The OECD–UN Tax Divide: What Global Entrepreneurs Need to Know

International taxation is entering a new phase. For founders, digital service providers, internationally mobile entrepreneurs and remote businesses, the debate is no longer only about where profits are taxed. It is increasingly about which countries should have taxing rights, how cross-border services should be taxed, and how disputes between tax authorities should be resolved.

Two major initiatives are shaping this debate: the OECD's Two-Pillar Framework and the United Nations Framework Convention on International Tax Cooperation.

Both seek to address challenges in international taxation, but they reflect different priorities and approaches to allocating taxing rights. The UN framework remains under negotiation, and its proposed provisions should not be confused with binding domestic tax rules. United Nations, August 2026

1. Two Competing Approaches to International Tax Governance

The OECD: coordinating the existing international tax system

The OECD's work focuses on international tax coordination, corporate profit allocation, transfer pricing, and mechanisms designed to reduce tax avoidance and resolve cross-border disputes.

Its Two-Pillar Framework addresses two major issues:

• Pillar One: seeks to reallocate certain taxing rights over the profits of the largest and most profitable multinational enterprises toward market jurisdictions.
• Pillar Two: introduces a global minimum-tax framework for large multinational groups, generally those with consolidated annual revenues of at least €750 million.

The OECD framework builds on existing international tax arrangements while attempting to adapt them to increasingly digital and globally integrated business models. OECD: International Tax

The UN: a broader, more inclusive framework

The UN Framework Convention on International Tax Cooperation emerged from UN General Assembly Resolution 78/230.

Its objective is to develop a more inclusive international tax framework, with greater participation by countries that believe existing arrangements do not adequately reflect their interests.

The negotiations include proposed instruments addressing:

• International tax cooperation and governance;
• Taxation of cross-border services;
• Prevention and resolution of international tax disputes.

In August 2026, UN member states negotiated draft texts covering these workstreams. The process is ongoing, with the aim of delivering final texts to the General Assembly by 2027. These drafts are proposals under negotiation, not automatically applicable tax rules. United Nations: Framework Convention

2. Why Cross-Border Services Are a Major Flashpoint

For internationally mobile entrepreneurs, the most immediate concern may be the taxation of cross-border services.

Consider a consulting business based in Portugal that provides digital services to customers in another country. The business has no office, employees or other physical establishment in the customer's jurisdiction.

Under traditional treaty principles, the source country's ability to tax the business profits may depend on whether the business has a permanent establishment there, although withholding taxes and special treaty provisions can apply differently.

The UN negotiations consider approaches that could expand source-country taxing rights over certain cross-bord