SC Inputs on Workstream III on dispute prevention and resolution, 24 August 2026
South Centre Inputs on Workstream III on dispute prevention and resolution (Co-Leads’ Draft Protocol on the Prevention and Resolution of Tax Disputes)
24 August 2026
The South Centre supports the development of an effective multilateral framework for the prevention and resolution of tax disputes. The Protocol should reflect the different capacities of States and provide sufficient flexibility for broad participation.
The Protocol should contain sufficient legal and procedural detail to provide a legal basis for mechanisms where none currently exist and to ensure coherence with mechanisms available under existing instruments. As such, the protocol itself should establish who can invoke it, when it applies, the obligations of competent authorities, and the relationship with existing instruments, and minimum procedural safeguards. Detailed operational procedures such as how an advance pricing arrangement (APA) or joint audit is conducted or mediator is appointed should be addressed through accompanying guidance issued by the Parties to the Protocol.
The protocol should cover the broad range of dispute-prevention mechanisms, but none should be mandatory, to allow flexibility given different State capacities.
The Mutual Agreement Procedures (MAPs) could constitute the core mechanism for the resolution of tax disputes under the Protocol, as it has a well-established basis in international tax practice.
The Protocol should not establish mandatory arbitration. Any arbitration mechanism, if retained, should be expressly voluntary and based on the consent of all competent authorities concerned.
The timelines provided in the protocol should be indicative rather than hard deadlines.
The protocol should provide for capacity building and technical assistance for the implementation.