The UN Ad Hoc Committee released a second revised draft of the terms of reference (ToR) (Rev.2) for a United Nations Framework Convention on International Tax Cooperation  on Sunday, 11 August 2024. This draft reflects the discussions held during the second week of the Committee’s second session.

It follows the earlier publication of the first revised draft (Rev.1) earlier in the month.

The draft, as detailed in the note about the Rev.2 proposal, consists of:

  • Improvements to language and overall organisation of the draft ToR, as well as technical corrections that received no objections;
  • Proposed revisions to reflect where the Committee is now on areas of divergent views and the compromise emerging from the discussions, including the appropriate degree of flexibility provided in the draft ToR to the future negotiating committee;
  • No revisions to areas where Rev.1 was robust enough and showed a middle ground for all Member States;
  • No revisions to a few areas where a clear compromise has yet to emerge, and Member States are working to resolve this (including paragraphs 9c and 20); and
  • No textual proposals were made by delegations where those proposals did not have support in the Committee.

One major change can be seen in the “Substantive Elements of the Framework Convention” section, which has now been updated to “Commitments”.

This revised section highlights:

  • Fair allocation of taxing rights, including equitable taxation of multinational enterprises;
  • Addressing tax evasion and avoidance by high-net-worth individuals and ensuring their effective taxation in relevant Member States;
  • Ensuring that tax measures contribute to achieving sustainable development in its three dimensions: economic, social, and environmental;
  • Effective mutual administrative assistance in tax matters, including with respect to transparency and exchange of information for tax purposes;
  • Effective collaboration in addressing tax-related illicit financial flows, tax avoidance, tax evasion, and harmful tax practices; and
  • Effective prevention and resolution of tax disputes.

Third week expectations

The draft ToR will undergo a second reading to achieve consensus on all sections. The final version of the ToR, along with the procedural report for the second session, is scheduled for completion by Friday, 16 August, 2024.