UN Tax Convention Debates Intensify Over Mutual Administrative Assistance, Illicit Financial Flows and Harmful Tax Practices Commitments

The key highlights are set out below.

Mutual Administrative Assistance

Article 6 of the Convention template currently contains two paragraphs in which State Parties recognize that domestic resource mobilization depends on their ability to enforce domestic tax laws. To this end, States shall afford the widest mutual administrative assistance, including the exchange of information (EOI). Such assistance will cover information on revenues, expenses, profits, taxes paid, tax planning strategies, tax structuring arrangements, the nature of activities and any other relevant data.

Furthermore, paragraph 2 of article 6 provides that State Parties agree to cooperate to identify and eliminate administrative barriers, including those affecting EOI.

The discussion raised concerns about the scope of EOI and the capacity-building measures available to each country to implement these provisions. Several Member States from Africa, Asia and Latin America called for the broadest scope and definitions to support EOI in terms of the article, as the UN is an open forum for those countries which are not part of other separate fora. However, other countries, including various OECD members, questioned how such mutual assistance and EOI would coexist with existing standards from other forums. Additionally, the treatment of personal data and confidentiality were highlighted as key principles to be respected under the Convention.

Illicit Financial Flows (IFF), Tax Avoidance and Tax Evasion

The session in the morning of 11 November 2025 moved on to article 7. As drafted in the Convention template, State Parties agree to cooperate to combat IFF by:

• developing effective tools for detection, including enforcing reporting standards necessary to ensure effective taxation of income and profits linked to IFF; and
• sharing information about structures and techniques used by taxpayers to avoid or evade taxes.

This session remained an open debate, with no final draft circulated or approved. Member States and stakeholders did not reach common ground on key definitions — specifically, what constitutes "IFF" and "tax avoidance". Several representatives noted that numerous existing guidelines provide differing definitions of these concepts, both legally and from an accounting perspective. They also questioned whether these terms should align with those used in other frameworks, such as FATCA or CRS.

Harmful Tax Practices

The Wednesday, 12 November 2025 morning session began with article 8 of the Convention template, which recognizes that harmful tax practices undermine the ability to tax income fairly worldwide, particularly from multinational corporations with cross-border income. Accordingly, paragraph 2 of the article states that any tax incentive should be substance-based, linked to investment or performance, and not merely profit based.

Paragraph 3 further provides that State Parties agree to cooperate in developing effective tools to combat such practices, including:

• sharing information on revenues, assets, employees, and reported income on a country-by-country basis, taking into account varying needs and capacities; and
• introducing appropriate measures, which may include minimum taxes, on business activities originating from jurisdictions with harmful tax practices.

The debate was divided between Member States advocating for broader definitions of harmful tax practices, despite existing mechanisms (e.g. OECD initiatives), and those calling for a review of current measures to avoid duplication. It was noted that paragraph 22 of the Convention's Terms of Reference contemplates verifying existing efforts, with repeated calls to maintain this as a high-level commitment.

Finally, the afternoon session on 12 November 2025 closed with a brief discussion of article 9, "Sustainable Development", which most Member States agreed should follow the Sevilla Commitment, and an introduction to article 10 on cross-border tax dispute resolution.

As article 10 is one of the Convention's key commitments, along with its Second Protocol, the debate will continue in upcoming meetings.

Report from Ximena García, Associate, IBFD. Follow our reporting on this via our daily Tax News Service (subscribers only).