NOVA Tax Lab Weekly Report on UN Framework Convention on International Tax Cooperation

9 August 2025

The First Substantive Session of the Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation took place in New York United Nations Headquarters during the week of 4th – 8th August 2025. After finalization of the Terms of Reference for the Convention earlier this year, this session started the work on the Convention itself – an ambitious and promising undertaking.

The key focus areas of the first week were effective dispute resolution, sustainable development, and fair allocation of taxing rights. Discussion on effective exchange of tax information, taxing High Net Worth Individuals (HNWIs) and assistance in tax collection followed.

Regarding dispute resolution, many countries, especially developing ones, stressed the importance of not only regulating resolving tax dispute in an effective and equitable manner but also preventing them where possible to avoid costly and not always predictable dispute settlement. Another issue that was highlighted often was that it must be made clear how the Framework Convention regulates not only tax disputes in a traditional sense, but also disputes arising from the Convention itself. The importance of enforceability of dispute resolution mechanisms, as well as their adequacy to developing countries’ realities, were also stressed.

A discussion on sustainable development was rather brief, but important. Many recognized the deep connection between sustainable development and taxation, stating that commitment to sustainable development should be one of the Convention’s guiding principles. At the same time, several countries asked for clarity on specific commitments in this area, and mentioned that it could be helpful to get sustainable development experts engaged as most participants specialize in taxation and some did not feel qualify to make judgement or specific commitments.Finally, as expected, the discussion around fair allocation of taxing rights was the longest one. While negotiators recognized the inherited subjectivity of the category of “fairness”, the discussion seemingly achieved a broad recognition of location of economic activity value creation and revenue generation as guiding principles for fair(er) allocation of taxing rights. While most countries expressed preference for a high-level commitment, stressing the Framework nature of the Convention and the need to make is as future-proof as possible, some also stressed the importance of aiming for a good balance between flexibility and concrete, effective solutions contributing to addressing the modern taxation challenges.

It was also stressed that the Convention should address not only challenges related to corporate taxation but also to PIT and other taxes, and the circumstances of developing countries, as well as their capacity challenges, need to be taken into account. The critical importance of effective exchange of relevant information between countries, transparency and mutual assistance have been stressed multiple times.

Nevertheless, many questions remain unanswered, and many tradeoffs remain unaddressed, including defining an allocation key that would be seen as fair, ensuring transparency while respecting taxpayers’ privacy, and complying with the exchange of information requirements while facing severe capacity constraints and prohibitive costs. While it is unfair to expect these fundamental challenges to be addressed under a light timeline, we hope that further negotiations will result in flexible yet meaningful commitments.

The Second Substantive Session will take place next week, on 11th-15th August 2025, and will be dedicated to discussing both early protocols to the Framework Convention which are supposed to include more specific commitments of countries. Many relevant materials, including the General Assembly resolution 79/235 adopting the Terms of Reference, Issues Notes prepared by the Chair, and a Revised Programme of Work for the Second Substantive Session can be found at the relevant section of UN DESA website. All formal discussions can be followed online on UN TV, and recordings of all formal meetings are publicly available.

By Natalia Pushkareva