Updates from the Organizational Session of the Intergovernmental Negotiating Committee on the UN Framework Convention on International Tax Cooperation

This article is a repost from GATJ’s regional member, Tax Justice Network Africa. Please find the original article here.

Day 1: 3 February 2025 

The United States walks out, but the UN Tax Negotiations continue. 

3 February 2025 marked the beginning of the Organisational Session of the historic Intergovernmental Negotiating Committee (INC) on the United Nations Framework Convention on International Tax Cooperation commenced. The session’s agenda included the election of committee officers, the resolution of key organizational matters—such as establishing decision-making rules—and the selection of the subject for the second early protocol. This subject was to be chosen from the list of priority areas outlined in paragraph 16 of the terms of reference (A/AC.298/2), which are as follows: 

  1. Taxation of the digitalized economy; 
  2. Measures against tax-related illicit financial flows; 
  3. Prevention and resolution of tax disputes; and 
  4. Addressing tax evasion and avoidance by high-net-worth individuals, ensuring their effective taxation in the relevant Member States. 

The session was officially opened by the new INC Chair, Egypt’s Deputy Minister of Finance for Tax Policy and Reforms, Ramy Youssef. Among the 18 Vice Chairs elected to the bureau, Africa is represented by Daniel Nuer (Ghana), Wanjiru Kiarie (Kenya), and Mathew  Gbonjubola (Nigeria). 

Following the adoption of the agenda, Member States began their submissions regarding the framework convention and the two protocols discussed in previous sessions. While all parties acknowledged the significance of the negotiations, divergent views emerged on decision-making processes. Developed countries advocated for consensus-based decision-making, whereas the Africa Group—represented by Egypt—noted that while they would aim for consensus during the negotiations, they remained dedicated to completing the process within the dedicated time frame. This sentiment was reflected by a broad spectrum of other developing countries. 

In a shocking turn of events, following its submission, the United States walked out of negotiations. The US indicated that their reason for leaving the negotiations was that the ‘goals of the UN Framework Convention on International Cooperation on International Tax Cooperation are inconsistent with US priorities and represent unwelcome overreach.’ 1It indicated that it did not plan to cooperate any further in the negotiations and intended to reject the outcome of the framework convention process and welcomed others to join it in opposition. Despite its call, no other member states followed it out. 

In the past month, the US has expressed its displeasure with measures that translate to sharing taxing rights over the income that American multinational enterprises garner from other jurisdictions. In light of the previous insistence by the US, the European Union and other developed countries for a consensus-based approach in negotiating the UN Tax Convention, this reaction by the US reflects the threat that could come from this proposal. Putting in place voting measures that could allow one country to stall the progress of an entire negotiation process could result in discussions and subsequently outcomes that reflect the interests of few to the detriment of all. Such a scenario highlights the critical importance of ensuring that all countries participate in international tax cooperation on an equal footing. 

Tax Justice Network Africa is a member of the Global Alliance for Tax Justice, for additional information kindly refer to the official GATJ civil society press release here

Day 2: 4 February 2025 

Second Protocol Talks Kick Off 

4 February 2025 marked the second day of the Organisational Session of the historic Intergovernmental Negotiating Committee (INC) on the United Nations Framework Convention on International Tax Cooperation. The session’s agenda included discussing the modalities of decision-making and the selection of the second protocol.  

Decision-making has been one of the key controversial issues that have emerged from this process that could potentially lead to a stalemate. The European Union and Canada among others, are in support of consensus-based decision making while decision-making based on simple majority has received wide support from developing countries.  

The morning session involved a debate on a proposal for decision making of the Intergovernmental Negotiating Committee on a proposal presented by Norway and Mexico. The proposal is as follows:  

  1. Member States shall make all efforts in good faith to seek consensus in decision-making  
  2. Through the Chairperson, once it has been established that all efforts were made to reach a consensus and consensus was not reached, then the Members present, and voting shall make decisions based on a two-thirds majority on substantive issues  
  3. The decisions of the Committee shall be taken via a simple majority on matters of procedure  
  4. The Chairperson of the Committee shall determine whether a matter is procedural or substantive  
  5. The Chairperson’s decision on this can be appealed and put to a vote by the Committee and the decision shall be final if it is voted for based on a simple majority  

Canada, Australia, Singapore and China were among those that were in support of this proposal. Kenya expressed that it favoured simple majority-based voting in accordance with the previous process undertaken by the Ad Hoc Committee as well as the Terms of Reference. Pakistan also expressed a preference for maintaining this approach and requested why two-thirds majority was required, citing the UN Convention on Corruption as an example of an agreement whose voting threshold is a simple majority. Ghana and Nigeria indicated that this proposal would require more robust discussions before a decision was made. 

The next item on the agenda was the discussion on the subject to be chosen from the list of priority areas outlined in paragraph 16 of the terms of reference (A/AC.298/2) for the second protocol, which are as follows: 

  1. Taxation of the digitalized economy; 
  2. Measures against tax-related illicit financial flows; 
  3. Prevention and resolution of tax disputes; and 
  4. Addressing tax evasion and avoidance by high-net-worth individuals, ensuring their effective taxation in the relevant Member States. 

Zambia and Kenya were in support of a protocol on measures against tax related illicit financial flows (IFFs) but expressed that they were flexible and would be open to supporting another protocol. Germany, India, China, Norway, Singapore and Belize among other countries were in support of a protocol on the prevention and resolution of disputes. They argued that this was the least controversial protocol, it would receive broad support, and it would be possible to negotiate it within the stipulated times indicated in the Terms of Reference. 

The Philippines and Fiji were in support of the protocol on addressing IFFs. The Philippines argued that the selection of the second protocol should be based on urgency and the goal should be to select one that addresses the issue of resource leakages. Fiji similarly argued that the selection of the second protocol should not be based on simplicity alone but rather on what would bring the highest return on investment in the form of increased revenue for the time and resources spent negotiating the protocol. Brazil and Colombia were in support of a protocol on taxation of high- net worth individuals.  

Considering the divergent views on the issues discussed, the Chairperson stated that the Bureau would meet to discuss developing a proposal that would address the different perspectives on decision making. This proposal would then be presented on the floor the next day. He indicated that the schedule of meetings the next day might be ‘informal’ to allow Member States the opportunity to negotiate the issue of decision-making and the selection of the second protocol behind closed doors.   

Day 3: 5 February

Selection of the 2nd Protocol: Prevention and Resolution of Disputes  

5 February 2025 marked the third day of the Organisational Session of the historic Intergovernmental Negotiating Committee (INC) on the United Nations Framework Convention on International Tax Cooperation. The Chair suspended the formal session, shifting towards an informal session so that Member States could discuss the issue of decision-making and the selection of the second protocol.  

In the afternoon session, the INC resumed back to a formal session to discuss the selection of the second protocol. As outlined in paragraph 16 of the terms of reference (A/AC.298/2), the list of priority areas from which the subject of the second protocol should be selected include:  

  1. Taxation of the digitalized economy; 
  2. Measures against tax-related illicit financial flows; 
  3. Prevention and resolution of tax disputes; and 
  4. Addressing tax evasion and avoidance by high-net-worth individuals, ensuring their effective taxation in the relevant Member States. 

The Chairperson proposed that the subject of the second protocol should be ‘prevention and resolution of tax disputes’ following the wide support from Member States for this subject. The Chair also proposed that subjects that were not selected under paragraph 16 of the terms of reference would still be considered as subjects for future protocols, therefore moving the unselected protocols from paragraph 16 to 17 on future protocols. Poland, on behalf of EU Member States, expressed support for this selection of the second protocol. As the issue of issue of decision making was unresolved, the Chair suspended the formal session shifting into informal sessions so that more consultations could take place. 

The Chairperson informed the INC that there shall be no morning formal session rather an ‘informal’ session in the morning to finalise unresolved issues such as decision making. The formal session would resume in the afternoon. 

Final day: 6 February 2025 

Decision-making of the Intergovernmental Committee  

6 February 2025 marked the final day of the Organisational Session of the historic Intergovernmental Negotiating Committee (INC) on the United Nations Framework Convention on International Tax Cooperation. The morning session involved informal consultations, and so discussions took place in the afternoon. When Member States returned from the mid-day break, the Chair proposed the following decision-making mechanism of the INC on matters of substance:  

  1. The INC is to exhaust every effort towards reaching consensus taking into consideration the timeframe of negotiations.  
  2. If through the Chairperson by recommendation of the Bureau, it is established that consensus cannot be reached then voting on issues of substance within Protocols shall be done through a two thirds majority 
  3. On issues of substance within the Convention, reliance shall be placed on rule 161 of the Rules of Procedure of the General Assembly. This rule provides that subsidiary bodies of the General Assembly such as the INC shall apply the rules of procedure of the General Assembly. This means that voting on issues of substance (within the Convention) shall be based on majority voting.  
  4. The INC shall be able to decide on whether an issue is a matter of substance through majority voting.  

France, with the support of the UK, the Czech Republic among others made a proposal to amend the Chair’s proposal to instead have the INC make decisions via consensus. Ghana on behalf of the Africa Group, took the floor and expressed that the proposed amendment was setting the negotiations back. The African Group noted that the proposal would potentially stall the negotiations and potentially ascribe the voices of developing states to the periphery. Ghana then officially called for a vote on France’s proposal. 42 countries that comprised mostly of Member States of the EU as well as Canada, Australia and New Zealand voted in favour of it, while 98 countries, that were overwhelmingly developing countries, voted against it. 10 countries abstained.  

There were no further calls for amendment on the Chair’s proposal. Therefore, it was adopted via consensus. 

On the issue of the second protocol, dispute prevention and resolution was tabled by the Chair and adopted by consensus.  

The report of the Organisational Session was then adopted via consensus, however, Poland on behalf of the EU, expressed concerns over the need for more guidance on the negotiations such as the calendar of the next sessions, and the modalities of the INC amongst others. Poland requested that these concerns be officially reflected within the report.  

Right before the conclusion of the meeting, the Chairperson with the support of the Secretariat presented some of the working methods proposed for the intersessional work of the Committee. This presentation contained a proposal for three workstreams for the Convention and the two Protocols respectively. Under these workstreams, various taskforces could be developed with a task of working on different parts of the instruments. Each workstream would be led by two Vice Chairs, one from a developing country and the other from a developed country.  

The Chairperson then explained that the Bureau would be finalising on the working methods of the INC in February/March including providing a roadmap, developing the working guidelines of the workstreams, and developing mechanisms for the elections of the Vice Chairs for the workstreams amongst other issues.  

The Chairperson finally concluded the Organisational Session, commending the members of the INC for the spirit of cooperation and compromise that was shown during this session.  

Tax Justice Network Africa is a member of the Global Alliance for Tax Justice (GATJ), for additional information kindly refer to the official GATJ press release here. 

For more information on the UN Tax Convention Negotiations, please contact Everlyn Muendo at emuendo[@]taxjusticeafrica.net