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

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.   

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