Tax, Trade and Investment Treaties

Certain bilateral, regional or multilateral trade or investment treaties have an impact on tax measures and administration. This is because overlaps between tax treaties and these “non-tax treaties” sometimes result in unintended effects. The extension of treaty benefits to third parties who do not bear the treaty’s attendant obligations is one example.

Non-tax treaties that can overlap with tax measures and administration include:

  • Bilateral investment treaties (BITs);
  • Bilateral comprehensive trade agreements;
  • Regional trade and investment agreements; and
  • Multilateral trade and investment treaties, such as the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS) and other WTO agreements.


How such overlaps are managed and how unresolved issues are addressed may vary by provision, agreement, jurisdiction and context.

The use of investment treaties to “litigate” tax issues has accelerated in the past few years, signalling the urgency of providing reliable guidelines to Competent Authorities on important areas of interaction, such as definitions, fair and equitable treatment provisions, umbrella clauses, expropriation and non-discrimination.

The UN Tax Committee had commenced discussion on the relationship of tax to trade and investment agreements at its 18th Session in 2019, based on a note prepared by its Secretariat in the UN Department of Economic and Social Affairs (DESA). The note had proposed the development of guidelines to address claims under non-tax treaties against tax measures, including practical advice for non-specialists on a range of issues.

At its 19th Session, the Committee took note of the work in this area by UNCTAD, particularly its Investment Policy Framework for Sustainable Development, which serves as a tool for policy makers. It emphasized the importance of multistakeholder partnerships, such as with UNCTAD, and the need to examine existing country practices to inform the development of guidelines to address the overlaps. Committee work on the topic was postponed, however, from the 20th Session, in view of the COVID-19 pandemic and its wider workload.

At its 23rd Session, the Committee decided to include the relationship of tax to trade and investment agreements in its work plan for the 2021-2025 period. It established a related Subcommittee to identify and consider pressing issues where guidance would assist developing countries and stakeholders in tax systems.



Issues notes

  • Relationship of tax, trade and investment agreements, 23rd Session, October 2021, E/C.18/2020/CRP.36
  • The interaction of tax, trade and investment agreements, 18th Session, April 2019, ZZ, E/C/2019/CRP.14


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