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UN Committee of Experts on International Cooperation in Tax Matters

Membership and mandate

In November 2004, the Economic and Social Council adopted resolution 2004/69 which renamed the Ad Hoc Group of Experts on International Cooperation in Tax Matters as the Committee of Experts on International Cooperation in Tax Matters. The UN Tax Committee is mandated to:

  • keep under review and update as necessary the United Nations Model Double Taxation Convention between Developed and Developing Countries and the Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries;
  • provide a framework for dialogue with a view to enhancing and promoting international tax cooperation among national tax authorities;
  • consider how new and emerging issues could affect international cooperation in tax matters and develop assessments, commentaries and appropriate recommendations;
  • make recommendations on capacity-building and the provision of technical assistance to developing countries and countries with economies in transition; and
  • give special attention to developing countries and countries with economies in transition in dealing with all the above issues.

At the Third International Conference on Financing for Development, held in Addis Ababa in July 2015, Member States decided that the UN Tax Committee should increase its engagement with the Economic and Social Council through the Special Meeting on International Cooperation on Tax Matters, with a view to enhancing intergovernmental consideration of tax issues.

The UN Tax Committee comprises 25 expert members nominated by governments. The term of the current membership of the UN Tax Committee is from June 2013 until end of June 2017. Another outcome of the Addis Ababa Action Agenda was to update the expert member nomination process, mandating that “Committee members shall be nominated by Governments and acting in their expert capacity, who are to be drawn from the fields of tax policy and tax administration and who are to be selected to reflect an adequate equitable geographical distribution, representing different tax systems. The members shall be appointed by the Secretary-General, in consultation with Member States.” (para 29) Furthermore, the number of meetings of the UN Tax Committee was increased to two meetings per year, each for four days. One meeting now takes place in Geneva while the other is held in New York.

Organization of Work: The Subcommittees:

In its resolution 2006/48, the Economic and Social Council recognized that the UN Tax Committee agreed to create, as necessary, ad hoc subcommittees composed of experts and observers who would work throughout the year to prepare and determine the supporting documentation for the agenda items for consideration at its regular session.

The subcommittees and working groups have been critical for the work of the UN Tax Committee. During the year, the subcommittees and working groups focus on certain issues and then present options, including specific wording for review and adoption at the annual sessions of the UN Tax Committee. The subcommittees have also been instrumental in taking forward the revisions of the “Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries”, the update of the “UN Transfer Pricing Manual for Developing Countries”, and in developing new products, of particular interest to its members. Furthermore, they support the implementation of other aspects of the UN Tax Committee’s mandate, including new and emerging issues affecting international cooperation in tax matters and capacity building. When the subcommittees and working groups fulfil their mandates, they are dissolved by the UN Tax Committee.

There are currently nine subcommittees:

  • on Article 8: International Transportation Issues,
  • on Article 9 (Associated Enterprises): Transfer Pricing,
  • on Base Erosion and Profit Shifting,
  • on Negotiation of Tax Treaties—Practical Manual,
  • on Exchange of Information,
  • on Extractive Industries Taxation Issues for Developing Countries,
  • on the Mutual Agreement Procedure—Dispute Avoidance and Resolution,
  • on Royalties,
  • on Tax Treatment of Services,
  • and one Advisory Group on Capacity Development.

Membership of the subcommittees are not restricted to the UN Tax Committee members. Many subcommittees have “other members” registered from five broadly defined groups: (a) other experts from members’ administrations, (b) international organizations such as the OECD, World Bank, IMF, (c) the private sector, (d) non-member countries’ tax institutions, and (e) universities and knowledge centers.

Outcome documents following the 4th Mandate of the Committee

The Committee has been working on a number of products to further clarify the application of tax treaties, transfer pricing legislation, and how resource rich countries should address the taxation of extractive industries. The Committee has approved, and in 2017 will be issuing the following new products: (i) a new revised UN Treaty Model and Commentaries (for launch in October) with a major new provision on the taxation of fees for technical services; (ii) a revised version of the Transfer Pricing Manual (digitally launched in April 2017 at the Special meeting of ECOSOC on International Cooperation in Tax Matters – a book launch will follow in October 2017, on occasion of the 15th Session of the Committee of Experts in International Tax Cooperation), reflecting and giving guidance on transfer pricing practices of developing countries; and (iii) a new handbook on selected issues in the taxation of extractive industries by developing countries (for launch in October). The draft versions of these documents, and past versions used for discussion by the Committee members can be found in the webpage.

For further consideration by the fifth membership of the Committee, are two products on dispute resolution: (i) the updated version of the Guide on Mutual Agreement Procedure; and (ii) the United Nations Handbook on Dispute Resolution. Both products had their contents and outlines approved by the membership occupying the fourth mandate of the Committee, but are subject to further development by the next membership.

These documents are expected to provide further guidance to developing countries when drafting their domestic tax policies and accounting for MNE taxation in complex transactions, such as those involving the exploration of natural resources, and the application of an arm’s length price to a cross border transaction between related parties. The objective of the Model, Manual, and Handbook referred to above, is to build capacity in often underfunded tax administrations, so that they may raise revenues that will spur development in the long term.

During the 14th Session of the Committee of Experts, the Committee reviewed and suggested a provisional agenda, with key subjects that should be considered by the next membership of the Committee. Of particular importance are: (i) environmental tax issues of relevance to developing countries; and (ii) the taxation of the digitalized economy: issues for developing countries. 

The Trust Fund for International Cooperation in Tax Matters

The Addis Agenda urged Member States to support the Committee and its subsidiary bodies through the voluntary trust fund, to enable the Committee to fulfil its mandate; including supporting the increased participation of developing country experts, at subcommittee meetings, where the inter- sessional work of the Committee is achieved; and increasing the participation of Least Developed Countries in the work of the Committee. While the current membership of the UN Tax Committee is sufficiently balanced between developed and developing countries, certain developing country groups are underrepresented. For example, there are only two Least Developed Countries (Senegal and Zambia) and one Landlocked Developing Country (Azerbaijan) members in the current term. An additional area for follow-up is thus the volume of resources contributed to the Committee’s trust fund.

The Trust Fund in Tax Matters has never received any donations from any of the Member States, despite the many calls made by ECOSOC, although some donor agencies and bodies have voluntarily sponsored some of the Committee’s activities directly throughout its life. Member States should engage with the Committee, including through the donation of resources to meet the expectation of an expanded set of activities and strengthened committee going forward.

Despite the increase in the number of days in which the Committee meets, and the broadening of the Committee’s activities through the institutionalization of many of the subcommittees, there has as of yet been no additional funding to assist the secretariat serving the Committee which in 2016, is composed of three people, one of which only works half time for the Committee. Of the two permanent secretariat, only one is tax technical. 

The 5th Composition of the Committee of Experts: The way forward

2017 is the last year of the four-year mandate of the 4th composition of the Committee of Experts. A new group of tax experts will be selected as members of the Committee, which starts in July 2017. The United Nations Secretary General will appoint those officials in consultation with the Member States.  Member States should consider nominating suitably qualified tax experts for the Committee’s new term, which begins in the second half of 2017, with nominations of female experts particularly encouraged.