United Nations Framework Convention on International Tax Cooperation (UNFCITC)
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.
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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.
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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.
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27 TH SESSION OF THE INTERGOVERNMENTAL WORKING GROUP ON THE RIGHT TO DEVELOPMENT (21 MAY 2026, PDN-TEMPUS)
Panel: Tax-related illicit financial flows and the right to development
South Centre Intervention
The South Centre’s spoke at the United Nations’ 27th Session of the Intergovernmental Working Group on the Right to Development on a panel discussion on tax-related illicit financial flows and the right to development.
Key points:
– The UN Framework Convention on International Tax Cooperation (UNFCITC) must include tax avoidance in the definition of tax-related illicit financial flows (TIFFs)
– UNFCITC must also include an effective monitoring mechanism so progress on reducing TIFFs can be measured
– Public Country by Country Reporting (pCBCR) of tax paid is a key component of the fight against TIFFs and the South Centre is taking various actions to promote pCBCR
– UNFCITC’s second protocol’s tools on dispute prevention like joint audits have huge potential to reduce TIFFs
– UNFCITC’s Conference of Parties will play a central role in ensuring effectiveness and must be well designed.
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South Centre Inputs to the Intergovernmental Negotiating Committee on the UN Framework Convention on International Tax Cooperation
The Intergovernmental Negotiating Committee (INC) on the United Nations Framework Convention on International Tax Cooperation (UNFCITC) released three documents in January 2026 to inform negotiations at its Fourth Session, held in February 2026 in New York:
- Co-Lead’s Draft Framework Convention Template (22 Jan 2026) prepared by Workstream I, providing draft text for the Articles of the Convention.
- Co-Lead’s Draft Options Paper (21 Jan 2026) prepared by Workstream II, outlining options for the protocol on the taxation of services.
- Co-Leads’ Concept Note (23 Jan 2026) prepared by Workstream III, presenting potential design features for dispute prevention and resolution protocol mechanisms.
The South Centre submitted inputs on the three documents on February 26 and March 6, 2026, following a call for input by the INC. The submissions are reproduced below:
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