Kumar & Byrnes' Comments With Recommended Text for UN Framework Agreement

Pramod Kumar Siva and William Byrnes of Texas A&M University School of Law’s International Tax Risk Management graduate program

Abstract

We appreciate this opportunity to provide article-by-article input and text recommendations for the Framework Convention Template. On behalf of the International Tax Risk Management program of Texas A&M University, we strongly support the inclusive, multilateral approach of the UN tax cooperation initiative and offer our comments in the spirit of constructive engagement from both business and academic viewpoints. Our comments and drafting suggestions are submitted in our personal capacity and do not represent an official statement or position of Texas A&M University or our respective employers.

For each article, we offer concrete drafting suggestions and legal reasoning to support a convention text that achieves tax fairness without double taxation, that is administratively workable, and that protects the rights and certainty of taxpayers and states alike. We urge explicit provisions confirming that the new framework will build on established norms to avoid fragmentation, double taxation, or uncertainty. We emphasize support for mutual-agreement-based dispute resolution, targeted transparency measures, and the preservation of the benefits of the existing tax treaty network.

We urge that each obligation in the Convention be designed for administrative practicality. Global tax rules must be implementable by tax authorities of varying capacity and manageable for taxpayers. Principles of simplicity, proportionality, and clarity should guide the text. New transparency or reporting requirements should follow a risk-based approach, targeting high-risk taxpayers or transactions to maximize effectiveness without unduly burdening ordinary businesses.

Article 1: Purpose and Objectives

We recommend that, in addition to the high-level goals drawn from the Terms of Reference (e.g., inclusive cooperation, sustainable development), the objectives article explicitly mention eliminating double taxation and preventing tax evasion as twin goals. Enshrining the avoidance of double taxation as a core objective will signal to businesses that the Convention seeks not only to raise tax cooperation standards but also to provide certainty that income will not be subject to unrelieved double taxation.

We further suggest referencing certainty and predictability for taxpayers as an objective, which complements the goal of effective and fair tax collection. For example, Article 1 could state that a key objective is: 

“to establish a fully inclusive and effective international tax cooperation system that ensures tax certainty and avoids double taxation, while mobilizing resources for sustainable development.”

Article 2: Principles

We support the inclusion of principles from the Terms of Reference, such as respect for fiscal sovereignty and the need for inclusive decision-making. We strongly endorse the principle that the Convention shall complement (not override) existing international tax standards and treaties. This should be explicitly stated. For instance: 

“The provisions of this Convention shall be compatible with established international tax norms, and shall complement and support existing bilateral tax treaties and multilateral initiatives.” 

This principle is crucial to avoid conflicts between the Convention and the extensive network of bilateral treaties on which business relies for tax certainty to make foreign investment decisions.

Another key principle to include is proportionality and simplicity – measures should achieve objectives without excessive complexity or burden. We also endorse a principle of tax neutrality (ensuring the Convention does not discriminate between cross-border and domestic commerce).

Finally, a principle of transparency with safeguards is essential: the Convention should promote transparency to combat evasion, while protecting taxpayer rights and confidentiality in line with existing treaties.

We are pleased that sustainable development considerations are among the principles, and we suggest recognizing the need for consensus-based decision-making in the Convention’s operation (to ensure broad buy-in) rather than simple majority voting on tax standards.

Article 3: Definitions

The Definitions article is noted as forthcoming. We encourage drafters to ensure all key terms are clearly defined in alignment with common international usage. For example, terms such as “tax treaty,” “tax avoidance,” “illicit financial flows,” and country categories (developing, least developed, low capacity) should follow UN or OECD definitions to avoid ambiguity.

To assist later when addressing compatibility, we suggest including a definition of “Tax Treaty” that clarifies the Convention’s relationship to bilateral treaties, for instance, defining it as 

"any bilateral or multilateral agreement for the avoidance of double taxation, including this Convention and its protocols". 

Likewise, a definition of “Competent Authority” would help identify which officials will engage in mutual agreement procedures under Article 9.

Taxpayers value consistency – differing definitions across instruments create compliance confusion that impacts tax risk management, and thus foreign investment. Therefore, the Convention’s definitions (for terms like “permanent establishment,” “dividends,” “royalties,” etc., if they appear) should mirror those in the UN Model Tax Convention or OECD Model, unless a deviation is intended. This will facilitate treaty alignment and ease implementation. If new concepts are introduced (e.g., “tax-related information” or “harmful tax practices”), those should be precisely defined to guide states’ commitments.

Article 4: Fair Allocation of Taxing Rights

We acknowledge the importance of market countries and source countries sharing in taxing cross-border income, especially in an era of digitalized business models. This principle should be implemented without resulting in double taxation or conflicting with existing treaty thresholds. As currently phrased, Article 4 could be read as endorsing overlapping tax claims by every jurisdiction with an economic connection to a business. We recommend clarifying in the text or commentary that Article 4 is a guiding principle that will be given effect through specific tax rules (e.g., bilateral treaties or protocols), rather than an open-ended license for multiple jurisdictions to tax the same income.

Crucially, if new nexus or profit allocation rules are to emerge (such as those for digital services or distribution profits), the Convention should ensure the residence jurisdiction provides complete double tax relief for any income taxed by a source/market. We suggest adding to Article 4 (or as a separate provision) language such as: 

“In exercising the above right to tax, States Parties shall avoid double taxation of the same income, including by granting appropriate relief pursuant to their domestic law or tax treaties.”

The Convention should align with the allocation of taxing rights under active discussion in parallel global initiatives. Article 4’s concept could be complemented with structured optionality – for example, a country could commit to a standardized nexus and profit allocation rule (perhaps via a future protocol) to exercise these taxing rights, while others may reserve. Fairness without imposing a one-size-fits-all rule immediately.

Article 5: High-Net-Worth Individuals

For paragraph 1, we suggest referencing the ultimate beneficial ownership of assets as a key category for exchange, treating shell companies or trusts as transparent. This dovetails with global efforts to establish beneficial ownership registers, which we view as positive, provided they are implemented in a risk-targeted manner. We encourage clarity by referencing frameworks, such as the Common Reporting Standard (CRS), and expanding their application into areas such as luxury asset registries, cryptocurrency holdings, etc., as technology permits. 

Paragraph 2 provides that States will share information on schemes and techniques used by HNWIs to avoid taxes, and will require taxpayers and advisors to disclose such schemes. This is an excellent step toward what the OECD calls “mandatory disclosure” regimes for tax schemes, and we encourage its inclusion. To strengthen paragraph 2, we recommend incorporating language that disclosures and exchanges be prompt and in a standardized format, to ensure information is actionable for all parties.

Paragraph 3 calls for coordinated approaches to ensure effective taxation of HNWIs. We interpret this to mean possibly coordinating policies like net wealth taxes, exit taxes, or residency rules. We support these measures to close tax gaps and improve overall fairness, building trust in international tax cooperation. Coordinated measures should be designed to avoid double taxation for individuals (i.e., treaties or mutual agreements should determine which country may exercise resident-based taxation). We also suggest integrating HNWI-focused efforts with the illicit flows and transparency measures in Article 7 for example, by using risk-based transparency focusing on high-risk individuals or advisors.

Article 6: Mutual Administrative Assistance in Tax Matters

Article 6 should avoid duplication with the CRS and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) by encouraging all parties to join both or adhere to these standards, and, incrementally and compatibly, expand exchanges to additional types of information. Critically, mutual assistance must be accompanied by guarantees of confidentiality and data protection. We recommend Article 6 state that any information exchanged shall be used only for tax purposes and kept confidential, as the supplying state would apply domestically, subject to penalties for unauthorized disclosures, mirroring Article 26 of the UN Model.

We suggest including in Article 6, or a related article, that more advanced administrations will provide technical assistance and training to developing country administrations to effectively implement the exchange of information and other forms of cooperation. This could be cross-referenced in the capacity-building provisions (Article 10).

Key points we support in Article 6 include: broad scope of information exchange (covering all taxes and all taxpayers, not just specific income categories), speed and efficiency in responding to requests, and spontaneous exchange of information about tax schemes or abuses relevant to another Party. We also support provisions for joint audits or examinations, which allow two or more tax administrations to coordinate their audit of a multinational – this can prevent inconsistent outcomes and disputes. Notably, the Workstream III concept note highlights joint audits as an option, and we agree they are a valuable dispute-prevention tool if both the taxpayer and the authorities consent. Note that we address our specific comments and suggested language for Workstream 3 in a separate comment letter.

Article 7: Illicit Financial Flows (IFFs), Tax Avoidance and Evasion

We recommend Article 7 encourages adoption of risk-based beneficial ownership transparency measures for high-risk sectors (e.g., public procurement, extractive industries, real estate transactions), attracting extra scrutiny while avoiding burdens on low-risk activity.

We applaud inclusion (e.g., Article 7(b)) to share information on structures and techniques used by taxpayers to avoid or evade taxes, complementing Article 5’s similar clauses. Such cooperation could be facilitated by a secure UN-hosted platform where tax authorities can exchange anonymized profiles of aggressive tax schemes and their hallmarks. Anti-avoidance measures should be well-defined and focused on abusive arrangements. We encourage the use of agreed standards, such as a Principal Purpose Test or Limitation of Benefits clauses.

To bolster Article 7, we suggest adding a clause on capacity-building in enforcement – e.g., developed countries pledging to assist developing countries in investigating and prosecuting tax crimes, possibly through secondments or joint investigative teams.

Article 8: Harmful Tax Practices

We recommend including text about transparency in incentives (e.g., publishing information about tax holidays and rulings granted) and about exchanging that information. We emphasize confidentiality and appropriate use of shared data: CBCR contains sensitive business information and should remain a tool for tax authorities’ risk assessment, not a public document. A coordinated approach under the Convention would assist CBCR data analysis, especially for developing countries that may not currently receive it, while maintaining safeguards.

We recommend supporting the emerging Pillar Two global standard rather than creating a new regime by encouraging countries to adopt a minimum tax or an Undertaxed Payments Rule.

Article 9: Sustainable Development

We wholeheartedly support anchoring the tax convention within the broader context of the Sustainable Development Goals (SDGs) and the Addis Ababa Action Agenda’s call to strengthen domestic resource mobilization. Tax policy is a tool for development, and this Convention should explicitly recognize that improving tax cooperation should ultimately help countries, especially developing countries, to mobilize revenues for sustainable development. We recommend Article 9 affirm that States will cooperate to use the fruits of improved tax collection for development priorities. Although this is more of a political statement than a binding rule, it is a worthwhile signal.

Article 10: Dispute Prevention and Resolution

We robustly addressed Article 10 in our Workstream III companion comments.

Articles 11: Capacity Building and Technical Assistance

Regarding capacity building, we believe the Convention should include concrete commitments from developed countries and international organizations to support developing countries in tax administration and policy design. Parties could agree to establish a Tax Cooperation Capacity Building Fund or program under the Convention’s framework, where resources (financial or technical assistance) are provided to developing country tax administrations. We echo the academic view that capacity-building must be done without undermining taxpayer certainty or deviating from globally agreed standards. That is, assistance should focus on training and systems that enable developing countries to implement rules such as transfer pricing and the exchange of information in a manner consistent with international norms, rather than encouraging unique local approaches that fragment the system.

Additionally, technology transfer could be part of capacity building, e.g., developed states agreeing to share or fund modern e-audit tools and digital infrastructure for tax data exchange. The Convention’s institutional setup (Conference of Parties and Secretariat) could oversee such initiatives. 

           Other Articles in Development

Article 12 Relationship with other Agreements: Our Article 12 text recommendation:

“Except as otherwise provided in this Convention or agreed by the parties, nothing in this Convention shall affect the rights and obligations of a Party under any existing international agreement in the field of taxation.” 

This can be nuanced (for instance, if the Convention were to function like an MLI modifying treaties, that would be an exception by agreement). Clarity here will prevent legal uncertainty for taxpayers who otherwise might be unsure which treaty applies.

Conference of the Parties (COP): We recommend that the Convention establish a COP with decision-making procedures that emphasize consensus for essential matters. Tax norms strongly affect national sovereignty; as noted earlier, a consensus-based approach will ensure stability and broad acceptance. The COP’s mandate could include reviewing implementation, adopting protocols or annexes, and providing a forum for ongoing dialogue. As part of that dialogue, we encourage institutionalized stakeholder engagement, for example, observer status for business and academia (building on the UN’s inclusion of stakeholders in the INC process).

Secretariat: A strong Secretariat will be vital to support implementation (e.g., facilitating information exchange networks, managing databases, convening dispute panels, and establishing a pool of experts, as addressed in our cooperation comments on Workstream III). We suggest the Secretariat also coordinate capacity-building programs among parties. It might liaise with bodies like the UN Tax Committee, OECD, IMF and others to avoid duplication and leverage expertise. Stable funding for the Secretariat is critical; parties might contribute according to U.N. scale or another formula.

Funding and Financial Support: Developing countries may need financial support to participate fully (e.g., to attend meetings, upgrade IT systems for information exchange). The Convention could include provisions for a voluntary trust fund or mandatory contributions earmarked for capacity building.

Optional Protocols: In addition to the two early protocols (on Services and on Dispute Resolution), the Convention may envisage additional protocols (for example, on implementing a minimum tax or other future topics). The institutional provisions should allow a flexible protocol system in which a subset of Parties can move forward on specific issues without derailing others, again a form of structured optionality. However, all these instruments must remain coherent under the Convention’s umbrella.