The UN tax convention will be judged by the numbers still in brackets

This is an Opinion piece from Plumb Line, EM Governance Review's analysis, explainer and opinion column. It argues for a position on a live regulatory debate; the facts it rests on are linked.

The negotiations on a United Nations Framework Convention on International Tax Cooperation have reached the stage where principles stop being the hard part. The United Nations General Assembly set up an Intergovernmental Negotiating Committee to draft the convention and two early protocols in a process running from 2025 to 2027, according to the UN secretariat's negotiation page. Registration for the sixth session closes on 9 November, the programme of work has been circulated, and a seventh session is scheduled for the submission of the final texts. For the developing and emerging economies in the negotiation, the next months decide whether it delivers revenue or only a forum.

What the drafts say

The co-leads' zero draft of the framework convention, dated 21 July 2026, sets out the principles that developing countries asked for. Its Article 5 says "a fair allocation of taxing rights among jurisdictions shall reflect the real economic contribution of each", Article 6 commits parties to "explore coordinated approaches to ensuring effective taxation of high-net worth individuals", and Article 7 obliges them to "cooperate to combat tax-related illicit financial flows, including tax avoidance and tax evasion", the draft shows. Article 9 asks for dispute resolution mechanisms that are "fair, independent, accessible, and effective".

The operative numbers are missing. The convention enters into force on the ninetieth day after the deposit of a ratification count that the draft leaves in square brackets as "number to be determined". Amendments are to be agreed by consensus where possible and, as a last resort, by a "[ ] majority vote of the States Parties present and voting". The whole article on exchange of information is in square brackets, and a review date of 2035 is bracketed as well.

The first protocol is where revenue would come from. The co-lead's draft protocol on the taxation of income from cross-border services, dated 20 July, gives the residence state the right to tax fees for services and lets the state where the fees arise tax them too, but provides that if the beneficial owner is resident in another state party "the tax so charged shall not exceed [ ] per cent of the gross amount of the fees", the text shows. Similar blank rates appear in the articles on automated digital services and on insurance premiums. A second draft protocol was circulated on the same day.

Two further design choices are already visible. Under Article 5(4) of the protocol, both the residence and source rules give way to a separate article where the beneficial owner carries on business in the source state and the fees derive from that business, or where it elects into that treatment, and a further article of the protocol is bracketed in its entirety. In the framework text, the definition of a tax-related illicit financial flow turns on a principal purpose of "the avoidance or evasion" of a revenue claim and leaves out flows linked mainly to other crimes. A Conference of the States Parties would adopt its own rules of procedure and could adopt further protocols, so much of the governance would be settled after signature.

Why the brackets matter more than the principles

A principle that taxing rights should reflect "real economic contribution" can be read by every delegation to suit its own position. A withholding rate cannot. For an importer of consulting, engineering, software and digital services, the difference between a token cap and a meaningful one is the difference between a convention that raises money and one that mainly limits what source states can collect. The blank in Article 5(2) of the protocol is therefore the most important blank in the package.

There is a trade-off that emerging markets should accept openly. A credible source-state right needs credible dispute resolution, or investors will price the risk of double taxation into service contracts. Article 9's promise of mechanisms that are "fair, independent, accessible, and effective" is the quid pro quo, and capital-importing states would be wise to offer it in exchange for a meaningful rate rather than resist it.

What Plumb Line would do

Three moves before the sixth session would strengthen the hand of emerging-market delegations. First, agree a common figure for the services withholding cap among the regional groupings of developing countries, and table it as a joint proposal rather than leaving the co-leads to propose a compromise. Second, back a ratification threshold low enough that the convention can enter into force among willing states within a few years of adoption. Third, pair the rate with a concrete dispute-resolution design under Article 9, so that the argument that source taxation deters investment can be answered in the text.

The exchange-of-information article should also come out of brackets. States that want to tax wealth and fight illicit flows, both of which the draft names, need the information to do it.

The framework convention already says the right things. Whether it matters for budgets in Nairobi, Dhaka, Tashkent or Lima depends on numbers that are still in square brackets. The time to write them is now, while the texts are open.