Tax Treaty Override Issue Has Nations Squaring Off in UN Talks

Countries with large tax treaty networks said Wednesday that a prospective United Nations tax agreement on cross-border services would see far less uptake if it required an automatic override of existing treaties.

Germany, France, Canada, and others told the committee drafting the UN deal that they want power over the process of aligning the deal with their existing tax treaties through bilateral negotiations.

Tax treaties are political deals that involve trade-offs, and giving the new UN cross-border services agreement, or protocol, an automatic override would upset the balance in those treaties, several delegates said.

“If we would only choose the option that this protocol supersedes all bilateral treaties that are incompatible, that is going to dramatically reduce the number of countries who can sign on to this protocol,” Gian Sandri, a Swiss delegate, said.

The UN treaty’s negotiating committee is meeting in New York until Feb. 13 to hammer out details of what the deal would cover and how it would work. The talks are spearheaded by developing countries, which say work led by rich economies at the Organization for Economic Cooperation and Development has ignored their concerns and interests in drawing up tax rules.

Treaty negotiators began discussions in early 2025 under a mandate from the UN General Assembly. They aim to wrap up a deal by the end of 2027.

The talks are split into three tracks. The first is an overarching document, called the framework convention, that charts the potential scope of the agreement and spells out its operational details. A second track deals with the protocol on taxation of cross-border services in a digitalized and globalized economy. A third track is on a protocol for prevention and resolution of tax disputes.

The delegates began discussions Wednesday on how to implement the cross-border services protocol, which is intended to remedy a loss in tax revenue developing nations have seen because of more cross-border services being provided digitally.

Liselott Kana, a delegate from Chile and co-lead of the protocol’s negotiations, said delegates had two broad options: stay silent on implementation and leave it to countries to implement the protocol, or create a mechanism to put the protocol into action. The latter could involve an approach similar to the OECD’s multilateral instrument—a mechanism the Paris-based body uses to enforce tax avoidance rules.

Africa’s 54-country bloc, a key driver of the negotiations, said it expects the protocol to include a method for amending existing tax treaties to align with the UN deal. The committee could mimic a fast-track amending tool the UN already has in place for countries using its model double tax convention, a Nigerian delegate speaking on behalf of African countries said.

Several nations suggested a blended approach that would involve core requirements for a country’s tax treaties, as well as optional rules. But the repeated calls for flexibility triggered a rebuke from Ghana, one of the main players in the African group.

“Does it mean that the document will be diluted and doesn’t say anything in order to get people to sign up on it?” Daniel Nuer, a Ghanaian delegate, asked the committee.