ICC warns of double taxation risks in latest UN tax talks 

Government negotiators gathered mid-November for the third session of the United Nations Intergovernmental Negotiations Committee (INC) on the Framework Convention on International Tax Cooperation.

Ambition is high: to reshape global tax rules under UN auspices, with a particular eye on fairness and development. For business, however, the direction of travel raises familiar, and serious, questions about certainty, coherence and the risk of double taxation.

As the institutional representative of over 45 million companies worldwide, ICC used the Nairobi session to drive home its message. In written submissions to the negotiating workstreams, ICC advocated that without clear safeguards, the Convention could unintentionally undermine cross-border trade and investment rather than support sustainable development.

A convention with many moving parts

The first week in Nairobi focused on the draft commitments in articles to be included in the Convention itself (Workstream I). These articles ranged widely – from fair allocation of taxing rights, the treatment of high-net-worth individuals and sustainable development, to illicit financial flows, tax avoidance and evasion, harmful tax practices, and the prevention and resolution of tax disputes.

Double taxation: a severe and unacceptable risk for business

For the business community, the most sensitive provision is Article 4 on the ‘fair allocation of taxing rights’. As currently worded, Article 4 asserts broad taxing rights for jurisdictions but offers little guidance on how income should be allocated between them. From a business perspective, this creates a severe and unacceptable risk of double and even multiple taxation – an ambiguity could lead to a regulatory ‘free-for-all’ for jurisdictions.

ICC advocated that the Convention must explicitly state the prevention and relief of double taxation as a core non-negotiable objective. Any new source-based taxing rights must be paired with mandatory relief by the residence country, whether through exemptions, tax credits or equivalent measures.

Put more simply, if the Convention gives multiple countries the right to tax the very same profits, it must also require relief from double taxation, for instance, through recognition of a tax credit. Otherwise, if the same profits are taxed more than once, it will no longer be economically viable for companies to operate in more than one country. This ultimately leads to a decrease in investments and job creation, and distress in local supply chains and the overall local economy. Expanding taxing rights without equally strong relief mechanisms would, ICC says, amplify the problem rather than solve it.

Closely linked is the question of definitions.

ICC stressed the need to align concepts and definitions with existing international usage standards, such as those of the United Nations (UN) and the Organisation for Economic Co-operation and Development (OECD). Fragmented definitions increase compliance costs, strain tax administrations and raise the likelihood of disputes – outcomes that would disproportionately affect developing countries with more limited administrative capacity.

Dispute prevention and resolution must be strengthened to safeguard tax certainty.

The second week of negotiations turned to Workstream III, covering the latest concept note released by the UN Protocol II on dispute prevention and resolution. The concept note outlines an optional mechanism for the protocol to work, allowing countries to choose from a range of mechanisms, those suitable to their legal, political and institutional contexts. The concept note also included open questions on scope, mechanisms and capacity building.

While details remain uncertain, our response is unambiguous. Without credible dispute resolution, tax certainty, cross-border investment and sustainable economic growth are at risk.

To enhance tax certainty and reduce the volume of disputes, ICC proposed incorporating new prevention instruments into the Protocol:

• ‘MAP-Lite’ Framework: a streamlined process that allows tax authorities to cooperate quickly, review cases early and grant temporary tax relief while disagreements are being resolved – giving companies interim certainty and reducing the impact on business.  

• ‘Synthetic’ APAs: Encouraging the possibility of coordinating two unilateral Advance Pricing Arrangements (APAs) to create the certainty equivalent of a bilateral APA, yet with less complexity and delay.  

• Simple Safe Harbours: Introducing simple ‘safe harbours’ – pre-agreed tax rules – for low-risk services and routine distribution margins. 

Where disputes cannot be avoided, ICC strongly supports reinforcing the effectiveness of the Mutual Agreement Procedure (MAP) – a formal process that allows governments to resolve cross-border tax disputes between themselves – supported by a binding arbitration backstop. Experience from existing treaties suggests that the mere presence of binding arbitration encourages tax authorities to settle cases within MAP, reducing uncertainty for both governments and taxpayers.

One notable absence from Nairobi was progress on Workstream II, covering the taxation of cross-border services.

No new document was presented, although a fresh proposal is expected ahead of the next session in New York, starting on 2 February 2026.

For now, the UN tax process remains very much a work in progress. Whether it delivers a predictable, rules-based framework or a patchwork of competing claims will depend on choices made by negotiators.

ICC remains committed to constructive engagement with the INC and to delivering a predictable, rules-based system that benefits the global economy, while supporting developing countries in achieving needed revenues alongside investment confidence.