UN Transcripts — https://transcripts.un.org/zh/asset/k1w/k1wp6tpfo2
Third Session of the Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation — 10 November 2025
Language: en
Automatically generated transcript — may contain errors. Not an official United Nations record.

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INC · Chair · Rami [0:06]:

First of all, just I would like everyone to know that our intention is to start on time today because it's the first day and maybe in Nairobi getting the badges and and finding the place. The conference room is still new for everyone, so we give a little bit more space of time, but our intention that we will start in the afternoon on time and the same every day. So thank you for understanding. Now moving to the formal part of our session, I declare open the third session of Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Corporation and the Goal its first preliminary meeting to order.

I now deliver an opening statement. Excellencies, distinguished delegates, dear colleagues, good morning and welcome to the third session of the Intergovernmental Negotiating Committee on the UN Framework Convention on International Tax Cooperation. It's a pleasure to see you all here in Nairobi and to witness once again your commitment to to advancing this historic process. Since our last session, the intersectional work streams have continued with strong participation and genuine inclusivity among Member States. The work streams continue to make steady, balanced, meaningful progress toward our shared goal.

The roadmap issued in March set out a plan to complete the work by our team 2027 deadline. This calls for technical drafting to start after the New York session in early February 2026. To stay on schedule, we have some specific tasks to be completed during these two weeks. First, under the Framework Convention, we will review the draft text of the commitments with a view to reaching a common understanding on as many elements as possible. This exercise will allow us to advance the negotiations on other elements of the Convention, paving the way for a more complete and coherent text in the coming months.

Second, there will be an update on the progress made during the intersectional period on Protocol 1 on the taxation of income from Cross Border Services, with a view to presenting potential options and approaches for the Committee's consideration during the fourth session in February 2026. Finally, the committee will then turn to Protocol 2, where the work stream has begun developing preliminary approaches. These are outlined in the concept Note. Our discussions during this session and written inputs received before 5 December will sequent work leading to the draft of the Protocol Excellences. As we begin our discussions, let us preserve the spirit of inclusivity partnership that defines this process.

Every Member state, regardless of size or capacity, has an equal voice and vital role to play. The engagement of stakeholders from international organizations, civil society, academia and the private sector is also essential in enriching our discussions. Their perspectives, grounded in practical experience and diverse expertise, help ensure that the instruments we are Shaping are not only technically sound, but also fair, inclusive and responsive to the real world challenges. I encourage all stakeholders to actively contribute to the dialogue throughout this session and to share their insights and as we advance in our collective task. Before we begin, I wish to express my appreciation to our colleagues for their leadership to.

For their leadership, to the Secretariat for their tireless support, and to all of you for your continued engagement. Together we are shaping the foundations of a new era in global tax corporation, one grounded in fairness, inclusivity and trusts. I now give the floor to Ms. Shari Spagel, Director of the Financing for Sustainable Development Office of the Department for Economic and Social Affairs. Thank you.


DESA · Director, FSDO · Shari Spagel [4:39]:

Thank you, Rami. Good morning. It is my profound honor to welcome you all to the third session of the Intergovernmental Committee on International Tax Cooperation here in Nairobi. Let me begin by expressing our deep appreciation to the Government of Kenya for their warm hospitality and excellent arrangements, and to our colleagues in the UN Office in Nairobi for their support in hosting this meeting. Just a couple of months ago, the General assembly adopted the Sevilla Commitment, through which Member States committed to continue to engage constructively in the negotiations on a United Nations Framework Convention on International Tax Cooperation and its Protocols and to encourage support for this process.

This session in Nairobi marks an important step in fulfilling that commitment. As Rami said. As the Chair said, since our August sessions in New York, important steps have been taken. The three work streams have met in intersessional discussions, often bringing together more than 100 representatives reflecting member States, deep commitment and constructive engagement. Based on these discussions, the CO Leads released two key documents which will serve as the basis for our work at this session.

The CO lead's Draft Framework Convention template and the CO Leads concept note and ideas for potential solutions for Protocol 2. In addition, a call for inputs was launched to invite written contributions from Member States and stakeholders, including civil society, academia, international organizations and the private sector, whose expertise and evidence will help to enrich the negotiations. Nairobi now represents a critical phase in our process. The discussion is moving from broad issues to specific proposals and solutions. As we turn to these discussions, we should bear in mind that we need to find solutions that are workable for all countries.

The question is not only what is the best solution in principle or in theory, but what can be realistically implemented by countries with different administrative capacities, including those countries that are often unable to implement agreed upon norms due to capacity capacity constraints. This is indeed one of the purposes of the UN process by bringing all countries together. The focus of the session, as the Chair noted, will be a Systematic review of the CO lead's documents. The program decided by the Bureau will focus in detail on Work Streams one and three. Work Stream two will be discussed in depth at the next session in February.

Not because it is less important, as you all know, but because the issue is one that the work stream felt required additional time. We, as the Secretariat, together with the Chair and CO leads, are here to listen and receive guidance from you. Your active engagement, whether you agree or disagree, is therefore essential as we move forward. Let's remember that this process will continue to evolve towards a full first draft in 2026 and finalization in 2027. For example, within Work Stream 1, the priority put forward by the work streams at this stage is to advance the drafting of the commitments based on the view that other elements will naturally follow from them and this will be discussed further in further detail later on.

This, of course, does not mean that these other issues, such as governance, are less important, only that sequencing is needed and that the work streams felt that future discussions will be strengthened by taking place on a clear and coherent foundation. Let me conclude by expressing my sincere appreciation to all of you for your continued engagement and constructive participation. I particularly want to welcome and thank all of the stakeholders who are joining us in Nairobi. The growing relevance of this session is reflected in the number of organizations accredited and seeking accreditation, which has nearly doubled compared to previous sessions. As you all know, we are meeting at a challenging time with funding and liquidity restrictions.

But despite really want to assure everyone, despite the current challenges, the United nations system stands ready to provide the necessary support to ensure that negotiations remain inclusive, transparent and balanced. I look forward to a productive session, one that remains focused on technical issues before us, that brings us closer to a fair, inclusive and effective framework for international tax cooperation. And finally, I also want to thank the Chair in particular for your leadership and guidance in bringing us to this point, the CO leads as well, for all the hard work they put in and certainly to the team in case I don't get another chance to thank everyone from DGAC and Vandes, as well as the team from DESA who are really, as you all know, working a tiny team, working on a shoestring and working really around the clock to support this work. So really thanks to all of them. And finally my last comment is we have reserved in the Trademark Hotel this evening from 6:30 to 8:30.

I would love to say we are inviting you all for drinks. We don't have the budget for that, but we have reserved the space to invite you all to come together to join us for a drink at 6:30-8:30 in the trademark cartel, I think at the rooftop bar. So please join us there and I pass the floor back to the Chair.


INC · Chair · Rami [9:47]:

I thank the Director. The Committee will resume its consideration of agenda item three entitled Organizational Matters. Members will recall that by its decision 2 taken on 3rd February 2025, the Committee adopted the program of work for its sessions on the understanding that it might be revised during the sessions as needed. In this connection, the program of work is contained in document a AC298 CRB20, which has been distributed to delegations via Edelegate and is available on the website. The Committee members will also recall that by its decision3 taken on 6th February 2025, the Committee decided to take decisions at the beginning of each of its sessions on any new applications by international organizations and on participation of representatives of other relevant non governmental organizations, civil society organizations and academic institutions, the private sector and other stakeholders.

In this connection, the Committee has before its before it draft decision a AC 298 CRB 19 entitled Participation of international Organization, Civil Society and other relevant stakeholders Delegations wishing to make.

We will now proceed to consider the draft decision CRP 19.

May I take it that the Committee wish to adopt draft decision CRB19?

I see. I hear no objection. It is so decided.

The Committee has thus concluded this stage of its consideration of agenda item three.

The meeting is now adjourned.

So now we're going to convert to our informal mood to start the discussions for Work stream one. Just you will allow us a few minutes just to make some changes to the podium and we will start immediately.

Okay, so now we're going to start our informal meeting in which we're going to discuss the work that had been done during the intercessional period on work stream one on the framework convention. So now I'm inviting Mr. Daniel from Ghana, the co lead of this work stream, to brief us upon the progress and give us presentation and walk us through the whole work that has been done. Mr. Daniel, the floor is yours.


Ghana · Co-Lead (Work Stream 1) · Daniel [15:19]:

Thank you, Chair and good morning distinguished delegates and colleagues and excellencies. It's great to have all of us back again to continue the work that we've been doing since August when we left New York. We've had a series of intersectional meetings. We issued and we came up with an issues note. And basically based on our discussions, we also were able to come out with some text which we will be discussing in the next few days.

The deliberations were quite Fruitful. And thank you to everyone who joined us for the intersectional sessions. It enriched the discussions and made it possible for us to come out with what we have currently that we are going to discuss. And I believe that we'll continue in that vein to do analysis of the statements and be able to come out with a document that will take forward the work that we are doing now.

Just to refresh our memories a bit, we agreed that we gave some priority in which we're going to look at the work we are doing and if we remember, Okay, So we gave this table which showed the order in which we'll take up all the issues. As has been mentioned previously, we said we'll address the commitments first, which we started with in the discussions, and we've been able with that to come out with some text for all the commitments which we are going to discuss. We have some provisions which will be drafting based on part, based on the commitments. We have the Conference of Parties, the Secretariat, definitions, data collection, analysis, exchange of information, review and verification, subsidiary bodies, capacity building and take actions which we'll be doing alongside this General just after the commitments. Now, what we've planned is that if we're able to go through all the commitments before that we have before Thursday, before the end of the period, then the extra period will use it to look at other provisions in the Framework itself and some projections that are not subject matter release, that is the amendments to the Convention, adoption of Protocols and other formal matters, and financial resources.

Also, what we'll be looking at alongside our concentration, as we've mentioned, is on the commitments. But before we go there, I think we can look at. We want to look at the Draft Framework as we presented in the intersectional meetings, so that we can give an outline of what we like. Next slide. Yep.

So the template that we've proposed for the Framework is. I'll have a preamble, the objectives, the principles, definitions, the commitments. We'll look at relationship of the Framework with other agreements and instruments, and domestic law. We'll look at financial resources, data collection and analysis, exchange of information for implementation of the Convention, review and verification, conference of the State Parties, Secretariat, subsidiary bodies, settlement of disputes arising under Convention, relationship, Protocols and then final provisions. So this is the template that we've proposed and maybe you can take a few minutes to see whether there are any comments on this one.

Before we go ahead, Do you have any comments or we can move on into the general discussions.

Okay, so we can take it that there are no comments on the templates generally.

Nigeria Please. Sorry.


Nigeria [20:45]:

Thank you Chair and morning colleagues. I think since my first intervention. Let me also appreciate the people and government of Kenya for hosting us and thanks Secretariat for what has been done hitherto. I'm just wondering and please you are free to educate me where we have subsidiary bodies.

I don't know whether are we looking at the governance structure? Is that what we mean or does it mean something completely different? And if it does then I believe there should be a topic or a line dealing with governance structure for the whole framework and which I think we should also include the subsidiary bodies drilling down from the top. But please, I'm just exhibiting my ignorance. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [22:10]:

It.

So the governance structures we've mentioned go there's the items here we'll discuss in depth later on. So I'm sure when we get to it we can look at all these things because conference of parties part of governance. The other items that are part of governance which sort of look at when we get there. So thank you for the maths.

China please.


China [23:20]:

Good morning colleagues. Thank you Chair and the Secretariat and the CO leads for the leadership to bring us together here. I would like to have a very general comment because looking at the template here it seems that we have. We will have Article 4 in general regarding the commitments. But what we have now in the.

I think the draft outcome of the October 2025 is that there will be Article 4 starting from Article 4 to Article 11 will be the subparagraph within the commitments. I'm okay with both presentation but I'm just kind of how to accommodate this kind of a general template to the current draft we have for Wall street one. Thank you. All right. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [24:17]:

We. Yes, we've put them in maybe we realize we just bulleted them. We haven't numbered them. So the bullet is just to give the outlines but we actually plan that it should be the way it is would the commitments will be. Each will have an article so that makes it easier to look at.

So that's the format that's been adopted. That's what we use in the main framework. The bullets is just to indicate the items that relate to commitments. Thank you.

I don't see any more hands. So I think we. I believe we can move on to the next session and start it.

Our plan for the rest of the week. I mentioned it but I just want to go over it. We will look at. We've looked at the comments on the general structure. We'll now look at the commitments as they are set out and we are looking at them we'll start in the order in which we presented them, four through to 10, and depending on how long we spend on each one.

If you looked at the work program, the program work, we actually didn't give fixed dates for any item because we wanted to be such that if you finish with an item, we should be able to go to the next one. So we should flow as we go along. As we mentioned, if we go, we will finish the articles before the end of the week. If there are any other additional commitments which we haven't been raised and Member States want to raise them, then it should be possible for Member States to raise those commitments for Azicas. And then we could also look at other provisions that are related to the commitments and then any other matters that Member States want to raise, we could.

Regarding the other Articles of the Framework Convention, the idea is that as we mentioned earlier, is to allow us to flow and make maximum use of the time we have here.

So that I think believe we can look at the first of the commitments. That's Article 4. Now, based on the discussions we had, Article 4 was a bit longer. We've come out with this text based on the discussions we had and our understanding of what Member States were requesting, we will now put it out for Member States to make their comments on it as to whether we've captured exactly what we wanted to capture. If there are any additions or deletions we need to make, then Member States can do that.

And for the Article 4 Fellowship Taxing rights said the State parties agree that every jurisdiction where a taxpayer conducts business activities, including jurisdictions where value is created, markets are located and revenues are generated, have a right to tax the income generated from such business activities. So this is and is open for members to comment. Please.


IAHWG · Co-Chair [28:44]:

India, please.


India [28:46]:

Thank you. Chair this Article 4. The conceptual framing of Article 4, we believe is to define a principle of fair allocation of taxing rights among jurisdictions where revenue is generated to ensure the link between the economic activity, value creation and the market participation. Participation.

The current global reform discourse has already well established that value creation extends beyond production to market and demand locations. Now, with respect to the terminology used here, the article uses the term business activity instead of the economic activity which was present in the earlier draft that was circulated in on, I think September 2025. So we would like to emphasize on the economic activity rather than the business activity being used. The economic activities, we believe, is a broader term which is also mentioned in the terms of reference as well as the earlier drafts like Z78 to the earlier text like 78 to 30 also mentions economic activity rather than business activities. And secondly, the economic activity also means a lot of thing compared to the business activities which means value creating participation of say users in a digital economy.

So these, these criteria also show that economic activity is a better term rather than business activity. Thank you.


Speaker 11 [30:35]:

Thank you India, Poland, please.


Poland [30:43]:

Thank you Chair.

Taking into account that this article is going to define the fair attribution of taxing rights. I think that this is too narrow. I mean this article because if literally we say that we have tax right to tax on based on the specific conditions, for me we are missing here the resident based taxation. So I think that we should cover all the, all the issues, all the conditions and references, not only the part of them which is okay, the most, let's say problematic, but it is only it's not the full picture of the taxing rights of the sovereign jurisdiction. So this is the first remark.

Second remark is that I think and this is maybe more question than the comment that we need here kind of the legal explanation what this article really mean from the legal point of view of the commitment of of the contracting State. The example of this is relationship of this article with the double tax treaties. What it means that if we have because every jurisdiction is sovereign to tax, yes, we can tax error if we want. Yes, if we can only execute this kind of tax. But here we but our sovereign right.

We limit this right in the double tax treaties generally to avoid double taxation, but also to share taxation rights. And the question is, what is the relationship of this article in the context of our double tax treaties when we limit our sovereign taxation rights. Whether this article says okay, don't care, we just can tax everything at source considering this specific conditions. So in my opinion I would prefer the reference that this fair attribution of taxing rights is okay as a rule until the contracting rights states cannot otherwise agree in the bilateral double tax treaty or general international tax treaty bilaterally or multilaterally. So I think it is worth to say something like this.

Thank you very much.


Ghana · Co-Lead (Work Stream 1) · Daniel [33:45]:

Okay, thank you Poland. What we would do is on the issue of the question, there actually is some part of the framework where we'll have that discussion on the relationships. I agree we need to look at it as a whole. But for now let's wait on that one and then when we get there we'll look at this part of it. The first part.

Thank you for the first part that you indicated the narrowness of scope. Will be grateful if maybe later if you have some additional wording. You can let us have that one?

Hungry, please.


Hungary [34:29]:

Thank you. Chair.


Speaker 15 [34:33]:

We prefer to keep the commitments more general and high level. But Here in Article 4, our main question is that it seems for us that the wording is quite vague and unclear as to what are the obligations this Article will impose on the parties of the Framework Convention. So we would like to ask for more clarity on that.


Ghana · Co-Lead (Work Stream 1) · Daniel [34:54]:

Thank you very much, Russia, please.


Russian Federation [35:05]:

Thank you so much. Chair. Good morning, distinguished colleagues.

I'll make my intervention in Russian.

So again, good morning to all distinguished colleagues. Thank you so much for affording me the floor.

I would like to associate myself with the comments made by the colleagues from India. Insofar as the draft of this article was changed, including change just before the meeting, it was substantially modified.

This is why my comet might not relate to the whole article as a whole, but to specific parts.

Specific parts related to the words conducts business activities, which would be better if we use the words economic activities, as India said. Now, in our view, it is very important to understand, to understand what parties are going to contract to conduct business activities or conduct economic activities. This form of business is not only based on criteria of physical presence, but also new forms of. Of criteria.

As we are discussing the term fair allocation of taxing rights. And to this extent we should not limit ourselves solely with criteria of physical presence. So this term is one that will have to be determined as we move forward. Thank you.


Speaker 18 [37:26]:

Thank you. Russia, Italy, please.


Italy [37:29]:

Oh, thank you. Good morning everybody. Thank you.

The government for Kenya for hosting us and the Secretary to give us the possibility to comment. Again, we had the possibility to write, to submit written comment. And in those written comments we also found that perhaps more work has to be done at technical level to make a common understanding on the terms that are used in this article.

Maybe we have to find a compromise. Maybe. For sure we have to find a good compromise solution which works for every country. So everyone should be dissatisfied to a certain extent and try really to allow a new balance between social and residents. So in this case there could be also a place for a resident taxation.

If we interpret the term value is created giving value to the place where some intangibles are developed, for instance, and not only to the market are located. It's not a surprise that for some countries it is important to maintain the physical presence for some kind of activities. While we fully agree that this concept doesn't fit for the digital way of providing services. So what we would like to say here is that we do not deny the value of the three factors used in this article. But perhaps much more work has to be done in the definition of those article where a compromise could be found because again, value is created.

We could talk for years saying that value is created where the users are or where the intangibles are, but it doesn't get the solution that we want. So it is clear where markets are located but revenues are generated could offer potential for abuse, for instance. And we were worried about that. So we do not oppose to find new nexus. Of course, this is why we are here.

But we have to work much more on definition than in order to find the good balance that we are here to find. That's our first comments on that. So we have to more in order to be ready to accept that concept as it is written now. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [40:08]:

Thank you Saudi Arabia, please.


Saudi Arabia [40:14]:

Thank you, Daniel. And thank you, Chair. Just my comments will be in a form of questions and I think the first one when we are saying that state parties agree that every jurisdiction should we talk about member jurisdictions or we should talk about any jurisdictions, whether they are a member to the convention or not. This is one point and I think the second point when we are saying where values created market are located and revenue are generated here are we referring to three conditions that must be met for a jurisdiction to get that to have that commitment or get that right to tax. Because as you know, it's not necessarily that all the three must be present in order to be able to tax.

I mean, if you look even to the concept of withholding tax and other way of taxing sometimes the revenue is not generated elsewhere. But the taxation you want to preserve it in your jurisdiction. So so is the intention here that we create three conditions for that right to arise? Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [41:28]:

Thank you. Sadia. On the last one, the clarity is or is maybe might have to replace the end with or they are supposed to be individual. At least from the discussions we had the idea was that any one of them could put so if the wedding is creating some problem, it's supposed to be an all from the discussions. It must be each any one of them could apply.

So not. Yeah, so not all three at once individually. Yeah, we'll look at that. Mexico, please.


Mexico [42:06]:

Thank you very much. Good morning to everybody. Everyone. With respect to the commitment Mexico agree with the principle established regarding the right to tax. However, it is important to clearly define the interaction between the Framework Convention and the double taxation conventions enforced since concerning business activities, the principle applicable under the DTC is that the source state my only exercise is taxing right.

If a permanent establishment is constituted thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [42:59]:

Thank you, Mesiko. I. As I mentioned earlier, we'll come to that part of it. Switzerland, please.


Switzerland [43:10]:

Good morning, colleagues. Thank you. Many thanks to you, Koleed, for the draft template, the Framework Convention and the work you put in it. It is, I think, very important to move our discussion forward and it helps a lot. I understand that this is mainly used work, but I hope and I assume that you also have had help from the Secretariat.

So our thanks go also to the Secretariat. Regarding the commitment for a fair allocation of taxing rights, our first remark concerns the legal nature of that provision. We understand that it is a high level commitment that should serve as a guideline for the attribution of tax taxing rights, but that it does not directly attribute taxing rights. Otherwise this could come in a conflict to existing double tax treaties where taxing rights are attributed. And because of that issue, our proposal would be not to use the language, have a right to tax, but rather to State, for example, that Member States should observe these principles when they attribute taxing rights, or also make sure that taxing rights are attributed in the defined way, as this was, for example, done in the Compromiso de Esevilla the the Severe Outcome document.

Our second remark concerns the criteria that are mentioned here for the attribution of taxing rights. For some we must make reservations, but if we maintain them all, we believe that these criteria they should be put in a relation with each other. And this is particularly important, for example, when you have the source of revenue in a state, but in that state there is no value created. A very simple and practical example. Let's assume that a country there is a business that mines metals, produces copper.

That product is sold to somebody in Switzerland, and wooden Switzerland, because the source of the revenue is in Switzerland, have the right to tax all of the profit of that producer of the copper, or would it only be the profit attributed to the sales function? So we would welcome to have more clarity in that respect. What is the order of the different criteria that we will use to describe fair allocation of taxing rights? Thank you very much. Thank you, Switzerland.


Ghana · Co-Lead (Work Stream 1) · Daniel [46:08]:

And on the second part, that is for all of us to determine the sequencing or how we put it together. So as we as the discussions go on, I'm sure we'll come out with how we want to have it done as Member States. Thank you, Republic of Korea, please.


Republic of Korea [46:38]:

Good morning everybody.

I would like to thank the Code Lead and the Secretariat and Chair for preparing for this COLI strive to Framework Convention template and for their continued efforts leading up to this session I also would like to express my appreciation to Kenya's government and the United nations office and Arby for hosting this creative meeting.

Regarding the commitment of fair allocation of taxing rights of Article 4, Korea agrees with the overall direction of ensuring taxing rights in the jurisdiction where income is generated or the market is located. However, as Italia has mentioned before, since the criteria enumerated in the co lease draft are all source based, Korea suggests adding elements related to residence taxation in order to maintain a fair balance in the allocation of taxing rights. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [47:46]:

Thank you. China, please.


China [47:52]:

Thank you Chair. I would like to thank the colleagues and also the colleagues who contributed to the discussions in the world Spring one and drafting of this this text.

My first comment will be. I think if we recalled in the September version there was a paragraph, I mean the second paragraph, the paragraph two regarding the condition commitments of avoiding unrelieved double taxation when formulating the possible new test rules then why now the paragraph two here is gone? It's missing during the discussions in the world stream one I think I'm really appreciated and impressed by the Secretariat saying that this Article 4 is formulated with with two principles. The first one is promoting an approach where all jurisdictions where business activity or economic business takes place share testing rights over related income. And the second one is to balance this new rules with principles of economic efficiency, testing neutrality, simplicity and effects on cross border trade and investment.

In our belief, I think it is very important this is a very balanced architecture of this article 4. So I think it is very necessary to have paragraph two here that we are committed to bring out something to address the needs of fair allocation of testing rights. And in the meantime we are also committed to take into consideration to avoid unrelieved or unintentional attended demetriusation. And this article will be imbalanced if we only have paragraph one. That's my first comment.

Secondly, regarding paragraph one here, it is different from what we had in the September version. In this current draft my read is that every judicial taxpayer conducts business activities including blah blah blah. It seems we're trying to define the business activity with value creation, market location and revenue generation. But very importantly, I think we are missing the business activity occurrence all economic activity occurrence in the previous version. I think this is very important.

Maybe this is the fundamental ones among I mean any possible sourcing, new sourcing routes, that's business activity occurrence. Now we are trying to define the business activity with recreation market location and revenue generation I don't think is increasing enough. Thank you Chair.


Ghana · Co-Lead (Work Stream 1) · Daniel [50:41]:

Thank You, Noi, please.


Norway [50:46]:

Thank you, Chair, and good morning to everyone. And let me start by thanking the Government of Kenya to host us here in Nairobi. It's a pleasure to be here. I'd also like to thank the Chair for his work on this committee and you as a co lead and the Secretariat, for all the efforts in facilitating the discussions in the work stream and also responding to the request for Member States to provide provide us with a first draft of provisions in the FC to support the discussions that we're having here. I will make some more general remarks that I probably should have made earlier, but nevertheless, I'll make them now.

So the Framework Convention will cover very complex issues and concepts. So it's good that we have text to discuss.

We view these discussions here as initial and we will have to revisit these discussions as we go forward. In particular, they need to be linked to the other parts of the Framework Convention, such as the relationship with other international agreements, reservations and institutional arrangements. And by that, I think the template that we were presented with this morning may also need to be revisited. Maybe some of the parts needs to be modified or it's a good idea probably to divide the Framework Convention into chapters that can guide the reading of the Framework Convention once it's finalized. We also need to link the discussion of the commitments to the discussion that we will have in the future on objectives and principles, because there are important interactions there.

We also believe, like others, that the commitments should stay high level to facilitate a broad agreement and also to ensure future proofing, because I think that's something we should keep in mind that we now use concepts that are very much present in the debate now. But we would like to have a Framework Convention that is also relevant in the future as new issues arise. We also think that the discussions going forward need to be held on the basis of thorough analysis. This is important to find common ground on the issues that we discuss here and also ensure the stability of the Framework Convention in the future. So we also think that it's important to support these discussions by providing the Member States with written explanations to the text, because a lot of thought has come into the drafts that have come up, but they are not always clear to us as we read the text.

So written explanations of the text in advance of sessions would, I think, facilitate the work of both Member States and stakeholders here. And it will also assist in having structured and well prepared discussions. And timelines are tight here, so the more we can facilitate discussions, it's important. Now, coming to to Article 4, we had understood the commitment here to be most relevant in situations where two states domestic law taxing rights overlap and those States are interested in allocating taxing rights between them.

It's not entirely clear to us how the text or the provision relates to the heading of fair allocation of taxing rights. I think it's been raised by other delegates that it's not this paragraph focus on source issues and it's more steered towards identifying factors upon which income should be taxed. So we would like some more guidance from you, co lead and the Secretariat on the background and the intended operation of this provision. Allocation doesn't seem to be very present in this text. We also note like other that it covers only business activities and perhaps a provision of fair allocation should be broader.

It is relevant to other types of income and in other situations. We also think that the concept of fairness needs to be further discussed here. In our view this relates to several aspects. We need to have a reasonable balance between the taxing rights of residents and and source states and that probably needs to be drawn out more clearly in the final draft. Fairness also relates to the effect that the rules have on taxpayers and also the overall economic effects it will have on trade and investment and the ability of the rule here to promote economic growth.

And by this we continue to believe that the discussions should be based on thorough analysis that is based on fundamental economic principles including tax neutrality and tax efficiency. So we look forward to the discussions coming over the coming days and next. United Kingdom please.


United Kingdom of Great Britain and Northern Ireland [56:49]:

Thank you Chair. The United Kingdom looks forward to discussions this week on the Framework Convention. We thank the Secretariat and the CO leads for their stewardship of the intercessional work and for circulating drafts in advance of this session. Having a text to comment on is very helpful for these discussions and many thanks to our host, Kenya. The UK supports effective and inclusive international tax cooperation and supports consideration of how how this Framework Convention can best further those aims and contribute to the urgent call from FFD to mobilise domestic resources.

The UK supports these aims for international tax cooperation and we are firm champions of the FFD consensus. We reiterate the importance high quality evidence based economic and legal analysis can have to inform negotiations and implementation, including on interactions with other agreements and impacts on global trade, with specific attention to distributional effects on low and middle income countries. In August we called for the Committee to agree a plan for such analysis by the end of 2025. We repeat that call today and would welcome time on the agenda during this session to discuss. The UK State stands ready to work with all Delegations to deliver a balanced, efficient and workable outcome that maximises participation.

There was an interesting discussion of fair allocation of taxing rights in the August session. We note that this article somewhat reflects paragraph 28e of the Compromiso de Sevilla, but now significantly diverges from it in certain important ways. We think the language of the Compromiso de Sevilla should form the basis of this article. That's because the Compromiso de Sevilla was agreed at the highest possible level, that is leader level and sole non signatory is not Participating in this process. Mirroring this new universally agreed text will help to maximise participation whilst delivering substantive high level commitments.

We therefore request that paragraph 1 be aligned with paragraph 28E of the Compromiso de Sevilla. That is, we will make sure that all companies, including multinationals, pay taxes to the governments of countries where economic activity occurs and value is created in accordance with national and international laws and policies. We recognise that there may need to be limited edits to reflect the nature of this Convention, for example replacing we with the State parties. But such changes ought to be administrative rather than changing the fundamental meaning of the text. In August there was also a helpful discussion of how any commitment of fair allocation of taxing rights should balance with principles of economic efficiency, neutrality and effects on cross border trade and investment.

We would request the addition to Article 4 of language to reflect those principles. Economic efficiency, tax certainty, neutrality and considering the effects on cross border trade and investment. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:00:07]:

Thank you. United Kingdom, Sierra Leone, please.


Sierra Leone [1:00:12]:

Thank you. Greetings everyone. Thank you to the Kenyan Government for hosting us here. It's been a pleasure. Thank you, Chair.

Thank you, Kholid for putting this draft in.

As Article 4 is very convoluted and requires broad based definitions of certain terms such as business activities. It is very experience that we simplify this article for the understanding of all. And in this slide we suggest that we delete certain wordings there then from us. I think we believe that putting or reframing this article in this manner that the States Parties agree that every jurisdiction where value is catered, markets are located and revenues are generated have a right to tax the income generated and we also need to add or attributable datu. I think the word business activities needs to be deleted for simplicity in understanding these particular articles and for the benefit of all.

Thank you. Sure.


Chair [1:01:40]:

Thank you. Sierra Leone, Denmark please.


Denmark [1:01:44]:

Thank you, Chair. Since this is the first time I'm taking the floor, first I want to appreciate everyone who has been helping us facilitate this global dialogue, providing Drafts before the session and rooms to be in and so on. There has been a lot of effort and since this is our first time also taking the floor, our remarks will be a bit of a general nature and we will not go into details.

But for now what we are puzzling with is what does it mean that we agree, what is the legal nature of this commitment? And we are very much looking forward to the discussions that will be under Article 12. And this whole question that has been raised by other delegations also of how this institution acts with our existing bilateral treaties that have been negotiated over many, many years. So this is something that we are very much interested in diving into. Our second point is that we are also echoing what have been said by other delegations that since this is a global dialogue, we do believe this draft is not.

Maybe taking into account every perspective of of allocation of taxing rights, mainly being the resident state perspective is from our point of view, difficult to find currently, except for maybe be interpreted in value creation or maybe business activities. But we would very much like it to be clearly, more clearly reflected as it is, as you say, a holistic dialogue that we are having and we are trying to catch a general and holistic approach. So that is our initial remarks. Thank you.


Chair [1:03:23]:

Thank you. Singapore, please.


Singapore [1:03:26]:

Thank you. Thank you to the Secretariat Chair and co lead for stewarding this work stream and also to the Government of Kenya for hosting us. With regard to this article, I first agree with India that we should use economic activities rather than business activities, as economic activities is more encompassing.

My second point is that if this is intended to set up factors for the allocation of taxing rights, then I agree with Poland and Korea that we are missing some concepts such as that of residence. And then I have two queries. The first is that there are three factors cited. Value creation, where markets are located and where revenues are generated. Because they are cited separately, the implication appears to be that there are exclusive.

So is it meant to imply that there would be situations where markets are located and revenues are generated, but there is no value created? So that's one question I have. If the concepts of markets and revenue generation are intended as proxies for value creation, then I would say that it's sufficient to just stick with the term where value is created. Then my last point is when we talk about having a right to tax the income, what is the context of that right? Is it in the context of an avoidance of double taxation agreement or is it in the context of domestic law?

So I think it's useful to make that Clear, such as using the words having a right to tax the income generated in the context of domestic laws or in the context of an applicable tax agreement. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:05:28]:

Thank you, Sweden, please.


Sweden [1:05:35]:

Thank you, Chair. And since I'm taking the floor for the first time, I also want to thank you so much to those who have arranged this meeting and made it possible. And also thanks to the Secretariat and the Sheriff for providing us with this draft so well in advance of the meeting. That has indeed been very helpful for us. A couple of maybe more also general comments that I think is important for the Framework Convention, but also maybe to other work we are doing.

And that is which I think also Norway and others have mentioned, going back to the economic analysis of what we are doing, which I think is crucial to our work and also in the context of the Framework Convention, specifically want to also link it to the principles that we are looking forward to discussing. Article 2. For me, it would have been more logical to start with the principles before moving down to the commitments, because I think that is what makes the basis for. Should make the basis for our discussions. But I mean, we are where we are.

So I think that in the Framework Convention, for us it's also very important that the commitments really are high level. So that is something that is also general comment. But it also goes for paragraph four, of course, and for the paragraph four, I also shared the views of many who have said that. I mean, it's difficult to sort of have this paragraph in what is a bit of a vacuum or in isolation, as I think Poland started with saying. I mean, should you view this in relation to your, I mean, domestic laws or.

I mean everybody can have the sovereign right to text in whatever way they want. Is that what we're doing? Is it relation to the tax treaties or is it in relation to other protocols? So I think when we are discussing this paragraph, I heard, Daniel, what you were saying, and I know that we are coming back to the relationships, but it's still very hard, I think, to discuss it in that context without knowing sort of the legal consequences or the legal basis for what we're doing. Then on the more specific criteria here, I think that it's a good starting point, but I also think that it more is focused on sort of the source based taxation rather than the resident.

And it has to be. It has to be balanced. Although I can also see that there might be some criteria that could be used for, even for resident states, for example, values created. But then again, I think at least Italy, so elegantly described, I think that we.

I don't think if we would ask within this room where is value created in different situation, I guess we would have very different opinions on that. So we really need to discuss these criteria and then I think also add them to make them more balanced. So. Yeah. So thank you again.

Thanks.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:09:15]:

Thank you. Can we have Kenya, please?


Kenya [1:09:20]:

Thank you. Chair. Let me start by welcoming all of you to Kenya. We really appreciate the General Assembly's recognition of our call last year to decentralize these meetings from New York to ensure that the meetings are going to be inclusive. So we are very grateful and we are honored to honor you and welcome.


Kenya · Africa Group [1:09:41]:

We hope you'll have an enjoyable stay in our country. I also want to thank the colleagues and the Secretariat for presenting this draft that, that we are currently discussing on Article 4. We. I'm making this statement on behalf of the Africa Group. We generally agree with the draft in the sense that it has a recognition of factors from both the supply side and the demand side, meaning the resident state and the source state.

And we especially appreciate the inclusion of market contributions which have traditionally been excluded in the current international tax rules. We believe that resident states do have an unfettered right to tax their own residents and value creation also includes factors from the resident state. And we have also included market contributions where we are talking about where markets are located, revenues are generated. But having said that, we believe that fair allocation of taxing rights should recognize a broad scope of factors to ensure that where those factors are met, then the rights of those countries can subject the resulting income to tax. Our concern with the current draft is that it has made the conduct of business activities as the overarching factor to the fair allocation of taxing rights.

And we believe that this should only be one of the factors that should be included. When we look at resolution 78 to 30, which this framework Convention has been guided to reflect by the terms of reference, it provides that taxes should be paid where economic activity occurs, value is created, and from where revenues are generated. And from this text we see that economic activity, not business activity, is only one of the factors. So our concern is that we should not use the conduct of economic activity as an overarching factor and that it should only be one of the factors. We also believe that the list of examples should include the words or attributable thereto.

And this is in line with with the object of this commitment, which is the fair allocation of taxing rights. So where income is attributable to a particular country, then this commitment should recognize the right of that country to tax that income. To that end, there's one more. When we're listing the examples of factors to be contributed to be observed in the fair allocation of taxing rates, we also propose deleting the word and and replacing that with or to avoid the possibility of interpreting that list as being the fact that all of them would have to be met for a country to be allocated taxing rights. So towards that end, we propose the following word.

We'd like to propose the following wording for fair allocation of taxing rights. The commitment on fair allocation of taxing rights. The States parties agree that every jurisdiction where value is created, markets are allocated or revenues are generated have a right to tax the income generated or attributable thereto. And we believe that that is going to make all the factors be recognized in the fair allocation of taxing rights and the fact that any of them can occur for a country to be allocated taxing rights. Thank you, Chair.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:13:38]:

Thank you, France.


France [1:13:44]:

Thank you. Thank you so much, Chair.

Now, before I start, and as this is the first time that we take the floor, we would like to thank all those who have enabled us to meet here again for this meeting. We'd also like to thank those who participated in the intercessional work which enabled us to move forward, we believe in a positive direction. Now, more Specifically, on Article 4, it seems to us that this is a commitment which is largely shared. No one can be against the principle of a fair allocation of taxing rights. It's on the definition that there might be conflicting views.

And so it's very important for us to fine tune this properly. It seems to us that it would be good not to be too restrictive, but also not too prescriptive to ensure that we can all understand and reach agreement regarding this commitment. And finally, as was said earlier, it is fundamental from our point of view to fully understand this commitment and its link to existing bilateral treaties which will reflect the concrete implementation of this fair location of taxing rights, this right to tax, and which in our view represents a form of equity and justice. Now, regarding the contents, it seems to us that things are moving in the right direction. This article could be read as a function, but as a function of what we mean by these terms, it's important to determine them.

This will be key. But right now, and I believe this was said by a number of speakers before I took the floor, we should clarify that residency taxation is also part and parcel of this fair allocation of taxing rights. Finally, we wanted to associate ourselves with a comment made by Colleagues from Norway. This article is very focused on enterprises, but it doesn't look at the issue of individuals. But it seems to us that a principle which is so general as fair allocation of taxing rights doesn't only concern enterprises, but also individuals, physical persons.

And so something less prescriptive might perhaps be broader and would include this very important aspect. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:16:24]:

Thank you, Japan, please.


Japan [1:16:30]:

Thank you, Chair. And thank you Secretaries for preparing to prepare this meeting. Since this is my first time taking the floor, my comments will be more General. Regarding Article 4. The expansion of taxing rights should should be limited to what is truly necessary to address the limitations of permanent establishment rules in the digitalized and globalized economy.

This current draft seems to suggest taxing rights based on various nexus criteria, which I believe is more than necessary and is unlikely to achieve broad consensus. The second point is that we also need provisions to eliminate resulting double taxation in this Article. We need to strike a balance under these considerations to maximize participation and ensure consensus among participating countries, which is essential for making the frame of convention truly inclusive and effective and contribute to international cooperation. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:17:37]:

Thank you, Jamaica, please.


Jamaica [1:17:43]:

Thank you very much, Chair. I also want to thank Kenya for hosting us. Heartiest congratulations to you co lead on getting the work so far, getting us to where we are so far. And of course also to the Secretary on a more personal note, just to thank all who represent their countries here for the outstanding contribution that they have been making to the restoration of Jamaica after the passage of the hurricane. So, Chair, in relation to Article 4, where we very much support the principle that is embodied in the article in that it seeks to address what has been a long standing imbalance in the allocation of taxing rights.

In that regard, Chair, I want to support the interventions that were made by some of the colleagues who have called for greater clarity in terms of the wording, we support the call for the recognition of individual taxpayers being covered in scope and we are wondering whether or not person may not be a better wording to be used. Also the fact that that the elements that are outlined there, which seeks to define what fair allocation mean that they should be or and not. And the other point that we want to make, Chair, is that whereas we are seeking to have very high level language in the Convention, we don't think that it should be so high level that there isn't sufficient specificity to provide guidance. Because what we are also trying to avoid is incoherence and incongruity in the Convention with other instruments that are out there which then could lead to UNINTENDED disputes. And then finally.

Chair, and perhaps we will get to this point. We notice that there will be an article that clarifies the relationship between the Framework Convention and the Protocols. But we are wondering whether or not there will also be an inclusion of an article that seeks to clarify the relationship between the Framework Convention as well as the other double taxation agreements that are out there. Thank you, Chair.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:20:54]:

Thank you. And I think this has cropped up several times as to whether what we have in the text relates to enterprises or to individuals. The word used there is taxpayer, and I think that is very general in nature. Taxpayer doesn't connote individuals or enterprises. It covers everybody.

I believe that is the way it is in most of our legislation. I don't know. So maybe we can still look at if there's another word we want to use. But at least as it stands now, taxpayer is general in nature. Thank you, the Kingdom of Netherlands, please.


Netherlands (Kingdom of the) [1:21:33]:

Thank you, Chair. And thank you, Kohlit, and of course, the Secretariat for all the work done. This really gives us a good basis to build on. I will also start with some general comments and then some comments on Article 4 along with others. We support that the commitments in the Framework Convention should be kept at a high level.

For us. It's key in this process to strive for broadly supported and effective outcomes given the wide range of views. We would therefore urge avoiding specific policy proposals in the Framework itself. And we think that we should leave these proposals for the Protocols. We would thereby ask to be extra diligent when we formulate commitments touching upon already on work already being done in the current draft.

This especially goes for the work of the Global Forum on Transparency and Exchange of Information and the Forum on Harmful Tax Practices. In our view, we need to carefully weigh where the Framework Convention could be of added value and could address issues currently unresolved. Then briefly on Article 4. Well, yeah, it has already been mentioned by many others. And Kohli, thank you for your first response to this.

We would nonetheless also like to share that we think that more clearly clarity on the interaction with other mechanisms and agreements would open up a deeper technical discussion on Article 4. As I understand it is foreseen to arrange this relation with other agreements elsewhere. Maybe, as you said in Article 12 of the Framework Convention, we would propose to start drafting this provision as soon as possible. We think clarity on this interaction could actually make the discussion on all the high level commitments easier. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:23:27]:

Okay, thank you. And we would like to take a very short break, about 10 minutes to allow us to stretch a bit. And then come back to continue. When we come back, we have Nigeria and quite a number of other countries written. Thank you.

Can I ask everyone just to go back to their places please? Back to your seats.

Please. Back to your seats. We are going to start immediately. We are starting immediately. Thank you everyone.

Okay, is nigeria? Nigeria is not okay. Then estonia please.

Is Estonia ready? Estonia is not here. Then Brazil, where's everyone?

No, Brazil is not here.

Zambia, Where's everyone?

Okay, Belgium. All Belgium is in the room. Belgium is also not in the room.

Ireland is Ireland please.


Ireland [1:43:19]:

Thank you very much, Chair, I am in the room. Just to begin, I'd like to thank the Secretariat and everybody for the work leading up to these meetings and the drafts prepared. They're much appreciated and it should allow us to have a very fruitful discussion over the next few days. We'd also like to thank colleagues for all the efforts in hosting us here in Nairobi.

I just have some preliminary comments on the text on Article 4. We support the comments of others that would like to see more balance in the article and the need to cover all references and. Sorry, we support others that we need to cover all references and recognize the role of residence based taxation and balance the article. In addition to the understandable focus on markets and other value creation mechanisms, it remains important to continue to look at physical presence and the investment and the development of intangible assets in those situations. We also share the observations made in relation to the legal nature of the obligations here and the need to avoid uncertainty and the attribution of a taxing right in every situation.

Having this discussion without addressing the role of DTA's like other have said is difficult but we welcome the confirmation previously given by the co Chair in relation to those aspects. And finally, we would support the UK and others in relation to their need to be in alignment as much as possible with the text we previously negotiated in Sevilla. Switching terms such as economic versus business activities creates uncertainty and we think alignment there would greatly assist discussions and bring clarity for all of us. Thank you very much, Chair.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:45:05]:

Okay, thank you.

Ireland, Nigeria please.


Nigeria [1:45:13]:

Thank you very much, Chair. And again thanks to colleagues for the wonderful contributions It. First of all, Nigeria alliance as safe with the position canvassed by Kenya on behalf of the African group. And in addition, Chair, permit me to respond to some of the issues that colleagues have raised as per the proposal in Article 4, particularly in support of the position canvassed by Kenya on behalf of the African group.

First of all, the position can pass by the African group is very neutral. Neutral because reference to A jurisdiction in my view, in my own understanding includes both ref residence and source jurisdictions. So it's not just about source or residence. 2 Reference to taxpayer also covers an individual or a non individual. And if we think taxpayer speaks more to corporate bodies, perhaps we can change it to a person.

And we all know that legally a person includes an individual and corporate persons. I particularly love the comments from my colleague from Norway talking about having broad based articles which will help to future proof. And it is in that light that I want to see submit Chair that references to business activity or economic activity should not come into that article and that the principal element for nexus in my view in this wise value creation exchange which is represented by markets and revenue high level enough to capture the intention for tax necess and if we stay there it is those three elements pertain to every thing that brings money or that brings a person into tax in energy reduction. This will be my comment then. I think there was a comment by one of our colleagues about double taxation.

I. I suppose that this article is about allocation of taxing right and therefore issue around relief for double taxation shouldn't come here at all. And I believe that could be addressed somewhere else down the line. And besides, we know that a resident state has unlimited right to tax its own residents and therefore under current rules relief for double taxation is a prerogative for or a duty of the resident state and therefore a manual understanding does not have a place in Article 4. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:49:02]:

Thank you.

Russian Federation, please.


Russian Federation [1:49:15]:

Thank you so much. Chair.

This is the second time I take the floor, so I'm going to associate myself with those colleagues who conveyed their gratitude to Kenya for the very warm welcome. And of course I'd like to thank the Secretariat for the very effective preparation of this meeting.

Now I'm going to touch mostly on the results which we were able to formulate, including on the basis of the comments made by colleagues regarding the interaction between this article and bilateral agreements and the avoidance of double taxation.

Now if we look at why we started this work. We started this work because all of us believe, at least the overwhelming majority of us believe that the fair allocation of taxing rights between various taxpayers and states should be more effective. And this is the reason why we started this work understanding that bilateral agreements, inter alia, don't always meet the situation which is arising in the economy. Regarding the fair allocation, this is why I believe that this convention, from the point of view of its interlinkages with other taxation treaties aimed mostly at avoiding double taxation, will of course not coincide with the Provisions contained in bilateral agreements. This Convention defines the overall principles.

This Convention creates the foundation for the future Protocol Protocol in which we are going to have to define those issues related to the interlinkages with bilateral agreements on double taxation and will have to contain mechanisms for these interrelationships. There might be various elements, for example, the fti, mli, as we discussed during the session we held in August in New York.

So we should here probably refer to the interaction between this Convention and the provisions of bilateral tax agreements. But it seems to us that this Convention, what it does is creates a basis, a foundation, so that this work and these issues can be discussed within the framework of a dictionary, different work stream, namely the Protocol on the Taxation of Services.

That is why I believe that these are the comments which we could make regarding those statements where my colleagues refer to this issue. We believe that this would be fair and just, but we would have to provide for such a mechanism in our future work. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:52:58]:

Thank you. We can have Estonia, please.


Estonia [1:53:06]:

Thank you. Chair and I would also like to thank everyone who made this event here possible, both in terms of physical presence and the materials prepared. I don't have much to to add to what has been said already, but I would like to also repeat the importance of the work on the definitions, which I think we should do, or at least start doing in parallel, because otherwise we may be talking about different things. And when I look at the text on the screen, then already in the first line, I think jurisdiction and tax, taxpayer, both terms would need to be defined in this Convention because jurisdiction usually refers to a power to do something. But here we are talking about a territory which is rather different from what we would.

You know, how we would use the word jurisdiction in general legal language. But yes, of course we have given it different meaning already in tax, but it would make sense to make it clear in this Convention. And also the issue of who is a taxpayer already came up. And I think here we may also want to make it clear in the definitions what we mean as to the allocation of taxing rights. I agree with the colleagues who have said said that unless we have a hierarchy between the criteria we have listed here, it's difficult to talk about the allocation and also about the fair allocation.

And we also believe that the avoidance of tuple taxation or eliminating the double taxation is an essential part of the fair allocation of taxing rights. And then there is another thought I just got from the current discussion and that relates to the right to tax. And in the world of tax treaties, we all follow the principle that the tax treaties don't give the states any additional right to tax that they don't already have in the domestic law. And that's also why the tax treaties can and be quite general in nature, because you would get most of the substance from the domestic provisions. And I think we should also make it clear here that the Framework Convention as such is not the basis for taxation.

Thank you,


Chair [1:55:46]:

thank you, Belgium, please.


Belgium [1:55:52]:

Thank you. And first of all, thank you to the CO lead for all his hard work and also to the Secretariat for work on the template of the Framework Convention. I also would like to thank Kenya for hosting us very warmly. And then I would like to align myself basically with what Estonia said just before me. I don't have much to add in that way.

And also what Trude in, particularly from Norway, said. I think it is important that we keep these commitments here high level and that we make it clear what is the relationship with the existing bilateral tax treaties. Thinking about the language used also at the FFD4 and for Sevilla statement, I would say the commitment, I would say adding in accordance with national and international laws and policies, adding that qualifier is also something that we should consider. But even further and also on working on the definitions because I do understand that you say Daniel taxpayer is broad enough, but the focus here is on the business activities and thinking about even in Belgium law, then it should be more clear. Clear that if you want to see it broad, then I think the individual taxpayer should be more precisely also included here.

Because if you say we have to see it broad, then we have to define it also. And then we are looking at a definition of taxpayer which should be clear to all of us. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [1:57:31]:

Right, thank you, Brazil, please.


Brazil [1:57:36]:

Thank you, Chair.

First of all, I'd like to thank the Government of Kenya, the contribution of all the states that have helped to prepare in previous online sessions this document and above all the staff for allowing us to have a previous document to work on.

My comments will be mostly on a general nature. I would like just to think where we came from. Basically how I read these provision is, as I understood from the previous rounds of discussions, this provision is just a basic broad provision that would allow us to discuss further and specify it further in future protocols. Basically, that's the idea that I want to mention. It is not per se, a binding or a specific provision that will create legal obligations and not specific implications.

Well, in the context of regime theory, regimes are a set of explicit and implicit combination or group of principles, norms, rules and procedures around which states or actors, expectations Converge. So and when we read this provision, we might think what it is. For me, it is something in between principle and a norm, that is it is of a broad nature. So I'm saying that because I see some countries or states comments being afraid that it will be self enforcing. And as I remember, the idea in the commitments is that they would just single out, they would point different topics on which we would work or have further protocols.

So we should not be extremely concerned that this provision would automatically revoke the Botex treaties or automatically influence the Baltax treaties. It's just a reminder for us that we will have several topics to work on in the future.

And if we read the provision in itself, it doesn't say much in my view. It's simply saying that countries can tax when there is a genuine link. It doesn't say how to tax, it doesn't say how the taxation in practice will be balanced, how much it will be taxed. It's just saying that we as a group recognize that countries can tax. Of course it will depend on the domestic provisions and also the interaction with double tax treaties.

But the goal here is to align our expectations in the sense that countries have a genuine expectation to tax when there is a market involved, when there is value creation, when there is a residential which is embedded in the concept of value creation or in the generation of revenue, and so on. So once again, it is not limiting or automatically having direct effect on other provisions. And it should be read in a combination legal text should be read as a whole. Should we refer to other principles mentioned in other parts or other objectives? Maybe we can do, we can add an additional paragraph.

I don't see the need to do it because as I just said, documents have to be read in their entirety. And there are different approaches how to interpret legal documents. We can use historical approaches, we can use approach, we can use purposive or teleological interpretation. We can use, we can look at the common meaning of words and so on. So should we refer to other principles, to other parts of the document?

Maybe we can if it helps to align our expectations. I don't see the need to it because it's an inherent implication of any legal document that should be read in its entirety. What calls my attention, however, is that the reference to fair allocation, it's just in the heading of the article, which is again just a broad commitment, not a specific rule how to apply. Again, it's just a broad commitment that we will discuss in the future. We are open probably through a conference of the Parties, we are open to create new topics, to identify new topics that would simply discuss how to tax in further protocols.

Protocols will be again discussed, they will have to be approved and in the end they will have to be approved under the local legal bodies, the congresses or parliaments in general.

So in short, in the reference to. So I do feel have the feeling that we are missing something in relation to the Fair. Maybe we can connect the Fair with the other principles or the other parts of the convention.

And it should be read as well in the sense that this convention in itself is the result of the interaction of human rights and or human rights regimes, documents, specifically international treaties on economic, cultural, social, human rights and taxation. But again it is mentioned, it will be mentioned in other parts of the convention. It will be mentioned in the objectives, it will be mentioned in the principles. But somewhat, somehow I still feel that we should bring back the word fair. Maybe in an additional paragraph the context of how fair should be read.

And finally, the last concrete comment is in relation to the wording on taxpayer in the ToR it was saying including multinational enterprises. And as we read there it tends to guide us to the conclusion that we are focusing only or mainly on business activities. Business, the expression business activity might change from country to country. I know that trees should not be read only taking into consideration the national perspectives. But.

But I think the tone is nudging. It's guiding us more in the direction that just we are talking more or only about business. So we might do minor tweaks in the language. If it's not accepted, it's okay as well. But in the Torah it was including multinational and as we read in that one, it's seems to focus more on business activities.

And it's not only about business. I mean individuals will also be included.

I think that was all. Sorry for the long intervention. Thank you.


Speaker 64 [2:05:38]:

Okay, thank you. We now have Zambia.


Zambia [2:05:46]:

Thank you and good morning. This is my first intervention on behalf of Zambia. Firstly, to pass our great thanks to Secretariat and the colleague for the draft before us and also for the intercession work. I think most of the things that we discussed have come through the text which is much appreciated. Also thank you to Kenya, the UN for hosting us here.

I think the cry that we have these meetings decided decentralized has now come to bear as regards our Comments on article 4. Firstly, we would like to align ourselves with a submission made by Kenya on behalf of the Africa Group and also the submission made by Nigeria. We align ourselves to those comments. And so quickly, just to re emphasize a few Things from the proposal that is being made, I think we see this issue of Member States saying there might be ambiguity in terms of business activities. I think the submission being made by us and also the Africa Group is that we delete business activities.

Also the issue that whether the article only covers multinationals, some states are saying taxpayer may need to be defined. I think the proposal that we are making is to have a deletion of taxpayer so that those issues of going to the definitions then fall off. Because the proposal is that we delete taxpayer, we delist business activities. Secondly, I think also the issue that we remove the Wade earned so that we have the weighed all in terms of the factors that lead to nexus being met. We don't need all three to be met any one of them.

Then when you look at the factors, I think the issue of value, where value is created, markets are located or revenues generated indirectly, all those cover economic activities. It's just a scope that is different. They cover business activity. It's just a scope that is different because I think when you are generating value, it will be for business purpose. It may be an economy, economic activity.

It may not cover all. When there's a market, obviously when there's exchange of value, there will be a business activity or economic activity. And also when there's actual revenue coming in, the sales have been made. So I think without really going into listing those, I think our proposal, I think it covers everything and more to that, we also include the issue of attributing the income there too. The other issue that has come up is the issue of relieving double taxation.

We don't believe that that really is an issue for Article 4 because it's not really an issue of taxing rights. I think the countries that tax on worldwide income residence basis, the fact that they are taxing on worldwide income and resident basis, they have the obligation to relieve double taxation. And I would expect that in the domestic registration where you don't have a bilateral treaty, countries with such laws will probably also provide for unilateral double taxation relief. So I think from us we don't think that we need to have another paragraph in the taxation of rights to have a paragraph dealing with relieving of double taxation. So with that said, just by tracing what my earlier colleagues submitted as Zambia will also submit.

Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [2:09:27]:

Thank you Bangladesh. Please.


Bangladesh [2:09:35]:

Respected chair and distinguished delegates from different countries. Firstly I would like to thank to code Kenyan government to be the host of this big event and give us all facilities. Thank you Kenya. I just share to convey My government view about the Article 4 of Draft Fair allocation of taxation rights as taxation right is our country is a constitutional right for why every year our Parliament revised our revenue laws and activities.

Now we are trying to establish a fair allocation of taxation rights. For a while in our country we have given emphasis for several taxpayers like autistic people like freedom fighters who conduct business but they have to pay lower debt tax.

We have already signed with 40 countries of the world double taxation evidence DTA and we express our quality cooperation to all countries. That's why taxpayer may get more benefit from that.

Already in our country we exercised fair allocation of taxation rights that is I already mentioned and our government is fully agreed with the Article 4 that is fair allocation of taxation rights. Thank you. Thank you very much.


Chair [2:12:14]:

Thank you. Islamic Republic of Iran please.


Iran (Islamic Republic of) [2:12:18]:

Thank you Chair for giving me the floor. Good afternoon colleagues. Thank you for your great endeavors, for your interventions.

And as this is my first floor, I want to avail myself this opportunity to express my appreciation to the Republic of Kenya for hosting these valued meetings. And also I wanted to say thanks to Secretariat for providing all the materials to have a very fruitful meetings. Actually, my floor includes two things generally I want to highlight the position of my country about the whole of this convention. The Islamic Republic of Iran as a developing countries support the general objectives of the UN Framework Convention on International Tax Cooperation aimed to moving toward global tax justice. And secondly regarding to the Article 4 and the terms of business activity, we believe that we need to preserve this term because this is very specialized terms and we used these terms in the other international treaties and conventions.

But for being more precise, to be clear and preventing about any ambiguity, I think we need to add paragraph to this article to define the scope of these terms. And because of that we think that economic activities is inherently ambiguous because of the broader domain of this world. And we wanted to suggest using business activities and another comments that we wanted to replace and with or on this paragraph. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [2:14:15]:

Thank you. We have United Arab Emirates.


United Arab Emirates [2:14:23]:

First of all, we want to say thank you to the Secretariat and the co Chair for all the work on this paper and also again, thank you to Kenya for hosting the Very happy to be here. We'll keep it brief so we align with many of the comments in terms of keeping the commitments high level with policy decisions to be in the protocols and also the need for economic analysis in terms of the wording on Article 4. We also agree with the comments that it'd be good to have an understanding of these terms and what is actually envisaged and that we're all aligned in terms of all have the same understanding of of what is included in here. We also think it would be good to understand the legal basis of these terms, how they will all interact with each other, and also how they will interact with other existing agreements. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [2:15:14]:

Thank you. Okay, we have Cote d', Ivoire, please.


Côte d’Ivoire [2:15:22]:

Thank you, Chair. I will be speaking French for a Balance.

This is the first time that I take the floor. I'd like to associate myself with all previous speakers and thank the Kenyan authorities as well as the people of Kenya for the warm welcome. And I'd like to thank the Secretariat for the outstanding quality of the work carried out during the intercessional period, which now enables us to engage in in depth discussion on the draft framework. Now, returning to Article 4, we heard the position of Kenya on behalf of the Africa Group. We also heard a statement by Nigeria, Zambia and a great many other countries.

And we would like to lend our support for these various positions of which we share entirely.

In addition to this, we have a few comments to make in our national capacity.

As far as the terms commercial activity or economic activity is concerned, I'm referring to the words in Article 4. Our position is that at this stage we should avoid introducing.

Terms which have not enjoyed consensus in terms of definition. These are terms which were used in various other instruments. But we are in a very specific framework here. And as long as States can't reach agreement regarding the contents and scope of certain terms, it would be risky to introduce them here at this stage of our work.

So we would like to delete these terms when it comes to Article 4 regarding the issue of the list of criteria to allocate taxing rights to the various jurisdictions and States. The issue of residence as a criteria for taxation. In our view, a state of residence has a right to tax its residents. It's a fundamental right, it's broad, it's recognized by all constitutions. So in our view, we shouldn't include the criterion of residence amongst the criteria for the fair allocation of taxation rights.

There's no contradiction here because a country where value is generated could easily be a country of residence. This is another criterion, and there's no need to introduce this criterion here, that of residence. It's not the right place to do so. And finally, I want to touch on the issue of double taxation.

Double taxation was raised here and we back the Secretariat's position following the exchanges during the intercessional period, paragraph 2, which referred to the obligation to eliminate undue double taxation. Was deleted because we believe that this is not the right place to do so. Article 4 doesn't deal with the elimination of double taxation.

Article 4 refers to the fair allocation of taxing rights.

Now there is a threat of double taxation of course but this is is a threat a risk which needs to be addressed elsewhere because otherwise we might lose our focus on what we want to deal with here in this article. Thank you.


Ghana · Co-Lead (Work Stream 1) · Daniel [2:19:28]:

Thank you Cote d' Ivoire.

It's almost time for break. I don't think we have enough time to take anybody now but when we come back from the break break we'll resume with Israel and then we'll continue with the list of countries. So with that want to break chair any comments?


INC · Chair · Rami [2:19:55]:

No. Thank you very much. Thank you Daniel for for this fruitful discussion. And now we are going to for the lunch break and we're going to reconvene again in the same room at 3pm thank you all.