The United Nations approved the final draft terms of reference (ToR) for the UN Framework Convention on International Tax Cooperation. The decision passed with a majority vote of 110 countries in favour, with 44 abstentions and eight countries against it, on 16 August 2024.
This decision follows after 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 11 August 2024. This draft reflects the discussions held during the second week of the Committee’s second session.
The Terms of Reference will be presented to the General Assembly in November or December this year, and a decision will be made on whether to proceed to the negotiation phase for the Framework Convention.
The UN General Assembly emphasised the need to develop a United Nations framework convention on international tax cooperation to strengthen fully inclusive and more effective international tax cooperation.
According to the ToR, an intergovernmental negotiating committee will finalise the text of the Framework Convention and two initial protocols. This committee is scheduled to convene at least three times annually in 2025, 2026, and 2027. The finalised text will be presented to the General Assembly for review during the first quarter of its eighty-second session in September 2027.
Objectives
- Establish fully inclusive and effective international tax cooperation in terms of substance and process;
- Establish a system of governance for international tax cooperation capable of responding to existing and future tax and tax-related challenges on an ongoing basis;
- Establish an inclusive, fair, transparent, efficient, equitable, and effective international tax system for sustainable development. This will enhance the legitimacy, certainty, resilience, and fairness of international tax rules while addressing challenges to strengthening domestic resource mobilisation.
Commitments
- 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 the relevant Member States;
- International tax cooperation approaches that will contribute to the achievement of sustainable development in its three dimensions, economic, social and environmental, in a balanced and integrated manner;
- Effective mutual administrative assistance in tax matters, including with respect to transparency and exchange of information for tax purposes;
- Addressing tax-related illicit financial flows, tax avoidance, tax evasion and harmful tax practices; and
- Effective prevention and resolution of tax disputes.
