fora have proved that even seemingly easy tax solutions are enormously complex to
implement and putting time pressure on Member States, especially the low-capacity Member States, would lead to suboptimal results of the negotiations. Therefore,
Czechia suggests that the Zero Draft keeps the brackets (par. 16) since we do not know how much time we will need because we do not know what exactly we are going to negotiate
Czechia also suggests that the timeline regarding early protocols (par. 17) is rewritten in a way that it states that the negotiation of early protocols will begin in a specific timeframe (months, number of meetings) after the negotiation of the
Framework Convention begins or, ideally, after the negotiation of the Framework Convention related to the functioning of protocols and other instruments is sufficiently specific. This will ensure that Member States are not wasting resources on
negotiating protocols’ provisions that would prove to be contrary to the Framework Convention. The deadline for negotiating any early protocols also should not be limited by a specific number of months (par. 17) but by a more flexible wording, for example, within a reasonable timeframe after concluding the negotiations of the framework convention depending on the number of protocols and on the subjects these protocols will cover
We support the aim set out in the Introductory Note that the ToR should provide guidance on the negotiation of the framework convention without unduly limiting flexibility for the negotiating committee. Hence, we believe it’s important that the ToR should focus on procedural elements for negotiating the framework convention and the ToR should not prejudge the outcomes of
the negotiating committee.
Denmark
Procedural
Approaches and time frame
Dispositions on the Drafting phase of the Convention
We reiterate the importance of member states being fully involved and consensus-based decision making. This, should clearly be reflected in the terms of reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of achieving a generally accepted result.
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes
Denmark
Procedural
Dispositions on the Drafting phase of the Convention
Recognizing the need to respect Member State’s tax sovereignty we are wondering how paragraph 7, letter b, is to be understood. Since, the objective - to our understanding - is to negotiate a framework convention not to establish a (new) global system of governance for international tax cooperation, we suggest that litra b is amended to "establish a new framework which is applicable for international tax cooperation [….]"
Regarding paragraph 7, letter c, we consider that some of the words used do not have one common understanding and are highly subjective. The risk is therefore that the wording could lead to future disputes as to their meaning. We would prefer to delete these subjective words. Otherwise, we consider it could be fruitful with a terminology section or some definitions in the ToR.
As a starting point, we consider it could be beneficial to add the following wording in the beginning of the sentence in paragraph 8: “while recognizing and respecting tax sovereignty of each Member State […]”
Furthermore, to leave flexibility for the negotiating committee we suggest amend the introduction in paragraph 9 to serve as a recommendation by substituting “should” by “could”
Regarding paragraph 9 we believe in a sustainable development and find it is key in ensuring prosperity around the world. Furthermore, in general we find it of high importance to
have effective tax systems that ensure the taxation of income. Therefore, we concider that in paragraph 9(7) it would be fruitful to also make reference to transparency and exchange of information for tax purposes as key components in ensuring effective tax on income that can contribute to achieving sustainable development goals.
iIn general we acknowledge and support fairness in relation to taxation. However, we find it technically difficult to quantify “fairness” in the allocation of taxing rights and hence we don’t find it appropriate to have this as a guiding principle in the
framework convention in relation to allocation of taxing rights.
Regarding paragraph 10, we find it would be fruitful if the word “should” be replaced by “could” to ensure that the negotiating committee has the necessary flexibility. Also, as it is difficult to commit to headlines where it is highly uncertain what will be the content behind the headlines.
We find usage of “fair allocation of taxing rights” ambiguous and subjective. Thus, it is not clear how this statement should be understood in relationship to e.g., existing tax treaty network.
We welcome the focus on capacity building in the ToR for the framework convention. In general, we wish to contribute in the best way possible to the development of cooperation in the area taxation and we recognize that capacity building – and domestic resource mobilization (DRM) – are important means to support the countries in building a wellfunctioning tax system.
We welcome the proposed outlined structural elements for the framework convention. However, we also recognize that the relationship between the framework convention and with domestic law for some countries might be a constitutional issue
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: “If there is sufficient agreement on certain action items, some of these protocols could be negotiated at the same time as the framework convention.”. This option was merely suggested as a possible course of action and should be reflected as such in the draft terms of reference. We strongly prefer that only a limited number of early protocols be developed after the negotiations of the framework convention are concluded.
We propose to amend the wording of paragraph 14 by changing the word “should” to “could”. Especially as the early protocols mentioned are merely headlines where the content behind these headlines has yet to be defined or discussed. It is therefore highly uncertain what countries would be agreeing to.
We don’t think it will benefit the progress to negotiate early protocols simultaneously with the negotiation of the framework convention. Simultaneous negotiations will both from a resource – and a legal perspective – be rather difficult to carry out.
Hence, we note that simultaneous negotiations will place excessive demands on Member States’ resources. We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe to be foreseen for the negotiations of early protocols will depend on the number of protocols and on the subjects they cover. It is in our view not recommended to have a single deadline for finalizing all substantive protocols.
The topics of protocols should focus on areas with the broadest consensus and agreement, therefore, least controversial topics, avoiding issues that are already under negotiation or those with internationally agreed standards. Therefore, it is appropriate to first conduct an assessment and discuss an exhaustive analysis of a small number of issues and prioritize certain topics
over others.
We propose to consider how the work on OECD Inclusive Framework on BEPS can most effectively be leveraged in a UN Framework Convention on International Tax.
The intergovernmental negotiating committee should throughout its work avoid duplicating the work of other relevant forums. It should consider potential synergies and leverage the existing tools, strengths, expertise and complementarities of the
multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
We support that the framework convention is negotiated and developed through intergovernmental negotiations. Hence, we support realistic timelines for the negotiations that
take into account the complexities of international tax issues and the need for analysis and thorough discussions at a technical level. Remembering that the work in OECD has turned out to be more time-consuming than first estimated, we don’t believe it’s fruitful that the ToR in advance limit the amount of negotiating meetings for the negotiations of the framework convention
We support that the ToR should also acknowledge the importance of participation by all relevant stakeholders, including non-governmental organizations.
Denmark
Procedural
Dispositions on the Drafting phase of the Convention
There is more need to clarify the procedures that will be followed by the negotiating committee in the Terms of Reference, as it has already occurred in the past for other UN processes. We reiterate the importance of consensus-based decision making and this should clearly be reflected in the Terms of Reference. Consensus should be required in the negotiation and adoption of the text of the UN Framework Convention on International Tax Cooperation and its protocols, as well as for the work of the Committee, with the objective of achieving a generally accepted result
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: “If there is sufficient agreement on certain action items, some of these protocols could be negotiated at the same time as the framework convention". This option was merely suggested as a possible course of action and should be reflected as such in the draft terms of reference. Estonia strongly prefers that only a limited number of early protocols be developed after the negotiations of the framework convention are concluded.
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over
others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
Considering the lack of a common understanding of certain concepts of the draft ToR among UN Member States to date, there is a need to delineate these concepts in the ToR, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee.
Estonia
Substantive
Definitions
Dispositions on the Drafting phase of the Convention
The ToR should reflect that they do not prejudge the outcomes of the negotiating committee and that the work of the Negotiating Committee should be based on substantive technical analysis before starting to work on any potential measures in a targeted and efficient way.
Estonia
Substantive
Dispositions on the Drafting phase of the Convention
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes. We reiterate the importance of consensus-based decision making and this should clearly be reflected in the terms of reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of reaching a broad and universal implementation.
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
Considering the lack of a common understanding of certain concepts of the draft ToR among UN Member States to date, there is a need to delineate these concepts in the ToR, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee.
France
Substantive
Definitions
Dispositions on the Drafting phase of the Convention
For the sake of concision France is in favour of a brief preamble focused on the considerations exposed in the General Assembly's Resolution 78/230 of December 22nd. 2023. It is actually the founding Resolution which incorporates all essential considerations for the understanding of the extent of the Ad Hoc commitee's work
We recall that the objective of the Ad Hoc committee according to Resolution 78/230 is to "draft the terms of reference for a United Nations framework convention on international tax cooperation for the purpose of strengthening international tax cooperation and make it fully inclusive and more effective". It appears that the suggestions under points b and c of paragraph 7 to "establish a system of governance for international tax cooperation" and "establish an inclusive, fair, transparent, efficient, equitable, and effective international tax system" goes far beyond the initial mandate. A rewording emphasizing the building up of current frameworks is therefore suggested.
France suggests to recall the spirit of the General Assembly's Resolution to take into consideration the works carried out in other fora, as well as possible synergies, existing tools and to work in the interest of complementarity avoiding any duplication which could prove counterproductive.
The need for consensus-building in good faith with regard to the importance of the issues relating to international tax cooperation should be emphasized in this part of the ToR for the framework convention. As noted by France in its previous contribution and recalled again above, the commitment of the countries and consequently the extent and success of the works carried out by the Ad Hoc committee will depend on the decision-making process.
It is also suggested to reword the principle, well accepted, concerning the need for sufficient flexibility in the future works, which are expected to be sound in evolutionary contexts over time.
The principle of sovereignty in the field of taxation shall be highlithgted withoud any limitation. It is therefore suggested to revise this part of the Draft
Eventually, the global and universal nature of the discussion implies as such to take into consideration the constraints and specific situations of each country. That is why it seems pointless and confusing to refer specifically to "countries in special needs"
The issues addressed in this part seem partly redundant with those included in the description of possible topics for the protocols. It is therefore suggested to delete paragraph 10 whose content is reproduced in paragraph 14.
Structural elements of the framework convention constitutes the core of the ToR which shall concentrate the ground works of the committee next summer. It is crucial and must be developped in a way to list the items to be inserted into the framework convention, such as:
-Decision-marking process;
- Technical support;
-Composition and missions of the Secretariat;
-Relationship with other existing instruments; - Financial resources;
-Dispute settlement for the purpose of implementing the framework convention;
-Periodic assessment of the framework convention's implementation;
-Exchange of information for the purpose of implementing the framework convention;
-Final clauses.
France
Substantive
Dispositions on the Drafting phase of the Convention
The drafting of the framework convention must be prioritized and the discussions on preliminary protocols will only start subsequently. France is not in favor of holding parallel discussions.
When the time comes to start discussions on preliminary protocols it is essential for the credibility of the works that each protocol be preceded by an impact assessment in order to demonstrate its relevance and added value. In any case, these works must be initiated in the less controversial areas and the most likely ones to achieve a consensus as well as a global and universal implementation.
France suggests to select a short list of working options, in particular in the area of environemental measures to support and finance the climate change. For the reasons previously outlined, we renew the proposal submitted in our last contribution to start reflecting on the taxation of air transport through the taxation of kerosene or airline tickets, and on the taxation of sea transport. In an effort to take into consideration possible synergies and works carried out in other fora, France recalls that these topics are currently being discussed within the Global solidarity levies Task Force.
We can agree on a reflection on the fight against illicit financial flows whose purpose shall be explicitly clarified and restricted to the field of taxation.
Regarding substance, i.e. the high-level commitments, Germany deems it essential to maintain stability and legal certainty by avoiding inconsistencies with established global standards. To promote efficiency and effectiveness while avoiding destabilizing the international tax architecture, throughout its work, the intergovernmental negotiating committee should, in line with OP 6 letter (d) of Res. 78/230, avoid duplicating the work of other relevant fora by considering their work, potential synergies as well as the existing tools, strengths, expertise and complementarities available in the multiple institutions and
processes involved in tax cooperation at the international, regional and local levels. By coordinating with and building upon existing initiatives, we can ensure that our efforts are
both complementary and effective, and should therefore be adequately reflected in the guiding principles.
For the purpose of ToR, subjects for potential protocols should be selected carefully, and the future process should allow for adequate analysis and discussion before any additional specific commitments are envisaged. This would help to ease the initial
phase of this project, and ensure its effectiveness.
Paragraph 9: It is unclear what is meant by “special situations”. We think this should be further defined in order to avoid discussions in the further process.
Paragraph 10: Germany believes that, considering the discussions at the first meeting of the AHC and the overall objectives of the process, it is advisable to include "promoting domestic resource mobilization" among the listed commitments.
With respect to the effective taxation of high net-worth individuals (HNWI), we think that the wording of this commitment is too narrow and specific, solely addressing one aspect currently under discussion. As the Framework Convention should constitute a permanent set of guiding principles, we propose rephrasing this commitment more abstractly as: "effective taxation and fostering tax compliance, also with regards to high-net-worth individuals."
Paragraph 12: Currently, it is very challenging to get a clear picture about the different activities of different actors in the field of capacity building. This may lead to inefficiencies and overlaps. Therefore, the Framework Convention should address the exchange among stakeholders to ensure both demand-based approaches to capacity building as well as
effective coordination and collaboration between providers of capacity building. For instance, the following sentence could be added: “To ensure an effective coordination of support provided by stakeholders the Framework Convention should include a mandate for the United Nations to establish a comprehensive, detailed and regularly updated database, taking into account already existing databases from OECD, Addis Tax Initiative, IMF, etc., of all ongoing and planned tax-related capacity building projects in the field of DRM and ensure its use.”
Paragraph 13: For clarification, it should be specified that the relationship to protocols must also be provided for by the Convention. It is likely that the Convention will provide for other
instruments, e.g. recommendations, in addition to protocols to address specific requirements, and achieve its objectives. Therefore, "other instruments" should also be mentioned. Drafting suggestion: "relationship with protocols and other instruments provided for by the framework convention." Additionally, it would be beneficial to specify what is meant by "other agreements, instruments." Drafting suggestion: "tax-related
agreements and instruments."
it is unclear to what extent the Framework Convention could elaborate on the relationship with domestic law. The relationship to the Convention will generally be determined by the constitutional law of the respective jurisdictions. Therefore, we prefer deleting this part.
Paragraph 14: Regarding the simultaneous development of protocols, the Ad Hoc Committee is only mandated to consider the development of early protocols. As the development of early protocols constitute only one option that also requires further
thorough analysis (and legal clarity), we propose replacing "should" with "could." This change might also make it easier to reach an agreement on the issues mentioned.
Negotiating protocols (or other appropriate instruments) on the subjects within the time frame mentioned in paragraph 17 is quite ambitious, as these subjects are complex.
Regarding the subject of tax-related illicit financial flows, it is unclear what exactly is to be regulated by a protocol in relation to IFFs. Typically, IFFs relate to tax information exchange and administrative cooperation, both mentioned in paragraph 15 as topics for potential additional protocols. Consequently, no measures should be taken by the negotiating committee in relation to IFFs, which are only mentioned in paragraph 15.
Paragraph 15: We are wondering about the added value of this paragraph. The Convention should be future-oriented and enable tax challenges to be responded to in the future if
necessary. The parties to the Convention, their secretariat and bodies will have to be able to launch initiatives to develop protocols. If these parties come to the conclusion that a
protocol is required, they will be able to start work on it. Against this background, it is doubtful whether the Term of Reference should already list potential issues for future protocols.
Paragraph 16: We maintain our view that only consensus-based decisions are likely to be successful in the area of tax, and firmly believe that this requirement is covered by both the
mandate of the Resolution and the UN rules. Based on the Bureau meeting on 8 May 2024, where there was significant divergence of opinions, we suggest adding the following: "by
means of a consensus-based decisions”. The previous "efforts to complete its work" would also refer to this part of the sentence.
Paragraph 17: We refer to our earlier comment, explaining why the parallel development of protocols appears inappropriate. As a possible compromise, we suggest the following: "The
intergovernmental negotiating committee may begin discussing the early protocols described above during the negotiation of the framework convention as soon as progress on the underlying regulations related to protocols has matured sufficiently." This change, along with replacing "should" with "could" in paragraph 14, may allow more room for compromise
and potentially listing a greater number of topics for protocols in paragraph 14.
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes. We reiterate the importance of consensus-based decision making and this should clearly be reflected in the terms of reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of reaching a broad and universal implementation.
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: "If there issufficient agreement on certain action items, some of these
protocols could be negotiated at the same time as the framework convention." This option was merely
suggested as a possible course of action and should be reflected as such in the draft terms of reference. We strongly prefer that only a limited number of early protocols be developed after the negotiations of
the framework convention are concluded. Therefore, we propose the following amendment to the draft
terms of reference: "Early protocols on a small number of specific priority areas could be developed after
the negotiation of the framework convention."
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
Considering the lack of a common understanding of certain concepts of the draft ToR among UN Member States to date, there is a need to delineate these concepts in the ToR, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee.
Greece
Substantive
Definitions
Dispositions on the Drafting phase of the Convention
The terms of reference should reflect that they do not prejudge the outcomes of the negotiating committee and should clarify that the work of the negotiating committee should be based on substantive technical analysis before starting to work on any potential measures in a targeted and efficient manner.
In addition, other instruments besides protocols should be explored (e.g. best practices or soft law).
Greece
Procedural
Dispositions on the Drafting phase of the Convention
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes. We reiterate the importance of consensus-based decision making and this should clearly be reflected in the terms of reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of reaching a broad and universal implementation.
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: "If there issufficient agreement on certain action items, some of these
protocols could be negotiated at the same time as the framework convention." This option was merely
suggested as a possible course of action and should be reflected as such in the draft terms of reference. We strongly prefer that only a limited number of early protocols be developed after the negotiations of
the framework convention are concluded. Therefore, we propose the following amendment to the draft
terms of reference: "Early protocols on a small number of specific priority areas could be developed after
the negotiation of the framework convention."
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, Hungary could support further negotiations focusing on: dispute avoidance and resolution; digitalization and other opportunities to improve tax administration; domestic resource mobilization; fostering tax compliance; increasing tax transparency, and capacity building.
Considering the lack of a common understanding of certain concepts of the draft ToR among UN Member States to date, there is a need to delineate these concepts in the ToR, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee.
Hungary
Substantive
Definitions
Dispositions on the Drafting phase of the Convention
The terms of reference should reflect that they do not prejudge the outcomes of the negotiating committee and should clarify that the work of the negotiating committee should be based on substantive technical analysis before starting to work on any potential measures in a targeted and efficient manner. In addition, other instruments besides protocols should be explored (e.g. best practices or soft law).
Hungary
Procedural
Dispositions on the Drafting phase of the Convention
We do not believe the topics for commitments mentioned in the draft ToR accurately reflect the views expressed by all Member States during the Ad Hoc Committee’s first substantive session in April and May this year. We caution against a commitment on fair allocation of taxing rights, including equitable taxation of multinational enterprises given the ongoing critical negotiations at the OECD/Inclusive Framework and the existing commitments made by many participants in this regard. We believe the commitments should be high level and complementary to already existing commitments. Therefore, we would suggest pursuing commitments around domestic resource mobilisation, capacity building, and fostering tax compliance at this time.
We understand that the ultimate list of commitments that should be included in the ToR should be subject to further discussions in the negotiating committee and should not preempt the outcome of future discussions in that forum. This point should be made clearer in the ToR.
To deliver on the Secretary General’s report, we need to be mindful of the instruction to only negotiate early protocols “if there is sufficient agreement on certain action items some of these protocols could be negotiated at the same time as the Framework Convention”. We do not believe that the draft list of topics for early protocols, as set out in para 14 of the zero draft ToR, currently meets this test. From participation in the first substantive discussion we believe that significant concerns have been raised by many participants in relation to many of the areas listed. A number of these issues are subject to existing commitments in other international fora and so pushing for these areas to be the subject of early protocols potentially undermines the credibility of the Framework Convention and, in our view, is not aligned with the Secretary General’s Report
Negotiating early protocols, alongside the Framework Convention, risks placing excessive demands on Member States’ resources. To avoid such a situation, we recommend that the negotiation of early protocols be completed within a reasonable timeframe after negotiation of the Framework Convention concludes. Early protocols on tax-related illicit
financial flows and prevention and resolution of tax disputes, once clearly defined, are logical starting points as there is sufficient agreement among all Member States to take action here.
The work of the negotiating committee should be based on detailed research and thorough analysis to enable the committee to work on issues in a targeted and efficient way. Further clarity is needed in relation to the technical resources available to support this work
Ireland
Procedural
Dispositions on the Drafting phase of the Convention
We would like to see online meetings catered for during discussions of the negotiating committee. Such access would facilitate better participation from the most relevant experts across the globe, reduce meeting costs for all Member States, and ensure a greater level of participation.
Ireland
Procedural
Dispositions on the Drafting phase of the Convention
There is a need to clearly define certain concepts in the ToR for the benefit of all participants. Common understanding of terms such as “fair allocation of taxing rights”, “transparency and exchange of information”, and “tax-related illicit financial flows” is critical to ensure informed negotiation of these aspects of the ToR. Guiding notes on these topics should be prepared for
the second session of the Committee.
Italy strongly reiterates the importance of ensuring complementarity with the existing work and achievements. To this aim, Italy also asks to move the concept now included in paragraph 20 (Approaches and time frame for negotiations) of the “zero draft”, to paragraph 9, in the context of the “Principles”.
Under the section titled “Substantive elements of the Framework Convention”, paragraph 10 of the “zero draft” ToR provides that the Framework Convention should include commitments on a number of topics listed in the same paragraph, including e.g. taxation of multinational enterprises. Italy would like to stress that these commitments may possibly contradict other longstanding political commitments and engagements that have already been taken in other fora, such as on the OECD/G20 Two-Pillar Solution. Also, the proposed early protocols listed under paragraph 14 include topics
that may conflict with the mentioned longstanding political commitments already expressed in other fora
The “zero draft” ToR does not address the key aspect of the decision-making rules under which the Framework Convention will be negotiated. Italy reiterates that the decision-making rules should strive for consensus, since international tax rules cannot
be imposed by a majority over a minority of member States.
As far as early protocols are concerned, Italy supports to proceed through a sequential approach. Paragraph 14 of the ToR provides that early protocols should be developed simultaneously with the negotiation of the Framework Convention. A similar provision is provided in paragraph 17. Italy believes that there are instead sound reasons in favour of a sequenced or staged approach, and strongly advocates the Framework Convention be negotiated before developing early protocols. In fact, the legal obligations and the legal consequences arising from the Framework Convention must
be clarified before entering into negotiations of protocols. One key aspect, for example, is whether the adoption of protocols will be mandatory or optional and, in the latter case, how optionality can be consistent with the commitments required under the Framework Convention
Italy considers that the negotiation of protocols should include two stages: scoping and analysis. While a preliminary discussion on the scope of protocols could be made during the negotiation of the Framework Convention, we deem it essential that a thorough impact analysis be made before drafting protocols.
Italy
Procedural
Protocols
Dispositions on the Drafting phase of the Convention
The ToR should consider not only protocols, but also other instruments, such as for example exchange of best practices and recommendations, that can be more appropriate and effective in addressing some specific areas of work and can ensure sufficient flexibility to the future negotiating committee
Following a sequential approach, Italy believes that priority should be given to issues for which the enhancement of international tax cooperation can effectively contribute to the domestic resource mobilization for developing countries.
On the specific priority areas to be addressed in early protocols, mentioned in paragraph 14 of the “zero draft” ToR, Italy underlines the following:
-taxation of the digitalized and globalized economy and taxation of income derived from cross-border services are areas that are more likely to create divergencies with
longstanding political commitments already expressed in other fora;
- the area of tax-related illicit financial flows is not defined, and, to date, it is not clear what kind of issues should be addressed by a protocol;
- on high-net worth individuals, Italy is of the opinion that this work should be focused on, and limited to, ways to improve tax transparency and exchange of information that could be used by member States to tax their high-net worth resident individuals,
according to their respective domestic tax laws.
We would like to emphasize the importance of consensus-based decisions when developing the Framework Convention. Ensuring that decisions are made with the broadest possible agreement is crucial for the long-term success and credibility of a framework convention and for securing wide acceptance among the Member States. Also, another fundamental goal of the Framework Convention relates to tax sovereignty. Without consensus-based decisions it makes it highly unlikely to achieve this goal.
Regarding the proposed timeline, we would like to point out that for a truly inclusive process, it is also essential to allocate sufficient time to substantially review and discuss the shared documents and come up with compromise solutions – especially given the complexity and impact of the envisaged Framework Convention. In our opinion, the review and feedback period of two weeks is not sufficient to conduct a comprehensive analysis and provide meaningful input on the current draft proposal. While we broadly welcome an efficient negotiation process, we also question if two years – depending on the number and length of sessions – will suffice to agree on both a Framework Convention and early protocols.
Para. 10 mentions that "the framework convention should include commitments on: fair allocation of taxing rights". While we agree with the underlying objective, we would like to refer to existing solutions regarding minimum taxation of large MNE groups as well as the work regarding Amount A and B of Pillar 1 which is more or less finalized. Therefore, we suggest to refer to this work that has already been done on global level by adding: "by building on the measures developed under Pillar One and Two of the OECD/G20".
Para. 10 refers to commitments that "should" be included in the Framework Convention. We maintain the view that it would be more suitable to replace the term "should" by "could" to provide more flexibility to the negotiating parties.
Considering the overall objective of the process, we would like to emphasize that there are several topics mentioned in the Zero Draft ToR, which seem to be addressed already by existing legal frameworks. Therefore, we take the view that it is crucial to consider and refer to already established processes to mitigate
resource constraints. The current scarcity of resources and capacities requires the efficient use of available mechanisms. This would also pose a more sustainable and effective approach to international tax cooperation, avoiding that efforts are duplicated.
Developing early protocols simultaneously with the negotiation of the Framework Convention appears to be very ambitious and challenging in practice. Given the complexities and consensus needed in this regard, it might be more practical to prioritize a
sequential development, starting with the most pressing issues, where broad consensus can be more readily achieved. Thus, the number of early protocols (if there will be any) should be kept
to a minimum. Moreover, some of the topics that are listed under para. 14 and should be subject to early protocols are also mentioned under para. 10 as substantive elements of the Framework Convention. This overlap makes the relationship between the Framework Convention itself and early protocols unclear.developing early protocols simultaneously with the negotiation of the Framework Convention appears to be very ambitious and challenging in practice. Given the complexities and consensus needed in this regard, it might be more practical to prioritize a sequential development, starting with the most pressing issues, where broad consensus can be more readily achieved. Thus, the number of early protocols (if there will be any) should be kept to a minimum. Moreover, some of the topics that are listed under para. 14 and should be subject to early protocols are also mentioned under para. 10 as substantive elements of the Framework Convention. This overlap makes the relationship between the Framework Convention itself and
early protocols unclear.
With regard to the specific priority issues mentioned in para. 14 inter alia list the "taxation of the digitalized and globalized economy": Given the fact that comprehensive work has already been done on this matter by the OECD/G20 Inclusive Framework on BEPS, it is not clear why it needs to be further addressed in an early protocol. In any case, the paragraph should clarify the specific aspects to be covered under this item to ensure focus and effectiveness. Moreover, this issue should in any case be aligned with the OECD's work on Pillar One and Pillar Two to avoid overlapping and to harmonize efforts
The bullet point "taxation of income derived form cross-border services" in para. 14 should be deleted. Given the fact that the taxation of cross-border services is handled very differently in the existing model conventions, this is certainly a very controversial issue that probably does not find broad consensus at an early stage.
Regarding para. 15, it is unclear what additional value this paragraph brings to the overall document. While we recognize that the topics listed are rather indicative, it may be better to integrate the most relevant and least critical issues into para. 14 and delete para. 15. This approach could provide greater flexibility to adapt to future developments and shifts in the international tax landscape, ensuring that the framework remains relevant and responsive to evolving needs
Para. 15 lists "exchange of information for tax purposes" among the topics that might be subject to future protocols. In this regard, we would like to stress the importance of exchange of information in order to fight tax avoidance and evasion. However, we also like to highlight that several international standards on exchange of information already do exist and have been widely implemented across various countries and jurisdictions, accompanied by comprehensive peer review processes. In this regard the standards on exchange of information on request are well-proven and have been in existence for almost 15 years now. The AEOI standard has already been revised and will be added by the future reporting under the CARF. Regarding MNE groups next to CbCR that has been implemented by many jurisdictions already, additionally, several jurisdictions are in the process of introducing public country-by-country reporting. Furthermore, upholding confidentiality within the framework of exchange of information is crucial, particularly to protect taxpayer rights. Given the limited resources and capacities of countries that have not yet introduced comprehensive EOI infrastructure, we acknowledge that not all countries can participate equally in this process. Therefore, it might be more appropriate to address this issue in the broader context of domestic resource mobilization. In any case, it is essential to undertake a thorough analysis to identify actual gaps and required measures in the framework of exchange of information. However, to our knowledge such an
analysis has not yet been conducted.
Para. 17 mentions that the negotiation of early protocols should be completed within six months after the conclusion of the negotiation of the Framework Convention. While we acknowledge that the proposed timeline could enhance coordination between the documents, we are of the view that – as previously noted – the simultaneous negotiation of early protocols and the Framework Convention is not feasible due to the complexity therein and resource and capacity constraints. Moreover, considering the unknown number and complexity of these protocols, this pre-set and relatively short timeline does not appear suitable. As mentioned above, for a truly inclusive process, it is also essential to allocate sufficient time to substantially review and discuss the shared documents and proposals
We would like to reiterate the importance of consensus - based decision making to secure coordinated approach to global tax
challenges. From our perspective, consensus could ensure policy coherence between various tax systems, policies and practices and international obligations and commitments, therefore we see it as a basis requirement for the negotiations among sovereign states and for the adoption of the text of the
framework convention and its protocols.
As regards commitments mentioned in the Zero Draft of Terms of Reference, we strongly prefer them to be high-level and respecting consistency with already existing commitments. In the light of the discussions during the first substantive session of the Ad Hoc Committee in New York we would add our voice to the work on domestic resource mobilization, capacity building and fostering tax compliance
Guiding notes on concepts used in the Terms of Reference that lacked common understanding among the parties would be highly welcomed to facilitate constructive discussions in the second session of the Ad Hoc Committee.
We would strongly support the negotiation of protocol or other possible instrument within a reasonable timeframe after concluding the negotiations of the framework convention.
We would advocate that the topics of the protocols focus on areas with the broadest consensus avoiding issues that are already under negotiation or covered by the internationally agreed standards. Finally, based on discussions during the first substantive session of the Ad Hoc Committee in New York we would consider appropriate to start this work with the conduct of an assessment of a limited number of issues leading to the
prioritising of the topics.
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes. We reiterate the importance of consensus-based decision making and this should clearly be reflected in the terms of reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of reaching a broad and universal implementation.
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: "If there issufficient agreement on certain action items, some of these
protocols could be negotiated at the same time as the framework convention." This option was merely
suggested as a possible course of action and should be reflected as such in the draft terms of reference. We strongly prefer that only a limited number of early protocols be developed after the negotiations of
the framework convention are concluded. Therefore, we propose the following amendment to the draft
terms of reference: "Early protocols on a small number of specific priority areas could be developed after
the negotiation of the framework convention."
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
Considering the lack of a common understanding of certain concepts of the draft ToR among UN Member States to date, there is a need to delineate these concepts in the ToR, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee.
Luxembourg
Substantive
Definitions
Dispositions on the Drafting phase of the Convention
The terms of reference should reflect that they do not prejudge the outcomes of the negotiating committee and should clarify that the work of the negotiating committee should be based on substantive technical analysis before starting to work on any potential measures in a targeted and efficient manner. In addition, other instruments besides protocols should be explored (e.g. best practices or soft law).
Luxembourg
Procedural
Dispositions on the Drafting phase of the Convention
Luxembourg expresses its concern with respect to item "Approaches and time frame for negotiation", specifically point 19 in the draft terms of reference. Full engagement and continuity of representation by Member States throughout the negotiation might prove to be difficult to ensure for small Member States with limited human resources.
Luxembourg continues to stress the need to ensure a transparent and comprehensive process of drafting the terms of reference. All UN Member States should be able to take informed and well considered decisions and to anticipate the next steps as well as the content of the framework convention. Therefore, and taking also into consideration the complexity of the discussions, Luxembourg reiterates the importance of adequate and inclusive working methods that allow for hybrid participation of all UN Member States’ tax experts.
Luxembourg recommends that the terms of reference reflect the consultation process with all stakeholders. Stakeholders should include representatives from the private sector as they may experience significant impacts under the framework convention.
Luxembourg
Procedural
Dispositions on the Drafting phase of the Convention
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes (Resolution 72/249). We reiterate the importance of consensus-based decision making and this should clearly be reflected in the terms of reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of reaching a broad and universal implementation.
Malta
Procedural
Dispositions on the Drafting phase of the Convention
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: "If there issufficient agreement on certain action items, some of these
protocols could be negotiated at the same time as the framework convention." This option was merely
suggested as a possible course of action and should be reflected as such in the draft terms of reference. We strongly prefer that only a limited number of early protocols be developed after the negotiations of
the framework convention are concluded. Therefore, we propose the following amendment to the draft
terms of reference: "Early protocols on a small number of specific priority areas could be developed after
the negotiation of the framework convention."
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
Considering the lack of a common understanding of certain concepts of the draft ToR among UN Member States to date, there is a need to delineate these concepts in the ToR, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee.
Malta
Substantive
Definitions
Dispositions on the Drafting phase of the Convention
The terms of reference should reflect that they do not prejudge the outcomes of the negotiating committee and should clarify that the work of the negotiating committee should be based on substantive technical analysis before starting to work on any potential measures in a targeted and efficient manner. In addition, other instruments besides protocols should be explored (e.g. best practices or soft law).
Malta
Procedural
Dispositions on the Drafting phase of the Convention
We recall the request made in Resolution 78/230 to take into consideration ongoing and existing work of other relevant forums. Consistency with ongoing work and consensus achieved in international forums (such as the Inclusive Framework on BEPS and the Global Forum on Transparency and Exchange of Information for Tax Purposes) should be a guiding principle, aiming to build on these strengths and engage ineffective cooperation to ensure a synergistic approach to global tax challenges. The Convention should seek to avoid duplication and fragmentation of work. By doing so, the comfort and commitment to work towards a broadly supported outcome will be solidified
In paragraphs 7, 8, 9 and 13 the Terms of Reference refer to “the international tax system”. However, as the ICTD stated in their Report to the Secretary General, there is no such all-encompassing international tax system. There is only a patchwork of domestic rules, bilateral agreements and (very few) multilateral agreements that determine the taxation of cross-border situations. The results of that patchwork on the same fact pattern can vary widely, depending on the states
involved. It is therefore incorrect to suggest that a UN Framework Convention can change or establish an all-encompassing international tax system. What the Framework could do is to give options for Member States to amend in a coordinated way those domestic and bilateral rules.
The zero draft of the Terms of Reference suggests establishing a system of governance for international tax cooperation. We note that there is already a well-established system of governance for international tax cooperation that seems unlikely to be changed. It is generally accepted that states have sovereignty to determine their domestic rules and are equally
sovereign to determine which bilateral or multilateral conventions they sign up to. Reference is also made to the notion of tax sovereignty in the report of the UN Secretary-General of July last year. Once signed and ratified, it is evident that states are bound to act in conformity with these agreements and should not override them with domestic measures.
The Terms of Reference should avoid the suggestion that states can be bound by a majority decision. It should clarify what the aim of the Framework Convention will be in this reality. Will the Framework Convention include (multilateral) agreements to which states in their own sovereignty can agree to, will it be a convention in which states multilaterally only agree to participate, with protocols to which, again, states can sign up to (bilaterally) in their full sovereignty or will it be a set of suggestions for best practices that states can use in their domestic regulation or in bilateral agreements?
We strongly believe that clarity about the foundation and structure of the Convention and its relation to the protocols would offer the crucial opening for an open and constructive conversation within the Ad Hoc Committee and would set the basis for progress based on consensus. We believe that this basis would be solidified by including the task as laid down in
resolution 78/230 to take into consideration ongoing and existing work as a guiding principle in the Terms of Reference.
The call for a fair allocation of taxing rights, including equitable taxation of multinational enterprises is subjective as Member States (and stakeholders) have different opinions of what fair
and equitable exactly would be. Therefore they suggest in paragraph 10 delete “fair allocation of taxing rights, including equitable taxation of multinational enterprises”
The notion “effective taxation of HNWI” indicates a very specific commitment and action where we first see the need for a thorough policy analysis of tax systems worldwide before deciding on a course of action. Considering that globalisation, economic integration and technological developments have reduced mobility costs, making individual taxpayers more mobile and traditional tax bases more sensitive to tax avoidance, it could be worthwhile to focus on tools to
strengthening national tax systems in combination with a focus on transparency and EoI to obtain information on wealth held abroad. Therefore they suggest to replace in paragraph 10 “effective taxation of HNWI” by “strategies for realizing effective taxation of HNWI”.
As long as there is no concrete understanding of the foundations and structure of the Framework Convention, its protocols and the significance of early protocols within this framework, we are reluctant to commit to developing (early) protocols on notably contentious issues.
By including commitments on taxation of multinational
enterprises and taxation of the digitalized and globalized economy, existing and ongoing commitments and work seem to be disregarded. Netherlands thinks that paragraphs 10, 14, and 20 seem contradictory
In paragraph 16 we propose to include that meetings will last no longer than five days and will be held from Monday to Friday. Discussion at these meetings should be based on substantive papers that are distributed at least seven working days before the meeting.
Netherlands
Procedural
Dispositions on the Drafting phase of the Convention
With the objective of a broadly supported and effective convention in mind, we reiterate our suggestion regarding paragraphs 10, 14 and 17 that the Ad Hoc Committee and the Negotiating Committee should prioritize work on substantive elements and protocols on issues where consensus is most likely to be reached. We thereby suggest refraining from setting timelines for developing protocols, as the focus should first be on developing the Convention itself.
We suggest adding “or other instruments” to all references to protocols to give the future negotiating committee flexibility to determine the most effective mechanism to address specific
issues. For instance, in paragraph 13 add after “relationship with”: “protocols and other instruments provided for by the framework convention, (…)”.
Including a principle on complementarity [In paragraph 9: Include a bullet with the wording in the current paragraph 20 (and delete paragraph 20 accordingly)].
In paragraph 14:
- Replace “should” by “could” and replace “to be” by “that could be”.
- Delete “taxation of the digitalized and globalized economy”.
- Delete “taxation of income derived from cross-border services”.
- Add “taxation of income from natural resources and offshore activities”.
- Add “the relation between tax treaties and trade- and investment agreements”.
- Add “tax measures on environmental and climate challenges; exchange of information for
tax purposes, mutual administrative assistance on tax matters; and harmful tax practices.”
In paragraph 17: Replace the existing wording with: “The intergovernmental negotiating committee may begin discussing the early protocols described above during the negotiation of the framework convention as soon as the progress on the underlying regulations related to protocols matured enough, with the aim of finishing the negotiation of such protocols within reasonable time after the conclusion of the negotiation of the framework convention, to optimize coordination between the documents”.
The TOR should be drafted in a manner that will ensure wide participation in the negotiation process to facilitate wide adoption of the Framework Convention and any protocol to the framework convention
It is important to set realistic timelines for the negotiations that allow for the appropriate analysis and discussions of relevant issues and that are aligned with the scope of the negotiations set out in the TOR. Any negotiation on international tax cooperation raises complex issues, and the TOR should ensure that these are addressed based on thorough analysis sound knowledge. We suggest that the TOR does not mandate strict time limits for the negotiations and leave sufficient flexibility for the negotiating committee to adapt its discussions to the subjects to be addressed.
A fundamental objective of international tax cooperation is also to facilitate trade and investment, in particular by preventing double taxation and over-taxation and preventing tax avoidance and tax evasion. The Addis Ababa Action Agenda in resolution 69/313 also highlights the importance of trade and investments in domestic resource mobilisation and supporting the sustainable development goals. Norway suggests including facilitating trade and investment as one of the objectives of the Framework Convention.
In our view the principles listed provide a good basis for discussions in the negotiating committee. To leave flexibility for the negotiating committee we suggest including principles on an indicative basis that could be considered by the committee in their work. Therefore, we suggest rewording the introduction in para 9 to serve as a recommendation by replacing “should” with “could”.
The existing framework for international tax cooperation addresses a wide range of issues developed over many decades [...]. Substantial resources have been invested in the existing framework. This should be taken into account in the negotiations of the Framework Convention, in order to add value to the Framework Convention at the UN. Resolution 78/230 in OP 6 d) also refers to taking into consideration the work of other relevant forums, potential synergies and existing tools, strengths, expertise and complementarities available in the multiple institutions involved in tax cooperation at the international, regional and local level. OP 6 of resolution 78/230 sets out the guidelines for elaborating the TOR. 6 (a)-(c) and (e) is reflected either as an objective, a principle or a specific suggestion for protocols in the TOR. Therefore, it is appropriate to include the guideline in OP 6 (d) in the TOR to adhere to the resolution 78/230. In our view, the list of guiding principles in para 9 of the TOR should take into account existing work of relevant forums. We suggest including this in para 9 rather than in para. 20.
Para 9 indent 7 sets out fairness in allocation of taxing rights as a principle for the convention. However, it is unclear what is meant by “contributes to achieving sustainable development” in the context of ensuring fair allocation of taxing rights. Fair allocation of taxing rights should be based on economic realities such as value creation and the location of business activity, assets or taxpayers. The inclusion of contributions to sustainable development here brings uncertainty to the understanding of fair allocation of taxing rights based on economic principles. We therefore suggest editing para. 9 indent 7. to read “ensure fairness in allocation of taxing rights under the international framework for tax cooperation”.
Recognizing that the taxation of individuals is subject to the preference of every State and recognizing at the same time the need for the international tax cooperation to ensure that all States can enforce their domestic law on taxation of individuals, we recommend expressing the possible high-level commitment as “addressing taxation of high-net worth individuals”. This will ensure that the commitment remains high-level and provides flexibility to the negotiating committee in evaluating appropriate measures to meet this commitment.
We support recognizing capacity building as fundamental to enable governments and tax administrations to participate in all forums for international tax cooperation in a meaningful manner and at all levels. Further, we support recognizing capacity building as a means to enforce both domestic tax legislation and international agreements on taxation and administrative assistance. Existing capacity building initiatives such as the UNDP-OECD collaborative program “Tax Inspectors without Borders”, have been very effective and provide a good example of how different international organizations can mutually reinforce each other's comparative strengths. This wider scope of capacity building could be included in the TOR.
We believe that the relationship between domestic law and international law through a Convention should be determined by a Member State’s own domestic law, usually at Constitutional level. We therefore suggest deleting the reference to “domestic law” in para 13.
We would like to have more clarity on what is intended to be covered by the reference to financial resources and mechanisms. This is a feature that is not included in existing multilateral treaties in the tax area. Any commitment here should not have the impact of binding a Party’s budgetary process.
In line with our view that the TOR should not unduly restrict the flexibility of the negotiating committee and ensure wide agreement on the TOR, we suggest that the TOR should recommend topics for early protocols rather than serve as directives and support the use of “could” rather than “should” in the introductory part of para 14.
We support a staged approach in line with the suggestion made by the UK in the First Session. The negotiating committee could start discussing early protocols while negotiating the Framework Convention and negotiate the protocols once the negotiation of the Convention is finalised. As set out in para 13, the Convention will determine the framework for negotiating protocols under the Convention. It is important that protocols to the Convention are negotiated on the basis of those rules.
Norway remains fully committed to the work on international tax cooperation in the OECD, The Global Forum on Transparency and Exchange of Information for Tax Purposes and the OECD/G20 Inclusive Framework, including the ongoing work on the Two Pillar Project. The majority of UN Member States are also members of the Inclusive Framework. We do not see the merit in focusing on issues that are already under discussion in other forums with wide participation of UN Member States. We suggest limiting the number of protocols and focus on areas where there seem to be wide agreement. On this basis, issues relating to high-net worth individuals and tax measures on environmental and climate challenges could be recommended as topics for early protocols.
We do not see the need to recommend issues for future protocols to the Framework Convention. Once the Convention is in force it should be up to the Conference of the Parties to determine which topics should be addressed at any given time. This approach is in line with the objective in para. 7 b., that the Framework Convention should be able to respond to future tax and tax-related challenges on an ongoing basis. The approach is also in line with the aim of providing sufficient flexibility to the negotiating committee.
We suggest a bureau consisting of at least two representatives from each regional group to ensure that the widest range of economies and geographies are represented.
In line with our view that the TOR should set out a roadmap for the negotiations that ensure wide agreement on the end result and wide adoption of the Framework Convention and its protocols we support consensus as the decision-making mechanism. We believe this should be included in the TOR. The principle of consensus is widely accepted in the international tax cooperation and has proven to ensure agreements that are accepted and implemented by all participants in the relevant process. The Vienna convention on the Law of Treaties in Article
9 also recognises as a default rule that the text of a treaty takes place by the consent of all states participating in the negotiations of the text. In that spirit we propose to include the following as a 16 bis: "With regards to adoption of the convention, the Member State-led negotiating committee shall adhere to the the Vienna Convention on the Law of Treaties
(1969) Article 9.”
We believe it is important to ensure sufficient analysis of the issues that arise both in relation to the negotiations of the Framework Convention and its protocols. We recommend that the UN makes use of the knowledge, expertise and capacities that reside in particular in the IMF, WB and the OECD. The Platform for Collaboration on Tax forms a good basis for such analysis, especially if supported by input from the global tax research community/academia. We recommend including this as a new paragraph 21.
It is still unclear what is the purpose of the Preamble. Given its content, it appears to act more like a guiding principle for the FC negotiating body to consider throughout its work. Besides, it may well be streamlined, so that it just refers to the UNGA Resolution 78/230, since this Resolution already contains the pertinent references to UNGA Resolutions 77/244 and 69/313.
Since it can be advisable to have a reference in the ToR in respect of principles for the FC negotiating body to consider throughout its work, we suggest to have § 6 as a specific Chapter or, alternatively, to insert the content of § 6 on the Chapter “Approaches and time frame for negotiation"
The ToR should also recall that they do not prejudge the outcomes of the FC negotiating body and clarify that the work of that negotiating committee on any potential measure should be based on substantive technical analysis in order to ensure that it will be a targeted and efficient solution
In relation to the Objectives, it is necessary to have a more
precise idea and a common understanding of what is envisaged with the following references: “system of governance for international tax cooperation”; “tax-related illicit financial flows”; “domestic resource mobilization”
Furthermore, given our prior discussions on the subject, it is far from clear what is entailed by the proposed recognition, as principles of the FC, of some of the elements listed in § 9. Therefore, it is strongly advisable to further discuss the following so called ‘principles’, so that we can fully understand both their meaning and purpose: “A Member State responsibility to ensure that its policies and practices do not undermine the effectiveness of the tax base or system of other Member States”; “Fairness in allocation that contributes to achieving sustainable development”; and “Transparency and accountability of all taxpayers”
We suggest adding to the list included in § 9 that work on any potential measure under the FC should be based on substantive technical analysis in order to ensure that it will be a targeted and efficient solution.
As a complement to the commitments already mentioned for consideration on the zero draft ToR, we would suggest to amend §10 putting in for consideration also the following relevant high-level commitments: Domestic resource mobilization; Capacity building; and Fostering tax compliance.
Given the content of §§ 11 and 12, this Chapter appears to be concerned only with capacity building for an inclusive and effective participation of Member States in the current norm-setting process in respect of international tax cooperation. Although it is a legitimate and relevant concern that deserves to be dealt with in the ToR, it does not cover all the potential ramifications of this theme (capacity building). Therefore, we suggest amending the Chapter´s heading consistently, so that it explicitly refers to this specific type of capacity building (for example: Capacity Building for Member States participation in the international tax cooperation).
In addition to the elements already referred to in § 13, we believe that the ToR should mention that the FC would also have to include, at least, the following substantive and procedural elements: Rules of interpretation; Decision-making process;
Signature; Ratification; Entry into force; Reservations; Withdrawal; Amendments.
We believe that it is advisable for the ToR to point out a limited number of protocols to be developed as soon as the negotiations of the FC are concluded. We note that developing early protocols in parallel to the negotiation of the FC remains
an open issue to be further discussed by Member States and that the option to develop so called “early protocols” was merely suggested as a possible course of action and, only as such, it can be reflected in the ToR. Early protocols will only be a viable way of action if (and when) there is already a sufficient agreement on the approach to a specific item. This circumstance should be reflected on the Chapter’s heading, eliminating “early”, as well as on § 14, which should
be amended to: “Early protocols on a small number of specific priority areas could be developed after the negotiation of the framework convention.”.
The § 14 list of specific issues should, in any case, be presented between square brackets. For the sake of this initiative, topics for protocols should focus on areas with the broadest consensus possible and agreement (least controversial topics), avoiding issues that are already under negotiation or those where there are already internationally agreed standards. Therefore, it is appropriate to conduct an assessment and discuss an exhaustive analysis of a small number of issues prior to the prioritization of certain topics over others.
It is necessary to have greater clarity in the ToR about the procedures that will be followed by the FC negotiating body in the negotiation and adoption of the text of the FC and its protocols, similarly to what has already been done in other UN processes.
Since this initiative is targeted at achieving a generally accepted result, it should be stressed the importance of a consensus-based decision-making (note that such a statement does not prevent the ToR to also suggest the adoption of a subsidiary decision-making rule when consensus is not possible).
In relation to § 16, we suggest amending its final sentence as following: “(…) and submit the final text of the framework convention and of any early protocol to the General Assembly for consideration (…).”
Portugal
Procedural
Dispositions on the Drafting phase of the Convention
In relation to § 17, we suggest amending its initial sentence as following: “The intergovernmental negotiating committee could consider to begin the negotiations of an early protocol since it has begun the negotiations of the framework convention (…)”. Also in relation to § 17, we reiterate the excessive demand over Member States resources that results from the suggestion that the intergovernmental negotiating body should begin negotiating the early protocols while it also starts the negotiations of the FC. Still regarding § 17, we also note that it is not possible to have a single timeframe that fits every potential item to be covered by early protocols, so we recommend that the ToR mention, instead, the need for the negotiation of any of such protocols to be completed within a reasonable timeframe after concluding the negotiations of the FC. In addition, we note that the adequacy of any specific timeframe for the negotiation of early protocols will depend on the number of protocols and their respective items. In short: We find, at this stage, premature for the ToR to suggest a single specific deadline for finalising all early protocols.
In relation to § 20, we suggest amending it as following: “Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant fora and it should take into consideration potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions/organizationsinvolved in tax cooperation at the international, regional and local levels.”
It is in our best interest to safeguard the possibility of the FC to have at its disposal other instruments beside protocols (best practices, recommendations, other soft law instruments), circumstance that can be also foreseen in this Chapter.
We would like to support the tone of the Objectives language granting the possibility to achieve them and to have the result. We should establish the real practical instrument rather than to create any memorandum of commitments.
Add a principle stating "promote leading tax regulation, practices and technologies of digital transformation for increasing tax revenues and decreasing administrative burden on taxpayers". The UN Digital Transformation Group for Europe and Central Asia noted that Information and communication technologies (ICTs) have enormous potential to fast forward progress on the achievement of the 17 Sustainable Development Goals (SDGs) and addressing global challenges in the fields of education, employment, health, agriculture, inequalities, climate
change, governance and many more.
Add a principles stating: "Strengthening tax efforts and cooperation to integrate the informal sector into the formal economy". We believe that the following statement should be added to the principals as the issue on tax‐related illicit financial flows are included in the list of the specific priority issues to be addressed through early protocols. In this respect, we should notice that many countries, especially developing ones facing with issues of informal economy (informal employment, informal services and works, informal transactions) that resulted among others on the government tax revenues.
We believe that this the item on dispute resoluion is not a
top priority among others. The dispute prevention and
resolution mechanism is included in different international
conventions and projects. Moreover, initially it is necessary to decide on the scope of this mechanism – what issues it should regulate and then to incorporate in the convention. In this regard, we are leaning to put this item in future protocols and replace it in the Framework convention by another one, for example, tax incentives or harmful tax practices
We need some clarification with respect to the inclusion in the multilateral convention any provisions of the domestic legislation.
In case the Convention will contain some draft framework provisions which should be incorporated in domestic
legislation, we should use the relevant words.
The remark that exchange of information should be for implementation of the framework convention looks unnecessary, because all substantive and structural elements of the UNFC dedicated for implementation of the framework convention provisions. Otherwise, additional clarification of this remark is needed
Add "transparency and exchange of information" to the issues to be addressed in early protocols. Transparency and exchange of information is essential part of efforts to combat illicit financial flows, because exchange of information serve as instrument for achieving transparency of financial transactions. This is also recognized under par. 23 of the Addis Ababa Action Agenda there stated necessity to redouble efforts to substantially reduce illicit financial flows by 2030, with a view to eventually eliminating them, including by combating tax evasion and corruption through strengthened national regulation and increased international cooperation. In this paragraph also stated need to enhance disclosure practices and transparency in both source and destination countries.
We would prefer to keep the six‐ month period to complete the protocols following the Convention. It is rather important otherwise we have a risk to elaborate the Convention establishing only declarations and not providing any practical tools and mechanisms
We should follow one chair system and any number of vice‐chairs. More than one chair system can exist in consultation forms, not in such kind of committee
Russia
Procedural
Approaches and time frame
Dispositions on the Drafting phase of the Convention
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes. We reiterate the importance of consensus-based decision making and this should clearly be reflected in the terms of reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of reaching a broad and universal implementation.
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: "If there issufficient agreement on certain action items, some of these
protocols could be negotiated at the same time as the framework convention." This option was merely
suggested as a possible course of action and should be reflected as such in the draft terms of reference. We strongly prefer that only a limited number of early protocols be developed after the negotiations of
the framework convention are concluded. Therefore, we propose the following amendment to the draft
terms of reference: "Early protocols on a small number of specific priority areas could be developed after
the negotiation of the framework convention."
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
Considering the lack of a common understanding of certain concepts of the draft ToR among UN Member States to date, there is a need to delineate these concepts in the ToR, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee.
Slovakia
Substantive
Definitions
Dispositions on the Drafting phase of the Convention
The terms of reference should reflect that they do not prejudge the outcomes of the negotiating committee and should clarify that the work of the negotiating committee should be based on substantive technical analysis before starting to work on any potential measures in a targeted and efficient manner.
In addition, other instruments besides protocols should be explored (e.g. best practices or soft law).
Slovakia
Procedural
Dispositions on the Drafting phase of the Convention
Slovenia would like to reiterate the decision-making process that strives for consensus as a crucial element that would increase the sense of ownership of any agreement reached, secure its successful implementation, and contribute significantly to a stable international tax system. This element needs to be reflected in the draft Terms of Reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of achieving a generally accepted result,
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: "If there issufficient agreement on certain action items, some of these
protocols could be negotiated at the same time as the framework convention." This option was merely
suggested as a possible course of action and should be reflected as such in the draft terms of reference. We strongly prefer that only a limited number of early protocols be developed after the negotiations of
the framework convention are concluded. Therefore, we propose the following amendment to the draft
terms of reference: "Early protocols on a small number of specific priority areas could be developed after
the negotiation of the framework convention."
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
Starting with the objective foreseen in the paragraph 7.b) of the Zero Draft, we believe that to establish a system of governance for international tax cooperation is inherent in a Framework Convention, as stated in the Secretariat presentation on technical clarifications (bureau meeting of June 4). It is a core function and distinctive feature of a Framework Convention; therefore, it should not be considered as an objective.
Regarding paragraph 7.c) of the Zero Draft, we understand that Resolution 78/230 refers to the need of strengthening fairness, transparency, inclusiveness and effectiveness of the international tax system, more than to establish a new one. In that regard, we believe we should stick to the objective of promoting a more inclusive, fair, transparent, efficient, equitable, and effective international tax system.
It would be appropriate to introduce as a principle, the provisions of paragraph 6.d) of Resolution 78/230:
“To take into consideration the work of other relevant forums, potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions involved in tax cooperation at the international, regional and
local levels”
With regard to the substantive elements, Spain considers that the commitments mentioned envisaged in paragraph 10 of the Zero Draft should be high-level, and complementary to already existing commitments, leaving the most controversial aspects out of consideration. It is therefore proposed either to replace the word “should” by “could” or to limit it to the following issues: Domestic Resource Mobilisation (DRM); Capacity building; Effective taxation of high-net-worth individuals (HNWI), including wealth taxation; Ensuring that tax measures contribute to addressing environmental challenges;
It is our view that the reference in paragraph 13 to the relationship between the framework convention and domestic law is a complex aspect that depends on the internal legal system of each country. i.e Constitutional Law. This reference may be problematic since the framework convention must in any event respect the constitutional law. Therefore, we believe that the elimination of this reference should not be a matter of concern.
The clause on early protocols in Resolution 78/230 (paragraph 7.e) is conceived as optional, not mandatory. In addition, it states "priority issues" while the Zero Draft includes a long list of issues. We consider that the list includes a too large number of specific issues and therefore it would be appropriate to develop an exhaustive analysis and prioritize some issues over others. In addition, we understand that the early protocols should be limited to non-controversial issues and that we should avoid issues that are already under negotiation in other forums or those with internationally agreed standards.
Regarding the approaches and time frame for the negotiation (paragraph 16-20) we understand that the terms of reference should include the regulation of the decision making process as one of the important elements in the negotiation process. Also, we should take into consideration the paragraph 1 of Annex I approved in Organizational session (New York, 20–22 February 2024): “Given the importance of international tax cooperation, every reasonable effort should be made, within the available time frame for negotiations, to seek consensus on substantive
matters in the ad hoc committee.”. Consensus should be required in the negotiation and adoption of the text of the UN Framework Convention on International Tax Cooperation and its protocols, as well as for the work of the Committee, with the objective of achieving a generally accepted result.
In order to guarantee consistency between the Framework Convention and early protocols we consider that a sequential work is needed. Thus, we propose that once the Framework Convention has been developed, the discussion on early protocols will begin. The timeframe to be foreseen for the negotiations of early protocols will depend on the number of
protocols and on the subjects they cover. The deadlines proposed in the current Zero Draft are too demanding given the resources that would have to be committed to the simultaneous negotiation of the framework convention and the early protocols
There is a need for greater clarity on the procedures that will be followed by the negotiating committee in the terms of reference, similar to what has been done in other UN processes. We reiterate the importance of consensus-based decision making and this should clearly be reflected in the terms of reference. Consensus should be required in the negotiation and adoption of the text of the framework convention and its protocols, as well as for the work of the Ad Hoc Committee, with the objective of reaching a broad and universal implementation.
We stress that developing early protocols in parallel to the negotiation of the framework convention remains an open issue to be further discussed by UN Member States. Furthermore, we recall the wording used in the report of the Secretary General on Promotion of inclusive and effective international tax cooperation at the United Nations: "If there issufficient agreement on certain action items, some of these
protocols could be negotiated at the same time as the framework convention." This option was merely
suggested as a possible course of action and should be reflected as such in the draft terms of reference. We strongly prefer that only a limited number of early protocols be developed after the negotiations of
the framework convention are concluded. Therefore, we propose the following amendment to the draft
terms of reference: "Early protocols on a small number of specific priority areas could be developed after
the negotiation of the framework convention."
We recommend that the negotiation of any such protocols be completed within a reasonable timeframe after concluding the negotiations of the framework convention. The timeframe that
has to be foreseen for the negotiations of early protocols clearly depends on the number of protocols and on the subjects these protocols will cover. There should not be a single deadline
for finalising all substantive protocols
Protocols to be adopted under the Framework Convention should concern issues that require widespread multilateral coordination among Member States that cannot otherwise be
achieved than through legally binding instruments; and have some level of commonality among a sufficiently large number of Member States so that the issues can be effectively and efficiently addressed through a common approach. In this sense, it would be appropriate to first discuss an exhaustive analysis of a small number of issues and prioritize some issues over others.
The proposed timeline in the zero draft Terms of Reference, which suggests that the intergovernmental negotiating committee should begin negotiating the early protocols, while also starting negotiations of the framework convention, will place excessive demands on Member States’ resources. Negotiating early protocols would also not support the
inclusiveness of the process. States would require significant resources to participate in multiple negotiations at once. It is not realistic to expect that five protocols (as listed in paragraph 14 of the zero draft ToR) could be negotiated at the same time as the convention, especially given the technical assistance needs identified by a number of states at the first session of the AHC.
Throughout its work, the intergovernmental negotiating committee should avoid duplicating the work of other relevant forums and consider potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions and processes involved in tax cooperation at the international, regional and local levels.
Commitments mentioned in the zero draft should be high-level, illustrative, and complementary to already existing commitments. Therefore, we would suggest including domestic resource mobilization, capacity building and fostering tax compliance in
paragraph 14
Considering the lack of a common understanding of certain concepts of the draft ToR among UN Member States to date, there is a need to delineate these concepts in the ToR, for instance ‘tax-related illicit financial flows’. Guiding notes on this or other unclear concepts or topics should be prepared for the second session of the Committee.
Sweden
Substantive
Definitions
Dispositions on the Drafting phase of the Convention
The terms of reference should reflect that they do not prejudge the outcomes of the negotiating committee and should clarify that the work of the negotiating committee should be based on substantive technical analysis before starting to work on any potential measures in a targeted and efficient manner. In addition, other instruments besides protocols should be explored (e.g. best practices or soft law).
Sweden
Procedural
Dispositions on the Drafting phase of the Convention
Paragraph 9, sixth topic: We do not understand what the text aims at. It does not seem reasonable to require countries that amend their tax laws to analyse the potential effects of such amendments for all other countries. Furthermore, as source country taxation generally reduces the tax income of residence jurisdictions, source taxation can be said to “cause damage to, or undermine the effectiveness of, the tax base” of residence jurisdictions. This would seem like a strange outcome in this
context. We therefore strongly suggest that the wording of the text is adjusted according to the following: "recognize that every Member State has the sovereign right to decide the policies and practices of its domestic tax system"
Paragraph 9, seventh topic: Paragraph 9 should in our view set out the guiding principles for efforts to make international tax cooperation fully inclusive and more effective. It should not identify specific areas of work or decide the outcomes of the work ahead. Consequently, we suggest that the seventh topic, i.e. “ensure fairness in allocation of taxing rights under the international tax system that contributes to achieving
sustainable developments”, is deleted.
Paragraph 12: It is currently unclear to us what is meant by “build
capacity” in this context and how the para should be interpreted, e.g., in relation to para 22. Further clarification is needed.
Paragraph 13: It is not clear to us what is meant by “relationship with domestic law” in this context. We therefore suggest deleting the reference to “domestic law” here. At a minimum it has to be clarified what is meant by this text.
We believe that the International Monetary Fund or the World Bank would be well suited to perform an analysis to understand at this early stage which problems are intended to be solved by the convention an analysis.We propose that the wording: “simultaneously with” is replaced with “after”. If this approach is not possible, we propose to replace the word “should” with “could”.
We suggest that the following priority areas could be included
and a couple of issues could be the starting point under para 14:
enhancement of domestic resource mobilization (with focus on sharing effective practice, e.g. digitalisation of tax authorities), tax related illicit financial flows, exchange of information (with main focus on supporting measures), and capacity building.
Paragraph 15: It is currently unclear to us what value the para adds. As regards the additional topics, we are open to discuss whether some of the areas mentioned under para 15 could instead be characterized as “priority areas” and included under para 14.
Paragraph 16: International tax cooperation should always rely on a profound analysis of the issues that are dealt with. It is important that this part of the proceeding is clearly recognised not only in the ToR but also in the time frame for the negotiations. The wording: “established practice” is vague and should be further clarified.
Paragraph 18: Taking into consideration the workload and the diversity of countries in every region, we believe that at least 15 countries in total (3 by region) would be more appropriate for the bureau
Sweden
Procedural
Approaches and time frame
Dispositions on the Drafting phase of the Convention
We maintain that achieving the broadest possible consensus on the text of the framework convention is crucial for its adoption and implementation, and we support including a statement to that effect in the ToRs. Parties will not commit to a convention unless they believe it represents a fair balance of interests. Reaching consensus among competing interests is challenging and may take time, but it is essential for developing a convention that is widely implemented, which should be the primary aim of an inclusive process.
The ToRs should focus on the procedural elements for negotiating the framework convention. The right process is crucial to successfully achieving the substantive outcomes we aim for, and need to be defined in the ToRs, in particular on the issue of decision-making. Leaving the decision-making process out of the ToRs, when many other procedural issues are defined
(composition of bureau, agenda, time-line), will only delay the process as this postponed discussion will most likely considerably slow down progress in the second committee of the General Assembly.
We believe that priority should be given to negotiating the framework convention before discussions on early protocols. The convention will establish the conceptual and institutional frameworks guiding the negotiation of protocols. Therefore, it would be inappropriate to develop protocols while the convention's design and substance are still being negotiated. We should also consider the resource challenges Member States face when participating in multiple negotiations simultaneously, challenges that were brought up by both
developed and developing countries at the first substantive session. In addition, we emphasize that additional protocols are according to the UN Secretary General 2023 Report to "opt in and opt out" and we observe that this feature is not yet reflected int the ToRs
Regarding substance, we believe the ToRs should be designed based on the objectives and the text set out in Resolution 78/230 in order to create the best environment possible for successful negotiations. It is essential that the ToRs should outline the objectives and scope of the convention while ensuring that the convention complements and aligns with other
existing international tax instruments. In this context, priority should be given to issues that are less controversial and are more likely to achieve consensus. Furthermore, we are of the
opinion that simplification is needed in today's international tax cooperation and that issues should be addressed also based on their potential for simplification or also complication. In order to build on areas of consensus and potential for simplification, we believe a particular emphasis should be made on capacity building and domestic resource mobilization.
We believe there are many topics that need analysis and clarification in order to help reach a common understanding of what these terms cover, like fairness of the allocation of taxing rights, tax-related illicit financial flows, cross border services or requiring transparency and accountability of tax payers.
Finally, it is essential that the negotiations are open, accessible, and transparent so all Member States can participate effectively with the same information and analysis available to others. We note that the draft ToRs do not represent the view of all bureau members. It appears indeed that the ToRs do not reflect important concerns raised by multiple States at the first substantive session (e.g. regarding decision-making, timing of early protocols, number of early protocols, importance of complementarity, prioritization of work). We are of the opinion that, in order to achieve an inclusive process, the text should reflect the range of views that were expressed in the discussions, with a transparent process for resolving differences.
In paragraph 7, c. “… to establish an international tax system …” does not reflect resolution 78/230, that called for strengthening international tax cooperation and making it fully inclusive and more effective. We furthermore propose not to use the term "fair" as its meaning is unclear and strongly depending on the different interests of each country.
The first (tax sovereignty) and second sentences (“to not undermine the effectiveness of the tax base of other Member states") seem contradictory. We suggest to replace the second sentence by the following text from Resolution 78/230 “and that this tax sovereignty implies international tax cooperation that allows all countries to effectively participate in developing the
rules, by right and without preconditions, and adapt and implement them in accordance with their needs and preferences”
We propose not to use the term “fair” as its meaning is unclear and strongly depending on the different interests of each country. Resolution 78/230 does not mention the allocation of taxing rights, and further analysis needs to be made on what exact aspects of the international tax system are inadequate to achieving sustainable development (residence, source taxation, value creation etc.). We suggest to replace "system" with “cooperation” to keep in line with language of the 78/230 resolution.
We propose to add following bullet point: “- To take into consideration the work of other relevant fora, potential synergies and the existing tools, strengths, expertise and complementarities available in the multiple institutions involved
in tax cooperation at the international, regional and local levels”. This principle is the text of paragraph 6(d) of resolution 78/230. Paragraphs 6(a) to (c) of resolution 78/230 are all listed under principles as well. There is no reason to separate 6(d) from the other three principles in the ToRs.
As the purpose of the convention is to ensure full inclusiveness and effectiveness of international tax cooperation, commitments need to be specifically made in areas that will benefit most from further international tax cooperation while taking into consideration work done in other fora.
We have taken note that the zero draft addresses the subject of transparency and exchange of information for tax purposes. Work on the implementation of the international standards in this area is ongoing, including robust peer review and monitoring processes. Furthermore, capacity building and efforts to enable all countries to benefit from the established transparency framework are ongoing and remain at the top of the international agenda. While capacity building work can be extended and built on, it would remain crucial to allow for countries to implement the agreed standards. We trust work as envisaged in the zero draft will take these aspects into consideration.
We reiterate our intention to engage in discussions regarding commitments to capacity building. Other issues to be discussed are the coordination of different actors in this field and also the ways to improve the output of capacity building activities for countries wishing to benefit. We also recall that other countries raised these issues as well and we believe that these issues should be reflected in the ToRs.
Paragraph 12 may be misleading. It is the primarily responsibility of each Member States to build capacities to participate effectively in international tax cooperation. This is an outflow of sovereignty. The entity or entities identified in the framework convention will only support the Member States in achieving this goal. Therefore, we suggest deleting “have primary
responsibility for, and funding for, supporting” and replacing it with “support”
As specified in Option 2 of Secretary-General 2023 report (“If there is sufficient agreement on certain action items, some of these protocols could be negotiated at the same time as the framework convention”) early protocols should be limited to only one or two and only for less controversial issues. This was also noted by many delegates from both developed and developing countries in the 1st session. Further, complex issues like taxation of high-net worth individuals or taxation of digitalized and globalized economy should not be considered as
topics for early protocols.
We suggest to delete this paragraph. The subject of future protocols is clearly up to the second committee of the General Assembly and these suggestions exceeds the mandate of the ad hoc committee as the resolution 78/230 only mentions the possibility to consider early protocols in paragraph 6(e).
Our concern is that a short timeline for such a significant undertaking as negotiating and finalizing a framework convention (and if such be the case already considering early protocols) will decrease the chance of a broad agreement, particularly given the inherent technicalities of tax policymaking. Sufficient time is also needed for an inclusive process where the views of all members are heard and considered, as many developing countries called for capacity building to be able to participate in the negotiations
In view of the workload and in order to take into account the diversity of countries in every region, we believe this number is insufficient. We would propose a minimum of 15 countries in
total (3 by regional group).
Switzerland
Procedural
Dispositions on the Drafting phase of the Convention
We reiterate the compromise proposal made at the 1st session. The work could fully focus only on the framework convention for a certain period of time, for instance 1 year, before starting the discussions on early protocols.
Resolution 78/230, in paragraph 1, states that the Framework Convention is needed “in order to strengthen international tax cooperation and make it fully inclusive and more effective.” However, paragraphs 7b and 7c of the zero draft ToRs state that the objectives of the framework convention should be to establish a “system of governance” and an “international tax system” respectively. In both cases, we believe this does not reflect resolution 78/230. We therefore ask that in the Objectives section, “system of governance” and “international tax system” be replaced by “framework”.
Add a principle to paragraph 9 that could be frased as “maximise participation and coverage, by reflecting the views and interests
of a diverse range of countries, so that the Framework Convention can attract the widest possible support for implementation.”
We request that paragraph 20 of the zero draft be placed instead within paragraph 9, under “Principles”. We believe it is essential that the work of the UN is complementary to the work of other international organisations - both to ensure countries can make best use of limited resources and expertise (especially given the resource-intensity of international tax negotiations), and to provide certainty for taxpayers and tax administrations. Focusing on areas of comparative advantage and achieving complementarity avoids the risk of fragmentation of global tax standards and consequent legal ambiguity. Fragmentation would create more opportunities for regulatory arbitrage and illicit financial flows, and could weaken international tax cooperation for years to come. Competing standards could also lead to double taxation, which in turn would reduce cross-border investment.
We request adding “or other instruments” to all references to protocols, to give the future negotiating committee flexibility to determine the most effective mechanism to address specific
issuesA UN Framework Convention should consider the nature of cooperation that would be most effective and most proportionate in achieving the objectives identified. It is a fundamental principle of tax sovereignty that, where possible, decisions on tax should be for sovereign jurisdictions to take. It follows that international agreements should focus on issues that cannot be effectively addressed at jurisdiction level.
Ensuring appropriate timelines. A central feature of an
inclusive process is that the views of all members should be heard and considered. If discussions are rushed, this decreases the chance of a broad agreement, particularly given the inherent technicalities of tax policymaking. The negotiation of a framework convention is in itself a significant undertaking, and the simultaneous negotiation of protocols would greatly increase the complexity of the task. An arbitrarily short timeline would therefore not be appropriate. It also reduces the opportunity for resource-constrained Member States to
fully participate
We propose that paragraph 17 be amended to read: “17. Alongside negotiating the Framework Convention, the intergovernmental negotiating committee should set aside time for scoping and analysis of early protocols, so that Member States are ready to begin drafting and negotiating those protocols or any other instruments as soon as the Framework Convention is finalised.”
United Kingdom
Procedural
Dispositions on the Drafting phase of the Convention
We request that a placeholder be inserted into the section on “Approaches and time frame for negotiation”, for discussion in a dedicated agenda item in the second session, so that we can reach an agreement on decision-making. We note that this issue is not covered in the zero draft of the ToRs. The UK continues to believe that part of the purpose of the ToRs is to set out how the negotiating committee will be conducted, and we believe that decision-making forms an essential part of that. In terms of what the decision-making process should look like, we note that in all cases, UN practice is to seek consensus in the first instance. We believe that it is crucial to emphasise this in the ToRs, and different UN processes have used different variations of language to do
so (e.g. UNCLOS, Resolution 75/282 on Countering the use of information and communications technologies for criminal purposes states)
We believe that, for an inclusive process, the text should reflect the range of views that were expressed in discussions, with a
transparent process for resolving differences.
We also think it is crucial that this process be founded on a thorough analysis of the issues to be resolved and options for resolving them. Without that, we will not be able to agree effective solutions, or will implement measures that have significant unintended consequences. Analysis will also enable us to identify where effective solutions are already in progress, versus where new solutions are needed. T
United Kingdom
Procedural
Dispositions on the Drafting phase of the Convention
We reiterate our view that the focus of the ToR should be the procedures for negotiating the Framework Convention, not the substance of the Framework Convention, which should be left to
a future negotiating committee once it is established by the General Assembly. Such procedural directions could include, among other items, modalities relating to the negotiating process, to encourage clear and transparent decision-making; a process for a negotiating committee to determine appropriate substantive topics for inclusion in the Framework Convention (or
subsidiary negotiations) that is designed to ensure that these substantive topics are included based on sufficient analysis; and procedures to ensure that all Member States’ views are taken
into account during the expected negotiations.
United States
Procedural
Decision making rules
Dispositions on the Drafting phase of the Convention
In addition, we reiterate that the ToR should not prejudge the mandate for, or the outcomes of, the work of a negotiating committee. The zero draft includes several instances that appear to overstep the bounds of the mandate of the Committee by attempting to require a negotiating committee to work on specific issues. For example, paragraphs 7 through 10 list specific topics that the Framework Convention “should” include, and paragraph 14 lists early protocol topics that “should” be developed. The ToR should be clear that these topics are non-binding examples to preserve a negotiating committee’s flexibility
United States
Procedural
Dispositions on the Drafting phase of the Convention
Moreover, paragraph 14 lists specific priority issues “to be addressed” through early protocols. “To be addressed” abrogates any power that the members of a future negotiating committee have to consider the merits of developing early protocols on these topics. On this issue, we suggest
that the ToR use more neutral language to make clear that, consistent with Resolution 78/320, a negotiating committee has the option to consider early protocols
United States
Procedural
Protocols
Dispositions on the Drafting phase of the Convention
Despite extensive discussion of decision-making at the First Session, the zero draft is silent on this important topic. We request that sufficient time be dedicated to discussing this topic at the Second Session. To facilitate this discussion, we suggest that the updated draft ToR include placeholder language to make clear that this and potentially other important procedural matters will be addressed in the ToR.
As reflected in our prior inputs, clear and transparent decision-making by a negotiating committee requires the appropriate sequencing of negotiations. We are especially concerned that
the simultaneous consideration of early protocols would create confusion and conflict, and inappropriately restrict a negotiating committee’s work on refining conceptual objectives, principles, scope, and considering vehicles other than protocols. As the Committee knows, a Framework Convention creates the conceptual and institutional framework under which protocols would be developed. It would be premature to develop a
protocol before there is a Framework Convention in place to guide the negotiation and development of protocols. In addition, protocols are only one way to address issues under a Framework Convention. Mandating, before undertaking any analysis, that a complex substantive issue must be addressed through a protocol—to the exclusion of any other mechanism such as voluntary commitments or an exchange of best practices—risks removing many appropriate consensus-building tools from a negotiating committee’s toolkit.
Moreover, while we acknowledge the urgency expressed by Member States at the First Session, the resource commitments that would be required to simultaneously negotiate a Framework Convention and five potentially complex early protocols are considerable. The resource challenges created by large projects can significantly undermine inclusivity, especially as jurisdictions must choose how to best participate among many international tax projects across multiple fora, on top of handling day-to-day operations. This is the case even where work on a project builds on previous technical work, since not all Member States may have reviewed that work or may have since received other political direction that requires refreshed domestic processes to review. We consider the risks posed to transparent and inclusive negotiations by resource challenges to be as important as the potential substantive confusion and conflict that could be caused by early protocol consideration.
In many ways, the zero draft does not appear to fully reflect the views expressed by all delegates at the First Session. It is unclear how the balance between different views was struck and how compromises were made in the drafting of the zero draft. For example, during the First Session, there was extensive discussion of decision-making, and yet that topic is not reflected anywhere in the zero draft. In contrast, there was no robust discussion at the First Session on the merits of categorizing certain topics as “early” protocols or “future” protocols, but the zero draft includes a section on potential future protocols. The process of drafting the ToR should be transparent in order to give legitimacy to the process and confidence by delegates and stakeholders.
There was significant agreement among delegates in the First Session that there is a need for greater transparency in the Committee. While not directly related to the draft ToR text, we think this issue is important enough to the drafting process to provide suggestions for improvement here. A detailed agenda circulated in advance of each meeting day and a written summary of each day’s deliberations could provide better structure to the negotiations and allow Member States to clarify positions. As the draft ToR is revised during the Second Session, for each issue on which Member States have differing views, the Chair could provide to the Member States a written recommendation for a resolution, alternative proposals, and the reasons for the Chair’s recommendation. Resolution 78/230 stresses that international tax cooperation requires
“transparent decision-making structures” and “clear and transparent rules” to ensure meaningful
engagement, and we provide these comments in that spirit
In order to adequately take into account paragraph 6(d), the ToR should emphasize that every effort should be made to ensure a process that is complementary to, and not duplicative of, existing processes in other fora. Simultaneous discussions in multiple fora will result in the fragmentation of efforts to strengthen international tax cooperation and, as noted above, require jurisdictions with resource challenges to choose between competing processes. Our concerns on this point apply to many of the issues that are included as potential commitments or protocols in the zero draft, such as the commitment and protocol on exchange of information and the commitment related to equitable taxation of MNEs, among others.
The specific location of paragraph 6(d) of the Resolution in the zero draft suggests that it is of lesser importance than the other principles listed in paragraph 6. The zero draft lists the topics in paragraphs 6(a) through (c) of the Resolution as “guiding principles” for the Framework Convention, and relegates paragraph 6(d) to a section headed “Approaches and time frame for negotiation.” This differing treatment in the zero draft of the principles listed in paragraph 6 is at odds with the Resolution. This is also an example of an important decision made by the ToR drafters for which Member States, which were divided on this issue during the First Session, should receive a written explanation of the reasoning and the alternatives considered.
One point on which many delegates agreed was the importance of domestic resource mobilization. However, the zero draft only mentions domestic resource mobilization in one place, and in such a way that little importance is placed on it. Domestic resource mobilization is an area where the UN brings significant expertise. Additionally, Resolution 78/230 recognized that developing a Framework Convention will help in accelerating the implementation of the Addis Ababa Action Agenda on Financing for Development and the 2030 Agenda for Sustainable Development. A focus on domestic resource mobilization could productively leverage this expertise as a negotiating committee undertakes its work. While we note other Member States’ views that a future negotiating committee must look beyond domestic resource mobilization objectives, the Committee and a negotiating committee should consider linkages to, and impacts on, domestic resource mobilization efforts in the
context of its negotiations
The zero draft includes a number of terms and concepts that are subject to multiple interpretations. We recognize that the ToR is a higher-level document than a draft text of a Framework Convention or subsidiary negotiating documents. However, many of the topics included in the zero draft as commitments or protocols are so high-level that their meaning is ambiguous. For Member States to understand the ToR, and for a negotiating committee to productively undertake its work, there must be a common understanding of the scope of each issue.
The zero draft includes “tax-related illicit financial flows” as an objective and a priority area for an early protocol. While we acknowledge that the term “illicit financial flows” (IFFs) is increasingly utilized within the UN system, this term lacks an agreed-upon international definition. Because there is no clear understanding of the contours of “illicit financial flows,” it is difficult for us to evaluate the obligations related to IFFs proposed in the zero draft. For instance, “tax-related illicit financial flows” could include tax avoidance and commercial practices that may not be illegal depending on the jurisdiction. We think it is critical to maintain a clear distinction between tax crimes and inappropriate but lawful behavior. While the latter is an important public policy issue, it is not a matter of tax criminality. This fundamental distinction is important enough, and high-level enough, to be addressed in the ToR—especially where a negotiating committee is mandated to address the topic.
Similar ambiguities exist regarding other protocols and commitments mentioned in the zero draft, such as the references to “equitable taxation of multinational enterprises” and “taxation of high-net worth individuals.” While we do not expect the ToR to contain technical or even significant conceptual detail, we are concerned that such ambiguous phrasing at this early stage will leave a negotiating committee with a very challenging and potentially confusing scoping
task. That concern is amplified by the fact that the zero draft already seems to explicitly mandate that a negotiating committee include these items in the Framework Convention or design early protocols around these phrases.
IFFs as second early protocol - we are open to dispute resolution
Kenya
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Taxing the digitalised economy as second early protocol (double check)
Switzerland
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Tax avoidance of high net worth individuals as a second early protocol
Colombia
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
IFFs as second early protocol - but flexible
Zambia
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
HNWI or tax disputes as a second early protocol. We are largely flexible on the topic - perhaps digital services might also include digital economy so we might choose something from the other three. But flexible.
Pakistan
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Belgium
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
We are flexible - taxation of digital economy overlap. Dispute Prevention and resolution - has merit - needed as a vehicle to force the process of cross border services. No final position.
Norway
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Germany
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
China
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
???
Russia
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
IFFs as second early protocol
Philippines
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
HNWI as a second early protocol - we are flexible
Chile
Procedural
Procedural
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Sweden
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Singapore
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Argentina
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
???
Belize
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Bahamas
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Poland
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
United Arab Emirates
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
HNWI as a second early protocol - can be flexible
Tanzania
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
India
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Jamaica
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Taxing the digitalised economy as a second protocol
Indonesia
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Spain
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Netherlands
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Saudi Arabia
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
HNWI as a second early protocol or IFFs
Colombia
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
HNWI as a second early protocol
Brazil
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
South Korea
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
???
Fiji
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol
Hungary
Procedural
Protocols
4/2/2025
Oral intervention at the Organisational Session
Oral intervention at the Organisational Session
Dispute prevention and resolution as second early protocol