Following a three-week intergovernmental meeting in New York earlier this month, the United Nations has adopted Terms of Reference for a Framework Convention on International Tax Cooperation – a potentially significant step towards establishing new rules for cross-border taxation.
ICC, along with representatives from its national committees worldwide, actively participated in these negotiations – with the aim of ensuring that this initiative focuses on developing principles-based international tax policies that support trade, investment and the achievement of the Sustainable Development Goals (SDGs).
Following the adoption of the Terms of Reference, John Connors, Chair of ICC’s Global Commission on Taxation said:
“For companies globally, tax policy is not only a means of raising government revenues but also a catalyst for sustainable growth and development. It should drive investment in jobs, infrastructure, and technology, while fostering trade, encouraging sustainable investment, and ensuring fair competition. We look forward to a UN Convention that aligns with these critical objectives and are ready to constructively participate in the process”.
Commenting on the details of the agreed text, Luisa Scarcella, ICC Global Policy Lead on Taxation, added:
“While the inclusion of a new paragraph guaranteeing stakeholder participation in the future drafting of the UN Tax Framework Convention is welcomed, it is crucial to emphasise the need for structured, ongoing, and meaningful consultation with taxpayers throughout the drafting and negotiation process.
“In this connection, we regret that an important amendment proposed by EU countries, based on a prior suggestion from India to include references to taxpayer safeguards, was not adopted. This is especially disappointing given that the importance of taxpayers’ safeguards and consultations is recognised domestically across the vast majority of UN member countries.
“Additionally, while the inclusion of tax certainty as a guiding principle for the convention is appreciated, effective tax certainty requires broad international support and consistent implementation of new rules. Coordination with existing rules and frameworks established by other international forums is also essential. The business community hopes that the convention will be negotiated with broad consensus and that existing regulations will be duly considered.
“We are also concerned by the decision to address the taxation of cross-border services in one of the two protocols to be negotiated simultaneously with the Framework Convention. The ambitious timeline for this process raises concerns about the need to carefully consider the economic impact of new rules on local economies and global trade, particularly for developing countries that are service exporters.”
