Tax News & Views International Weekly: The Next Round of Tax Talks at the U.N.

Nearly three years ago, countries at the United Nations voted to create their own “framework” for international tax matters–setting them on a course to collide with the Organization for Economic Cooperation and Development, still considered to be the global standard-setter in that area.

The process has created many proposals, but has yet to create a solid, agreed-upon policy. Delegates hope that upcoming committee meetings—including one beginning this week—could be when the planks are hammered together. But they’ll need to single out a focus, work out contradictions, and decide what to do about the 800-pound elephant no longer in the room: the United States.

The relationship between the OECD and the U.N. has always been tricky. In the past, the U.N. has sought to supplement the OECD’s guidance, not to replace it. While the OECD sets the rules for international tax negotiations, the U.N. would give poorer and developing countries some additional policies to try and help them win the game.

The new track initially sought to create a new forum for countries to set global tax policies, as a competitor or replacement to the OECD. This followed the OECD’s Two-Pillar project, resulting in the 15% global minimum tax, which most developing countries reluctantly supported but also criticized as offering them little in new benefits. Many delegates from those countries also claimed that, while they ostensibly had a seat at the table in the OECD discussions, their lack of expertise and resources put them at a disadvantage.

While those supporting the U.N. process began with grand plans of replacing the OECD, its vision has become more narrow as things have moved forward. Now participants are focused on drafting a new model treaty which will give countries with strong markets or copious resources–rather than those where large companies are headquartered–more tax revenue.

This could include revenue from taxes on online activities, which is where the committee is likeliest to come into conflict with the United States. U.S. officials have long opposed such taxation, under administrations of both parties. And it is a strong supporter of the OECD’s role. President Trump has vowed to enact further tariffs against countries that use digital services taxes or similar levies, claiming they single out U.S. tech companies. And the U.S. has pulled out of the U.N. negotiations altogether since February of 2025.

Which leads to one of the biggest questions—how much weight will new U.N. rules carry? While the OECD’s process gets criticized, their recommendations are still followed by most countries around the globe. Can the U.N. guidance achieve the same level of compliance, without the participation of the world’s biggest economy?

Noteworthy Items This Week

Canada to Drop Streaming Tax That Drew U.S. Ire – William Hoke, Tax Notes ($):

Michael Geist of the University of Ottawa said in a July 29 blog post that Morris's letter confirmed that the government intends to not only drop the proposed increase in streaming contributions but eliminate the 5 percent base contribution requirement as well. “The entire contribution framework the [Canadian Radio-television and Telecommunications Commission] has built since 2024 is therefore dead, with taxpayers covering the costs while the government develops a replacement,” he said.

Morris told the court that the government expects to publish information about its plans to replace the funding streams in the Canada Gazette “in the coming weeks.”

Trump’s Latest Tariffs Hit With New Lawsuit by 25 States – Erik Larson, Bloomberg Tax ($):

The lawsuits accuse Trump and US officials of unlawfully using Section 301 of the Trade Act of 1974 to replace earlier tariffs that were either struck down by the US Supreme Court or expired. The government’s stated reason for imposing the levies — concerns about goods produced with forced labor — is pretextual and invalid, they said.

“After losing at the Supreme Court, the administration is once again trying to illegally raise taxes on families and businesses with a new round of tariffs,” New York Attorney General Letitia James said in a statement. “No matter how the administration tries to justify it, the law and our Constitution are clear that the president does not have the power to impose sweeping tariffs on whatever countries he wants.”

EU, OECD Countries Demand Treaty Protections in U.N. Tax Talks – Sarah Paez, Tax Notes ($):

OECD countries — led by EU member states — are pushing for the objectives and principles of a U.N. tax convention to honor existing bilateral and multilateral tax agreements, pitting them against G77 nations.

The U.N. framework convention on international tax cooperation “should retain its high-level nature and provide sufficient legal certainty now and going forward regarding its relationship with EU and international law, bilateral tax treaties, and other relevant bilateral, regional, or multilateral agreements, and with applicable domestic legal frameworks and constitutional requirements,” delegate Matthew Coakley, tax policy adviser at the Irish Department of Finance, said on behalf of EU member states.

OECD Exploring Ways to Ensure MAP Access for Service Deductions – Stephanie Soong, Tax Notes ($):

The OECD is aware that some countries are using domestic law to enforce the benefits test for intercompany services, which can prevent MAP access when disallowed service deductions lead to double taxation, Manuel de los Santos, head of the division responsible for transfer pricing, tax treaties, and exchange of information at the OECD Centre for Tax Policy and Administration, said July 30. He spoke at the National Association for Business Economics’ annual transfer pricing symposium in Washington.

Early on, when delegates were considering the scope of the OECD’s discussion paper on proposed revisions to Chapter VII, the issue was theoretical, de los Santos said. However, it’s clear through stakeholder comments on the discussion paper that it is no longer theoretical, he added.

“That’s a problem that we can't fix in the guidelines because the guidelines don't talk about deductibility or domestic law,” de los Santos said. As a result, delegates are working on a parallel project in the context of article 25 of the OECD model tax convention, which deals with MAP, he added.

EU Carbon Tax Fallout Overestimated In India, Group Says – Eleanor Butler, Law360 Tax Authority ($):

The cost of the European Union's carbon levy for India's steel industry may be lower than previously expected, as researchers have failed to account for the diverse nature of the sector, a climate think tank reported Tuesday.

According to the report by Sandbag, calculations using national average emissions don't reflect the fact that some factories in India are less carbon-intensive than others, meaning the actual cost of abiding by the carbon border adjustment mechanism may be lower than estimates suggest.

"The picture changes markedly once the country's heterogeneity, likely industry response, and price effects in EU markets are taken into account," Sandbag said.

Public Domain Superhero of the Week

Every week, a new character from the Golden Age of Comics, who’s fallen out of use.

This week’s entry: Captain 3-D

Debut Year:1953

Debut Publication: Captain 3-D #1

Origin Story: The lone survivor of an ancient people, he was preserved in "2-D" in an antique book, but can emerge into our world.

Superpowers: Confusingly, his powers come from the *fourth* dimension, and include flight, strength and advanced technology.

(Note: this hero never made it to a second issue, as the 50's fad for 3-D glasses died down.)

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