UN Tax Treaty Talks Advance as Countries Seek Bigger Slice of Digital Profits

UN tax treaty talks edge forward, chasing fairer rules for a digital world

The third negotiating session for a UN Framework Convention on International Tax Cooperation wrapped last week, and delegates made one thing crystal clear: the status quo isn’t coughing up enough cash for development. With official development assistance sliding 33 percent in 2025, governments are hunting for fresh revenue streams, and cross-border tax rules are squarely in the crosshairs, Earth Negotiations Bulletin reports.

Over four packed days in Nairobi, negotiators drilled into draft text covering everything from how to split taxing rights on digital services to protecting companies from double taxation. The session also cracked open two hot-button protocols: one on income from cross-border services and another on beefing up dispute-resolution tools. Delegates traded views on advance pricing agreements, mandatory arbitration, and curbing illicit financial flows, all while calling for “country-driven” capacity-building help.

“Fairness must be at the heart of this convention,” one African delegate told ENB, arguing that multinationals should “pay their share without scaring off investment.” Others pressed for language targeting high-net-worth individuals and tighter rules on tax avoidance. Although no text was locked in, negotiators agreed to circulate a revised draft before the fourth session in March 2026.

The reaction was swift. Tax pros say a UN-brokered deal could rival, and maybe upstage, the OECD’s Pillar One plans. Still, business groups warn that layering new rules on top of existing regimes could turn compliance into a game of 3-D chess. Stay tuned: eight more negotiating rounds are on the calendar.

Around the Tax World

• Brazil test-runs its consumption tax reboot. During 2026 the new CBS and IBS will appear on invoices at a combined 1 percent rate, but won’t actually be payable, creating “strong grounds” for future litigation over taxable bases (International Tax Review).

• London leaks, then hikes. UK Chancellor Rachel Reeves confirmed personal allowance freezes and higher dividend taxes after an accidental document drop ahead of the Autumn Budget 2025 (CNBC).

• Canada’s first Carney-era budget tilts international. Budget 2025 proposes new rules on hybrid mismatch arrangements and beefed-up GAAR penalties, aiming to raise CA$3 billion over five years (Law360 Canada).

• CJEU sharpens its VAT toolkit. In Brose Prievidza, the court held that tooling supplied free of charge can still count toward the taxable amount when goods are later delivered to another member state, clarifying long-muddled VAT treatment (Bloomberg Tax).

Tax Stat of the Day

33%, the drop in global official development assistance this year, a funding gap the UN tax treaty aims to plug.

Looking Ahead

All eyes turn to March 2026, when negotiators reconvene, with a fresh draft in hand, to hash out whether arbitration becomes mandatory or merely “encouraged.”