International investment agreements and their implications for tax measures: what tax policymakers need to know

A guide based on UNCTAD’s Investment Policy Framework for Sustainable Development

The UNCTAD Division on Investment and Enterprise is the focal point within the United Nations system for all issues related to investment and enterprise development. It conducts cutting-edge policy analysis, provides technical assistance and builds international consensus on investment and enterprise. The Division takes a lead role in advancing solutions to the development challenges faced by the international community in this area and is dedicated to support investment in sustainable development with its investment and enterprise policy toolkits.

Since the launch of the Investment Policy Framework for Sustainable Development in 2012 (updated in 2015), UNCTAD has been at the forefront of efforts to reform the international investment regime and has provided valuable backstopping to this process.

Building on UNCTAD’s long-standing expertise on FDI, investment policymaking and international investment agreements (IIAs), this guide on IIAs and their implications for tax measures complements a paper on “The Interaction of Tax, Trade and Investment Agreements” issued by the Secretariat of the Committee of Experts on International Cooperation in Tax Matters (UN Tax Committee) in April 2019.

The paper of the UN Tax Committee Secretariat outlined some key issues and questions surrounding the interaction of tax and non-tax treaties, including trade agreements and IIAs. The Secretariat paper was presented at the eighteenth session of the UN Tax Committee and the Committee endorsed the proposal for follow-up work on these issues.

This guide produced by UNCTAD in cooperation with the WU Global Tax Policy Center assesses the most relevant IIA provisions regarding their implications for tax measures, using the Investment Policy Framework for Sustainable Development (UNCTAD, 2015b) as a basis. To help address potential tax-related challenges arising from IIAs, it gives guidance on the questions and “possible further lines of enquiry” identified in the April 2019 paper by providing concrete policy options for each IIA clause.

It also draws on UNCTAD’s previous work on the coherence between international tax and investment policies, the theme of the World Investment Report 2015 (UNCTAD, 2015c) and two special issues of the Transnational Corporations Journal released in 2018 (UNCTAD, 2018a; UNCTAD, 2018b).