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.
South Centre Inputs on Workstream II on Taxation of Services (Co-Lead’s Draft Protocol on the Taxation of Income from Cross-Border Services)
26 August 2026
The South Centre welcomes the Draft Protocol on the Taxation of Income from Cross-Border Services and submits the following comments:
Scope: Cover all cross-border services broadly, not limiting it to technical and digital services alone, to avoid fragmentation.
Optionality: No reservations on key substantive provisions (Articles 5, 6, 7, 9); reservations permitted only for non-key administrative/procedural matters (e.g., rates, timelines).
Article 1. Subject to tax rule can apply to cross-border services income within Protocol scope, with the statutory rate fixed in the Protocol; extend paragraph 4’s residence state preservation to Articles 5–11.
Taxes covered: Exclude excise taxes.
Define “beneficial owner,” “payer,” “payment,” and “special relationship“; as applied in Articles 5 and 6.
The automated digital services list in Article 6(4) should be expressly non-exhaustive.
The protocol should provide guidance on nexus and revenue-sourcing rules under Articles 5 and 6, particularly for remote/data-driven monetization with no direct in-country payment.
The protocol should broaden “physical presence” beyond employees/agents and provide guidance on profit-allocation methods, including simplified profit allocation approaches under Article 9.
Existing treaties: Where inconsistent with an existing treaty, the Protocol should ideally automatically override the relevant provisions. However, in case treaty-by-treaty renegotiation is preferred, then the Protocol should trigger mandatory renegotiation within a defined timeframe aligned with Article 21 of the Framework Convention.
Implementation: In case the option of treaty-by-treaty renegotiation is chosen, then implementation can be done by a UN Fast-Track Instrument to streamline bilateral treaty alignment.
South Centre Inputs on Workstream I – Co-Lead’s Zero Draft of UN Framework Convention on International Tax Cooperation
26 August 2026
Fair allocation of taxing rights should include nexus factors based on OR rather than AND, should specify methods of allocation and be de-linked from the objective of avoiding double taxation.
Conference of State Parties (COSP) should be the supreme body for administering the Framework Convention (FC) and the Protocols and any other instruments it produces, be able to undertake any actions required to achieve the objectives of the FC, and should be able to make decisions by simple majority vote.
Amendments to the FC and adoption of the FC’s Protocols should also be by simple majority.
All Parties to the FC and its Protocols should make regular and mandatory contributions. This is essential for the success of the UNFCITC. Sustained non-payment should result in denial of voting rights, as is currently the practice in the UN General Assembly under Article 19 of the UN Charter.
The commitment to align existing tax treaties, domestic law and other instruments with the FC and its Protocols should not be request-triggered, and the COSP should determine a timeline by when it will be done.
The COSP shall take measures to ensure that no Party to the FC is prevented from implementing the Convention, its Protocols and any other instruments adopted by the COSP.
A Regional Tax Cooperation Initiative Under the ECOWAS Framework
The South Centre is supporting two of its Member States, Liberia and Sierra Leone, in implementing a pilot Simultaneous Tax Examination on Multinational Enterprises (MNEs), in partnership with the Economic Community of West African States (ECOWAS) Commission. The pilot, which can generate potentially substantial tax revenues, will operationalize the ECOWAS Supplementary Act on Mutual Administrative Assistance in Tax Matters. The pioneering pilot, potentially the first of its kind in the Global South, will develop audit capacity, generate domestic revenue, and build a model that can be scaled across other Member States of the South Centre and ECOWAS.
Read more in the press release jointly issued with ECOWAS and the governments of Liberia and Sierra Leone (également disponible en français/também disponível em português):
The South Centre has made a submission to the Intergovernmental Negotiating Committee of the United Nations Framework Convention on International Tax Cooperation on the draft Framework Convention’s commitments, and Dispute Prevention and Resolution protocol.
The contribution addresses the priorities and perspectives of developing countries in promoting inclusiveness, fair allocation of taxing rights, stronger transparency standards, and effective and accessible dispute prevention and resolution mechanisms.
2023 ANNUAL REPORT ON THE ACTIVITIES CARRIED OUT BY THE SOUTH CENTRE TAX INITIATIVE
The South Centre’s interventions have had a significant impact in helping developing countries bring about major reforms to the international tax system in 2023. Key achievements include the passage of the historic resolution in the United Nations General Assembly for the initiation of a UN Framework Convention on International Tax Cooperation, the successful end of a twenty year long negotiation in the UN Tax Committee for taxing computer software, the passage of an enhanced version of the Subject to Tax Rule in the UN Tax Committee for ending non-taxation in tax treaties, country level revenue estimates on the OECD digital tax solution vs Digital Services Taxes for the 85 combined Member States of the South Centre and the African Union, and extensive in-country capacity building for several South Centre Member States for taxing the digital economy and tax treaty negotiations.
Developing Country Demands for an Equitable Digital Tax Solution
By Abdul Muheet Chowdhary
The taxation of the digitalized economy is the foremost challenge in international taxation today. Countries around the world, especially developing countries, are struggling with taxing the rising profits of major tech giants which operate on entirely new business models that have made traditional international tax rules obsolete. A “Two Pillar solution” is being negotiated in the OECD/G20 Inclusive Framework on BEPS that seeks to update these rules, re-allocate taxing rights and establish a global minimum tax. However, as it stands, the solution has very limited tax revenue benefits for developing countries and is administratively complex. For the solution to be durable, it must be equitable, and accordingly must incorporate the concerns of developing countries going forward.
Ending Extreme Poverty by Ending Global Tax Avoidance
by Abdul Muheet Chowdhary
The world is estimated to lose around USD 500-600 billion in revenues from corporate tax avoidance each year. Ensuring that governments can collect this revenue through ending global tax avoidance will play a major role in ending extreme poverty. Overseas aid provided to developing countries focused on eliminating extreme poverty must therefore incorporate addressing tax avoidance, especially by Multinational Enterprises, as a core component of their efforts.
The South Centre welcomes the UN Tax Committee’s invitation of public comments into its draft agenda and four-year work plan. By engaging the public in preparing the work plan, the UN Tax Committee’s work can be more responsive to the needs of developing countries, and of UN Member States as a whole. By stating that “the goal to ensure that the Committee’s agenda is practical and relevant to developing countries and includes the most pressing challenges they face in tax policy and administration” the Committee has shown a laudable intent which is also in line with its mandate, which is to give special attention to developing countries. The South Centre offers its written comments on the three topics on which inputs have been requested. These have been prepared based on consultation with the South Centre’s Member States, which are exclusively developing countries.
Comments on Discussion Draft:Taxation of Software Payments as Royalties
South Centre Tax Initiative
The South Centre supports the proposal being discussed in the UN Committee of Experts on International Cooperation in Tax Matters (UN Tax Committee) to tax payments for computer software as royalties. This will help developing countries more effectively tax the digitalized economy and will bring clarity to the application of existing bilateral tax treaties.
Making the UN Tax Committee more effective for developing countries
By Abdul Muheet Chowdhary
The United Nations Committee of Experts on International Cooperation in Tax Matters (UN Tax Committee) is an important and influential subsidiary body of the Economic and Social Council (ECOSOC) that shapes standards and guidelines on international taxation. These are the rules through which Multinational Enterprises (MNEs) are taxed. Its role post-COVID-19 has become even more important as countries struggle to raise revenue. Despite being under-resourced, it has produced valuable guidance, especially on the crucial question of the digital economy. As a new Membership of the Committee is about to be selected, this Policy Brief provides practical recommendations on how the Committee can be reformed to be made more effective, especially for the interests of developing countries.
This Semester Report summarizes the activities undertaken by the South Centre during the period 1st July to 31 December 2020. It is intended to provide information, organized by themes, about recent developments in the areas covered by the Centre’s Work Program, meetings organized or co-organized by the Centre to examine particular issues or provide analytical support for negotiations taking place in various international fora, and conferences and other meetings where the Centre has participated. It also informs about publications made.
