CFE’s Tax Top 5 – 27 October 2025

BRUSSELS | 27 OCTOBER 2025

Commission Work Programme 2026: Key Taxation Measures & Simplification Drive

The European Commission published its 2026 Work Programme last week, setting out its legislative and strategic agenda for the year ahead, with a clear focus on simplification, competitiveness and enforcement. Among the initiatives proposed are several new and pending measures in the area of taxation, along with a number of withdrawals and simplification efforts that will shape EU tax policy under the current mandate.

Two new tax-related legislative proposals are listed for 2026. The first is an Omnibus on Taxation (anticipated for Q2 2026), a simplification-focused initiative aimed at streamlining various EU tax laws. The second is the 28th Regime for Innovative Companies (anticipated for Q1 2026), which may include harmonised rules or optional frameworks that could encompass tax elements for start-ups and scale-ups.

The Commission also plans to withdraw several pending tax proposals, including the Financial Transaction Tax, the Unshell Directive, the DEBRA proposal (debt-equity bias reduction), and the Transfer Pricing Directive, signalling a shift toward prioritising reforms such as BEFIT and the Head Office Tax System for SMEs.

Tax-related proposals which remain listed in the Work Programme include:

  • Proposal for a Directive on Business in Europe: Framework for Income Taxation (BEFIT)
  • Proposal for a Head Office Tax system for SMEs
  • Multiple VAT reform proposals related to distance sales, import VAT and implementing powers under Directive 2006/112/EC
  • Recast of the Energy Taxation Directive
  • Directives on a Digital Services Tax and Significant Digital Presence
  • Proposals relating to the EU’s own resources system

In parallel, the Commission released the first annual Overview Report on Simplification, Implementation and Enforcement. The report highlights the use of new tools such as implementation dialogues and reality checks, and reaffirms the strategic use of omnibus packages, including the taxation omnibus, to reduce burdens across Member States. Simplification is expected to remain a central pillar of future tax initiatives.

UN Framework Committee Seeks Feedback on Draft International Global Tax Cooperation Framework Protocols

The Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation will hold its third session from 10 to 19 November 2025 in Nairobi, Kenya. This intergovernmental process, mandated by UN General Assembly resolution 78/230, is tasked with developing a multilateral instrument on tax cooperation under UN auspices. The Nairobi meeting will centre on advancing negotiations around two key workstreams: the draft Framework Convention itself and a second protocol focused on the prevention and resolution of tax disputes.

Workstream I will focus on the Draft Framework Convention Template, which was released on 24 October 2025. The draft contains provisions on a fair allocation of taxing rights, high-net-worth individual taxation, mutual administrative assistance, harmful tax practices, and sustainable development objectives. Notably, Article 4 affirms that all jurisdictions where value is created or markets exist should have a right to tax resulting income. Articles 5 to 10 outline commitments on high-net-worth individuals, information exchange, illicit flows, harmful tax incentives, and dispute prevention. Many sections remain under development, including those on capacity building, financial resources, and institutional arrangements such as the Conference of the Parties and the Convention’s Secretariat.

Parallel discussions under Workstream III will focus on the Co-Leads’ Concept Note on Ideas for Potential Solutions, also released on 24 October 2025. This document proposes an approach to dispute prevention and resolution where States could opt in to various mechanisms, such as mutual agreement procedures (MAP), mediation, arbitration, joint audits, and administrative cooperation tools. The note also raises the possibility of applying mechanisms in “no-treaty” situations and suggests that the UN might play a hosting or supporting role. It addresses access to information and the potential development of a UN-managed transfer pricing database, especially to assist developing countries with limited access to comparables.

A call for written submissions on both draft texts is now open. Member States may submit up to 3,000 words per document, and stakeholders up to 2,000 words, in each case accompanied by a 250-word abstract. Submissions must be sent via email to inc-tax@un.org by Friday, 5 December 2025, at 11:59 PM New York time.

The detailed Programme of Work and session documents are available on the Session webpage. The outcomes of the Nairobi session will be crucial in shaping the first draft of a UN-led multilateral tax convention, anticipated for submission to the General Assembly in 2027.

OECD Publishes Third Batch of Updated Transfer Pricing Country Profiles

On 23 October 2025, the OECD released the third batch of updated transfer pricing country profiles, covering 25 jurisdictions. This update includes the first-time inclusion of Cabo Verde, Guatemala, Thailand, United Arab Emirates, and Zambia, bringing the total number of profiles published in 2025 to 83. A final fourth batch is expected in December.

The profiles reflect countries’ domestic legislation and practice on key transfer pricing issues, including application of the arm’s length principle, transfer pricing methods, comparability analysis, treatment of intangibles and intra-group services, documentation requirements, and dispute resolution mechanisms. The 2025 updates also include new sections addressing the transfer pricing treatment of hard-to-value intangibles and a simplified and streamlined approach for baseline marketing and distribution activities, reflecting developments under Amount B of the OECD’s Two-Pillar Solution to address the tax challenges arising from digitalisation.

Country profiles are developed from jurisdictions’ responses to an OECD transfer pricing questionnaire, ensuring consistency and accuracy. The OECD has maintained the profiles since 2009, with major updates following the BEPS Actions 8–10 and 13 in 2017, and expanded coverage in 2021 to include financial transactions and permanent establishments.

European Council Conclusions Target Tax & Compliance Burdens in Twin Transition Push 

On 23 October, the European Council adopted conclusions on enhancing EU competitiveness through the green and digital transitions. The conclusions place strong emphasis on reducing regulatory, administrative and reporting burdens for businesses, especially in areas affecting tax and customs. The Council highlights the urgency of adopting simplification packages, including those on sustainability reporting, due diligence and SME regulation, which are expected to ease compliance costs and streamline fiscal obligations.

The Council also calls for further measures in digital, financial services and chemicals regulation, all of which carry tax-related compliance implications. It underlines the need for a “simplicity by design” approach to future legislation and urges the Commission to consider withdrawing proposals that add unnecessary burdens. The Commission is invited to explore an optional 28th company law regime, potentially creating a harmonised framework for cross-border business operations, including tax treatment.

These measures reflect a broader commitment to regulatory self-restraint and legal clarity, with the aim of ensuring that tax, customs and other compliance regimes support the EU’s economic resilience and business environment.

Outcomes: UN Committee of Tax Experts 31st Session Meeting 

The United Nations Committee of Experts on International Cooperation in Tax Matters held its thirty-first session in Geneva from 21 to 24 October 2025, setting in motion an ambitious programme of work for the 2025–2029 term. The Committee agreed to establish a suite of new subcommittees, focusing on updates to the UN Model Tax Convention, revisions to the UN Manual for bilateral tax treaty negotiations, taxation of the extractive industries, digital economy, transfer pricing, artificial intelligence in tax administration, indirect taxes, and dispute prevention and resolution.

Initial discussions centred on the United Nations Model Tax Convention, guided by Conference Room Paper (CRP) 22. The Committee agreed to establish a subcommittee to review and develop provisions in light of current policy challenges, including nexus rules, non-physical business models, and difficult-to-negotiate provisions. Attention was also given to coherence with sustainable development goals. Although some members raised questions around coordination across subcommittees, there was consensus on the proposed mandate.

Work on updating the United Nations Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries (CRP.23) was also prioritised. Two update pathways were considered: an “essential update” (Option A) aligning the Manual with the 2025 Model, and a broader “comprehensive update” (Option B) including expanded practical guidance and tools for developing countries. The Committee agreed to proceed with an update and establish a subcommittee, with flexibility on the scope of work and a request for proposals on renaming the Manual.

The taxation of extractive industries was also discussed (CRP.27), with members debating how to address taxation of critical minerals and energy transition. Following deliberation, the Committee opted to create a dedicated subcommittee, with a mandate to ensure alignment with other related workstreams.

Further subcommittees were created to examine the taxation of the digitalised and globalised economy (CRP.24) and transfer pricing (CRP.29). The latter will update the 2021 Transfer Pricing Manual and develop guidance on profit attribution to permanent establishments and high-risk sectors such as telecommunications and tourism. The Committee also tasked this subcommittee with drafting unilateral APA guidance, strengthening developing countries’ dispute prevention capacity.

The Committee approved new workstreams on tax administration and artificial intelligence (CRP.25), indirect taxes (CRP.28), and dispute avoidance and resolution (CRP.26). On AI, members agreed to a phased approach beginning with a practical guide for tax administrations. The indirect tax workstream will address priority areas such as cross-border disputes, construction, and the digital economy, with outputs feeding into a UN VAT/GST Handbook series. Dispute resolution discussions led to agreement on developing practical APA guidance and broader mechanisms, pending further engagement from Committee members.

Further details and background materials are available via the official UN session page.

The selection of the remitted material has been prepared by:
Dr. Aleksandar Ivanovski & Brodie McIntosh