CFE Global Tax Top 5 Issue 9 2018

BRUSSELS | 17 NOVEMBER 2025

 

UN Framework Convention Negotiations on International Tax Cooperation Progress Into Second Week in Nairobi

The third session of the UN Intergovernmental Committee to draft a Framework Convention on International Tax Cooperation is continuing this week in Nairobi, Kenya. Running from 10 to 19 November 2025, the session forms part of the UN General Assembly mandate to negotiate a multilateral framework for international tax cooperation.

During the first week, Member States focused primarily on Workstream I on the draft Framework Convention, engaging in article-by-article discussions of the core commitments proposed in the draft text dated 24 October 2025. The session opened with deliberations on article 4, which addresses the fair allocation of taxing rights. The draft affirms that jurisdictions where business activity occurs—including where value is created, markets are located, or revenue is generated—should have a right to tax such income. Member States debated how this provision would interact with existing bilateral treaties and raised concerns regarding definitional clarity, tax nexus rules, and balancing taxing rights with taxpayer certainty.

Discussions on article 5, concerning high-net-worth individuals, highlighted proposals to improve transparency and deter avoidance. Delegates considered the expansion of exchange of information frameworks to cover new asset classes and greater disclosure of tax structures by intermediaries. While there was broad support for cooperation in this area, practical concerns were raised regarding enforcement and compatibility with national legal frameworks.

On article 6, addressing mutual administrative assistance, Member States discussed the scope of cooperation and the potential for exchange of information on a wide range of taxpayer and corporate data. Delegations from developing countries emphasised the importance of capacity building and requested flexibility to accommodate different levels of administrative readiness. Data protection and confidentiality safeguards were identified as essential to effective implementation.

Further discussions covered article 7 on illicit financial flows (IFFs), tax avoidance and tax evasion, and article 8 on harmful tax practices. In both cases, Member States raised definitional uncertainties and questioned how new commitments would align with existing OECD, FATF, and other international standards. Article 9, on sustainable development, received broad support, with agreement that tax cooperation should contribute to development outcomes in line with the 2030 Agenda. Article 10 on dispute prevention and resolution was introduced at the end of the week, setting the stage for the second week’s focus on Protocol 2.

On Monday 17 November, the Co-Leads for Workstream III will present the Concept Note for Protocol 2, which addresses the prevention and resolution of tax disputes. Member States are expected to discuss options for dispute mechanisms, including mutual agreement procedures (MAP), arbitration, and mediation, as well as how to support countries without treaty networks. The deliberations will continue through Tuesday and Wednesday. Protocol 1, on the taxation of income from cross-border services in an increasingly digitalised and globalised economy, was introduced briefly on 14 November and may be revisited if time permits. The third session will conclude on 19 November with the adoption of the Committee’s report and closing statements by the Rapporteur.

FISC Highlights Global Tax Cooperation Priorities After US Delegation Visit

On 10 November 2025, the Chair of the European Parliament’s Subcommittee on Tax Matters (FISC), Pasquale Tridico, issued a statement regarding the Subcommittee’s 27–29 October delegation visit to the United States, during which MEPs engaged with the US Department of the Treasury, members of Congress, United Nations representatives, private-sector stakeholders, experts and civil-society organisations. In the statement, the Chair underlined the central role of the United States in the global tax system and highlighted the importance of the EU–US economic relationship for investment and competitiveness.

The Chair expressed regret at the United States’ withdrawal earlier in the year from the global minimum tax agreement, noting that the EU continues to support reaching a comprehensive arrangement through the OECD. He stressed that securing a robust and coherent deal is preferable to agreeing a rushed compromise that could create loopholes or undermine EU competitiveness.

On digital taxation, the statement called for the swift resumption of negotiations on Pillar One, aimed at reallocating taxing rights for large multinationals with significant digital operations. The Chair also reiterated that, in the absence of a global agreement, EU Member States retain the sovereign right to apply or re-introduce digital services taxes.

Finally, the statement reaffirmed the long-standing EU–US cooperation in tax matters, while stressing the need for greater reciprocity in the exchange of tax information, including under the FATCA regime. The Chair emphasised that ensuring balanced information exchange remains an essential element of effective tax enforcement.

OECD Publishes 2025 Effective Carbon Rates Report

The OECD published Effective Carbon Rates 2025 on 13 November 2025, providing updated comparative data on how 79 countries, accounting for about 82% of global greenhouse-gas emissions, price carbon through carbon taxes, emissions trading systems and fuel excise duties. The report confirms that governments continue to pursue a wide range of interconnected objectives when setting carbon and energy tax policy, including revenue raising, energy affordability, competitiveness, energy security and emissions reduction. The 2025 edition shows that countries are increasingly tailoring carbon-pricing instruments to national circumstances, with greater variation in design and coverage than in previous years

A central finding is the continued expansion of emissions trading systems, both geographically and across new sectors. The report notes that ETSs now cover a growing share of global emissions and increasingly coexist with carbon taxes and fuel excise duties. This coexistence has led to more complex policy mixes, with countries adjusting price levels, exemptions and complementary measures to balance fiscal and economic considerations with environmental ambition. Effective carbon rates differ significantly across sectors, with road fuels often facing the highest price signals, while industry and electricity generation frequently remain subject to lower or no explicit carbon pricing.

The report highlights that although carbon pricing has widened, substantial coverage and price gaps persist, particularly where fossil-fuel support measures offset or dilute price signals. It also observes that policy flexibility has increased, with more countries using transitional arrangements, phased increases and targeted compensation to address distributional impacts and cost-of-living pressures. These adjustments are presented as essential for maintaining public acceptance while advancing climate objectives.

The OECD concludes that aligning carbon price signals with broader economic and social priorities remains a central challenge for governments, with the design of the policy mix increasingly influencing competitiveness, investment decisions and progress towards emissions-reduction commitments.

Updated VAT Committee Guidelines Published by European Commission

The European Commission has published the updated consolidated edition of the VAT Committee Guidelines, bringing together a comprehensive record of discussions and conclusions on VAT interpretation issues and guidance agreed by the VAT Committee since its establishment in 1977 to 11 November 2025.

The guidelines aim to promote the uniform application of the VAT Directive by clarifying how Member States interpret complex or ambiguous provisions, and summarise consensus views on technical questions referred by Member States or the Commission. They do not constitute official interpretations of EU law, and neither the Commission nor Member States are obliged to follow them. 

The most recent meeting in the updated publication is Meeting 127 of 14 May 2025. At this session, the Committee examined a series of new technical questions relating to the application of the VAT Directive. The discussions generally followed established themes: interpretation of exemptions, determining the place of supply in cross-border situations, and the treatment of sector-specific transactions where national practices differ. The Committee continued its work on refining the VAT treatment of complex services and ensuring that long-standing derogations and transitional provisions are applied consistently across Member States.

Tax Subcommittee to Hold Public Hearings on Tobacco & Energy Taxation

The European Parliament’s Subcommittee on Tax Matters (FISC) will meet on 20 November 2025, with the agenda structured around two public hearings on forthcoming EU tax policy initiatives.

The morning will open with a hearing on tobacco taxation, focusing on the European Commission’s recent proposals to update the Tobacco Taxation Directive. Members are expected to examine the implications of harmonising excise rules for emerging tobacco and nicotine products, including heated tobacco, nicotine pouches, vaping liquids, other smokeless products and raw tobacco. The discussion will also consider the potential impact of higher minimum tax rates across the Single Market. Findings from this session will contribute to the Parliament’s opinion on both legislative proposals currently under review.

A second hearing will follow on the tax aspects of the Clean Industrial Deal and the revision of the Energy Taxation Directive (ETD). This session will explore how tax measures intended to support EU decarbonisation objectives intersect with ongoing negotiations on the ETD reform. Particular attention will be given to the design of energy taxes that encourage electrification while avoiding incentives for continued fossil fuel use. The exchanges are expected to inform Parliament’s scrutiny of the Clean Industrial Deal’s fiscal elements and its implications for the wider energy taxation framework.

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