OECD vs. UN: Who Shapes the Future of Global Tax?

The OECD–UN Divide: Strategic Risks for Cross-Border Businesses

International taxation is entering a period of significant change. For internationally mobile entrepreneurs, digital service providers and cross-border businesses, the debate is no longer only about where profits are taxed. It is also about which countries should have taxing rights, how cross-border services should be treated, and what happens when different jurisdictions impose competing tax claims.

Two major institutions are shaping this debate: the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN).

Their approaches reflect different priorities in international tax governance. For businesses operating across borders, the resulting divergence could create legal uncertainty, additional compliance costs and greater exposure to double taxation.

1. The Fundamental Divide: Residence vs. Source

The OECD approach

The OECD has traditionally played a central role in coordinating international corporate taxation through:

• Permanent establishment (PE) rules;
• Transfer pricing and the arm’s-length principle;
• Measures addressing base erosion and profit shifting (BEPS);
• Treaty-based dispute resolution;
• The Two-Pillar Framework addressing the tax challenges of digitalisation.

These mechanisms seek to coordinate taxing rights, reduce profit shifting and provide a degree of consistency across national tax systems.

However, the OECD framework has continued to evolve, including through proposals that seek to allocate some taxing rights to market jurisdictions.

The UN approach

The UN places greater emphasis on inclusive international tax governance and the interests of source countries, particularly developing economies.

UN General Assembly Resolution 78/230 initiated negotiations towards a UN Framework Convention on International Tax Cooperation. The process includes work on the taxation of income from cross-border services and the prevention and resolution of international tax disputes.

The negotiations could influence how countries allocate taxing rights over services supplied across borders, including in increasingly digitalised business environments.

As of August 2026, the UN negotiations had progressed to detailed draft texts, with final texts targeted for submission to the General Assembly in 2027. These remain negotiated instruments rather than automatically applicable tax rules. United Nations: Framework Convention negotiations

2. Why Cross-Border Services Are a Key Battleground

Consider a software-as-a-service (SaaS) business incorporated in one country, with developers working remotely and customers spread across several markets.

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

The UN's work on cross-border services raises the possibility of changes to how source countries tax certain payments to non-resident service providers.

For businesses, the central questions include:

• Can a country tax payments to a foreign service provider without requiring a conventional physical presence?
• Could withholding tax apply to gross service fees rather than net profits?
• How would the new rules interact with existing tax treaties?
• What relief would be available if two countries tax the same income?

These are policy and implementation questions, not a statement that all cross-border services are already subject to new UN withholding tax