Blog by Nicole Trent, Junior Associate
Last month, the Intergovernmental Negotiating Committee (“INC”) met in New York from February 3rd to 6th to negotiate the new United Nations framework convention on international tax cooperation (“UNFCITC”),[1] following the adoption of the terms of reference.[2] With three designated sessions per year, alternating in New York and Nairobi, and a final text of the UNFCITC set to appear before the General Assembly in September of 2027, countries and multinational companies alike can expect big changes in international tax policy.[3]
Experts estimate that transnational corporations’ cross-border tax “optimization” strategies drain public budgets of hundreds of billions of dollars each year, highlighting the pressing need for reform.[4] The growing disparity in tax advantages benefiting large corporations, wealthy individuals, and the nations that cater to them is an increasingly urgent issue.[5] In response to the ongoing challenges of tax evasion and avoidance, a historic UN agreement is laying the foundation for a more effective mechanism to generate resources for development and public services.[6]
The UN’s ultimate goal is to create a unified system of governance that can respond to tax problems of today and those that might arise in the future.[7] The UNFCITC would be a binding document, as opposed to the current UN Tax Committee that creates non-binding technical guidance on tax matters.[8] Additionally, while the UN Tax Committee is comprised of tax experts, all Member States are welcomed to involve themselves in the INC.[9]
UN General Assembly Resolution 78/230 is the genesis of this journey towards a binding tax cooperation document.[10] Resolution 78/230, titled “Promotion of inclusive and effective international tax cooperation at the United Nations”, adopted in December of 2023, officially set into motion the long-awaited need to step up how countries cooperate on tax internationally, and to make such cooperation inclusive and effective.[11] Specifically, 78/230 aims to combat illicit financial flows, recover and return stolen assets, promote financial integrity for sustainable development, and improve public institutions, while also attempting to end aggressive tax avoidance and tax evasion.[12] The resolution addresses cooperation both substantively and procedurally, and establishes a Member State-led, open-ended ad hoc intergovernmental committee for the purpose of drafting terms of reference for the UNFCITC.[13]
With different goals between developed and developing Member States, in addition to the United States leaving the INC,[14] it will be interesting to see how the negotiations play out in the next couple of years, and what ends up in the final UNFCITC in 2027.
[1] Negotiating Tax at the United Nations: An Introductory Factsheet from an EU Perspective, Tax Just. Network (Feb. 17, 2025), https://taxjustice.net/wp-content/uploads/2025/02/20250217-NegotiatingTaxUnitedNations-EU-Factsheet-Final.pdf.
[2] G.A. Res. A/AC.298/2 (Jan. 16, 2025).
[3] Tax Just. Network, supra note 1, at 3.
[4] Breakthrough in New York: UN Committee Paves Way for New UN Tax Convention, Global Policy Forum (Aug. 20, 2024), https://www.globalpolicy.org/en/news/2024-08-20/breakthrough-new-york-un-committee-paves-way-new-un-tax-convention.
[5] Tax Just. Network, supra note 1, at 4.
[6] See Elisângela Rita & Kudzai Mataba, UN Convention on Tax: What Happened at Recent Negotiations, and What’s Next? (Feb. 14, 2025), https://www.iisd.org/articles/explainer/United-Nations-International-Tax-Convention-Negotiations (discussing the negotiations in February and the foundations on the agreement).
[7] G.A. Res. 78/230 (Dec. 28, 2023).
[8] Tax Just. Network, supra note 1, at 2.
[9] Id.
[10] Supra note 7.
[11] Id.
[12] Id.
[13] Id.
[14] Elisângela Rita & Kudzai Mataba, UN Convention on Tax: What Happened at Recent Negotiations, and What’s next? (Feb. 14, 2025), https://www.iisd.org/articles/explainer/United-Nations-International-Tax-Convention-Negotiations.