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Day 1. August 3

The fifth session of the Intergovernmental Negotiating Committee opened in New York this week, and for the first time delegations are working from a full draft treaty. The Co-Leads released their zero draft on 21 July — twenty-six articles covering everything from the allocation of taxing rights to the taxation of high-net-worth individuals, illicit financial flows, and the machinery that will govern the Convention once it exists. Over the next two weeks, governments will decide how much of it survives.

Day one was spent almost entirely on Articles 1 and 2: the objectives and the guiding principles. These are short provisions, but they are the interpretive anchors for everything that follows — and, crucially, they carry the commitment to align international tax cooperation with States' obligations under international human rights law. That principle was hard-won during the Terms of Reference negotiations in 2024, and CESR has argued since that it is the entry point for the issues squeezed out of the ToR: extraterritorial obligations, progressivity, gender.

Holding the line

The dominant dynamic of the day was defensive, and it came from the Global South. Speaking for the African Group, Zambia was unambiguous: Articles 1 and 2 reproduce what the General Assembly already agreed, the ToR were substantively negotiated, and reopening them now would mean losing sight of what the Convention was created to achieve. Nigeria described the ToR as the constitution of this process. Kenya, Côte d'Ivoire, Senegal, Ghana, Tanzania, Algeria and Burkina Faso followed, joined by the African Union and ATAF. India made a sharp structural argument by saying that each subparagraph of Article 2 connects to a concrete tax deliverable, which is precisely why these are operative provisions and not preambular context. Brazil, Russia, the Philippines, Indonesia, Azerbaijan and Saudi Arabia supported retaining the text. The Chair reinforced the point, noting that the objectives and principles were extracted directly from a ToR adopted by the UNGA.

The pushback

The counter-pressure was equally coordinated. Ireland, speaking for the EU27, called for the Convention to build on rather than replace the existing architecture, for the Conference of the States Parties to remain facilitative, for the Secretariat's role to stay limited, and for consensus on anything affecting the rights or obligations of Parties. The UK, France, Japan, the Republic of Korea, Italy, Austria and Luxembourg aligned. Norway questioned whether "fairness" carries legal meaning at all. Germany went furthest, arguing the instrument should contain objectives and principles rather than binding obligations of uncertain scope.

Two further moves deserve watching. Belgium proposed a standalone article on tax sovereignty modelled on the UN Convention against Corruption, picked up by Czechia, Sweden, Korea and Colombia. And Czechia and Estonia both suggested the ToR are merely a recommendation the INC may depart from — a direct challenge to the Global South's central argument of the day.

On human rights

The pressure on Article 2(c) arrived as redefinition. The International Chamber of Commerce welcomed the human rights reference and then argued that taxpayer rights and procedural safeguards should sit alongside it in the guiding principles. UN Independent Expert Attiya Waris named the risk directly: the draft does not unpack what international human rights law means here, and that silence is what invited taxpayer rights onto the floor.

Civil society pushed back by arguing that Article 11 devotes detailed text to protecting confidentiality while human rights receive a single vague line; a draft that, as it stands, protects the privacy of the powerful better than the rights of everyone else. The ILO proposed strengthening Article 1(c) with language on consistency with UN human rights instruments and the progressive extension of social protection floors.

There were openings. Sweden welcomed Article 2(c) and asked that gender equality be added to 2(d). Brazil said that if the article were reopened, it would add progressivity and broad-based taxation, and later called for coherence with human rights and common but differentiated responsibilities. Jamaica pressed for CBDR and environmental commitments. Mexico insisted the negotiation process itself must meet the fairness and transparency standards the Convention proclaims.

Discussion moved to Articles 4 and 5 on sustainable development and fair allocation of tax rights as the day closed.

Day 2. August 4

Tuesday took delegations into the substance: fair allocation of taxing rights, high-net-worth individuals, illicit financial flows, and harmful tax practices. Four articles, one pattern. On each, the zero draft has softened since the January and February versions — and on each, the same coalition arrived to defend the softening in the language of legal certainty.

Article 5: the heart of the Convention

The African Union put it plainly. Article 5 (fair allocation of taxing rights on multinational enterprises) is not one provision among many; it is the assurance that countries where wealth is genuinely generated will get to tax it, and it is why delegations came to New York in the first place. Africa, the AU said, has already had decades of exploration. What it wants now are commitments.

The draft does not yet supply them. Two changes drew the most fire. First, "economic activity" has disappeared from the list of nexus factors in paragraph 1 — India called it the loss of the anchor on source jurisdiction, and China, Kenya, Zambia (for the African Group), Jamaica and Norway all asked for its return. Second, the factors are joined by "and" rather than "or", which would make them cumulative. India, Peru, Saudi Arabia, Nigeria, Kenya and the African Group want that fixed.

"Real economic contribution" produced an unusual convergence. Senegal argued that speculative finance is not real economic activity and the qualifier invites confusion; Jamaica warned that capital-exporting countries could claim to be the real source of contribution. Switzerland and Estonia also want "real" deleted, but for the opposite reason, that it creates uncertainty.

The deeper fight is over paragraph 2. Zambia, for the African Group, called the language "explore and pursue" too soft to carry any commitment, and announced a resubmission adding a third paragraph on concrete measures: domestic law, protocols, and the renegotiation of tax treaties. The African Tax Administration Forum (ATAF) was blunt — without treaty renegotiation, it does not see how fair allocation happens at all. Germany, by contrast, welcomed the removal of the renegotiation requirement as an improvement. Algeria contended that without that mechanism, existing asymmetries would stay in place.

Brazil reassured the room that Article 5 creates no immediate obligation and does not directly affect treaties. Denmark thanked Brazil for the clarification and used it to press its own case. Switzerland's proposal for ‘informal-informals’ discussion on Article 5 was widely supported.

Article 6: sovereignty as a blocking device

On high-net-worth individuals, the diagnosis was near-unanimous among Global South delegations: the article has been watered down. Paragraph 1 language "cooperate to enhance" should return to "develop and implement" (African Group, India, Brazil, Kenya, Ghana, Morocco, Pakistan, Honduras, South Africa, ATAF). The word "general" in paragraph 2 unduly restricts what information can be shared and should go. And "explore" in paragraph 3 should become "adopt".

The new sovereignty clause at the end of paragraph 3 became the day's flashpoint. Belgium proposed a standalone sovereignty article modelled on the Convention against Corruption, and was backed by Germany, Estonia, Austria, France, Switzerland, Korea, Sweden, Poland, Ireland and others. Africa Group members answered that Article 2(b) already covers it and that repeating it article by article undermines each provision. Nigeria sharply underscored that a treaty means agreeing to override domestic law, so states are already surrendering sovereignty by signing.

Two interventions worth carrying forward. Mexico observed that the article treats high-net-worth individuals solely through avoidance and evasion, when the point is ensuring they pay their fair share and reforming tax systems accordingly. Spain asked that taxation under paragraph 3 be not only effective but progressive.

Articles 7 and 8 (Illicit financial flows, tax avoidance, tax evasion, harmful tax practices)

The afternoon turned on one word: illicit. A large bloc of European states, joined by Japan, Korea and Singapore, wants tax avoidance removed from the definition on the grounds that avoidance is lawful. Nigeria and ATAF answered that illicit is deliberately broader than illegal — the largest losses to developing-country treasuries come from arrangements lawful at every step. Brazil floated a possible landing zone: list avoidance, evasion and illicit flows as parallel items rather than subspecies.

Article 8 opened late. India proposed language on practices that erode the tax base of other countries. Discussion continues Wednesday.

Day 3. August 6

Wednesday moved through harmful tax practices, dispute resolution, mutual administrative assistance, exchange of information and capacity building. Main discussions revolved around who sets the standards, who can opt out, and which articles survive at all.

Article 8 (harmful tax practices)

The unresolved question is whether this Convention defers to work already done elsewhere. Czechia, Thailand, Belgium, Denmark, Germany, Singapore, Israel, the UAE, Korea, Japan, Norway, Portugal, France and Sweden all pressed some version of the same argument: recognise existing standards, avoid duplication, fill gaps rather than start from zero. Switzerland proposed flipping "develop and apply" to "apply and further develop", a small edit that signals a large effect.

The African Group answered on legitimacy rather than efficiency. Zambia, in a pragmatic move, suggested looking at existing work, keeping the good, and getting rid of the bad — but do not write a reference into the article that assumes every state here belongs to the forum that produced it (OECD). Nigeria noted the Terms of Reference nowhere instruct the Committee to adopt other bodies' instruments, and that the UN's umbrella is big enough for everyone. South Africa added that universal participation is what produces universal acceptability. India and Honduras asserted that where existing work was developed transparently and non-discriminatorily with all states able to contribute, it can stand; where it was not, this is the inclusive forum to continue.

Mauritius, Kenya and Zambia want the criteria for identifying and monitoring harmful practices set by the Conference of the States Parties, and "explore" replaced with "adopt". Mauritius noted aptly that transparency here is about tax regimes, not about taxpayers.

Kenya, Zambia, South Africa and the African Union resisted setting aside time for informal-informals on Article 5, with several articles still undiscussed, delegations due to leave at the end of the week, and member states running different delegates across workstreams. When the schedule shifts, dilution of texts becomes more likely.

Article 9 (mutual administrative assistance)

The African Group wants the article split into three paragraphs, with a third anchoring future mechanisms, and the qualifier "in accordance with their needs, capacities and priorities" deleted as a weakening device. Mauritius, Brazil and Cameroon agreed. India asked that the article specify cross-border disputes and name domestic resource mobilisation as the goal, and that paragraph 2(b) stop at "timely manner", since the trailing reference to taxpayers and tax authorities creates a right. The International Chamber of Commerce intervened specifically to keep that reference. Nigeria, Kenya and the African Union want "transparent" added.

Germany, speaking both as a delegation and as co-lead of Protocol 2, defended the "needs, capacities and priorities" language on the grounds that it preserves the optionality of protocol measures. The tactic seems to be to introduce procedural justifications to diminish commitments.

Articles 10 and 11 (exchange of information; data collection and analysis)

Switzerland stated it could not adhere to the Convention as presented unless reservations were permitted on mutual administrative assistance. Israel, Austria, Estonia, Belgium, Japan, Korea, Norway, Cambodia, Czechia and Ireland followed. Belgium noted openly that Article 25 forecloses reservations while other UN conventions allow them.

On Article 11, a large bloc moved to delete the exchange-of-information provision outright as too detailed for a framework convention. The African Group, Nigeria, the African Union, ATAF, India, Russia and CEDD resisted such a proposal by stating that deletion would either leave gaps or force EOI references back into every article, fragmenting the text. Senegal, speaking earlier on Article 10, averred that requests refused on foreseeable-relevance grounds would force countries to wait out foreign domestic procedures. Brazil signalled flexibility, noting 59 UN member states are outside the existing multilateral instrument.

Article 12 (capacity building and technical assistance)

Capacity building opened late, with Czechia and Germany pressing for assistance to remain voluntary and China asking that "shall" be deleted. ATAF countered that the article does not yet cover capacity to implement the Convention itself.

Day 4. August 6

Thursday was governance day. Having spent three days on what the Convention would commit states to do, delegations turned to the machinery that would make it happen: the Conference of the Parties, its subsidiary bodies, the data it would collect, the secretariat that would serve it, and the money that would pay for all of it. These are the articles that determine whether the substantive commitments become live obligations or remain declarations. They produced the session's clearest split — and, unexpectedly, its broadest agreement.

Article 13: how much power for the Conference of the Parties?

Article 13 establishes the Conference of the Parties, the body of all member states that will meet periodically to steer the Convention, adopt protocols and oversee implementation. Germany opened by observing that the draft is institutionally leaner and narrower than comparable UN conventions, and argued that the Conference should facilitate implementation without becoming a mechanism for expanding obligations beyond what states agreed. Italy invoked the constitutional principle of legality in tax matters, which in its view prevents an international body from creating new tax liabilities. Ireland, Spain, Malta, Luxembourg, Portugal and Belgium made versions of the same argument. Belgium was candid about why it matters so much to them: because the Convention permits no reservations, states are uncertain about the scope of what they would be signing.

The African Group answered that an organ described is not an organ empowered — the African Union's phrase. Kenya, speaking for its 54 members, asked that the Conference be named the supreme organ of the Convention and its protocols, meet at least annually, adopt its own financial rules, and have an explicit mandate over subsidiary bodies and protocols. India, Russia, Brazil and Honduras agreed that this is the one article that cannot remain high-level. ATAF flagged a drafting inconsistency worth fixing: the text calls the body a Conference of the State Parties in Article 13 and a Conference of the Parties in Article 20.

The one point of agreement

On stakeholder participation, the room converged almost completely. Germany, Czechia, the UK, Jamaica, Sweden, the Netherlands, Norway, Ireland, France, Estonia, Malta, Mexico, Brazil, the EU, Zambia, Nigeria, Ghana, the African Group, the African Union and ATAF all called for observer provisions modelled on existing UN practice — most often Article 63 of the Convention against Corruption.

The moment that crystallized it came from civil society. Speaking for the Global Initiative for Economic, Social and Cultural Rights, the delegate invited the room to turn around and look at the organizations seated behind them, then made the point plainly: this negotiation has been participatory, but the institutions that will govern the Convention are silent on participation. What delegates saw behind them has no assured place once the treaty enters into force. Greenpeace and the Global Alliance for Tax Justice added that limiting the Conference's powers misunderstands what it is — the Conference cannot exceed what parties decide, because the Conference is the parties.

Decision-making, and a clarification that mattered

The African Group, Nigeria, Ghana, Tanzania, Burkina Faso, the African Union and ATAF want decisions taken by simple majority, following established UN rules. Most European states, with Japan and Korea, want consensus. Côte d'Ivoire proposed a middle route: consensus as the governing principle, qualified majority when it fails. Brazil asked the obvious question about amendments — if the Convention itself is not adopted by consensus, why should changes to it be?

The Secretariat then supplied the decisive technical point. Where an instrument is silent on decision-making, established practice is consensus. Silence, in other words, is not neutral. If the African Group wants majority voting, it has to be written into the text.

Articles 14 to 18

Article 14 covers subsidiary bodies. India proposed a two-tier structure of technical working groups reporting through an intermediate committee, with rotating membership. The African Group wants specific bodies created now — on tax treaties, dispute resolution and the digital economy — and Nigeria and Côte d'Ivoire objected that the draft's first report is not due until 2035.

Articles 15 and 16, on data collection and on reviewing implementation, drew safeguard-based caution from Singapore, Israel, Austria, Germany and Norway. Articles 17 and 18 exposed the financing gap: Côte d'Ivoire noted the financial provision is nearly identical to the tobacco convention's and rests on voluntary funding, which it called unpredictable and risky. Brazil and Kenya pressed for assessed contributions and a dedicated fund. Discussion closed on protocols and amendments.

 Day 5. August 7

Friday closed the first week and, with it, the Committee's first full pass through the Framework Convention. Two articles took the whole day, and they turned out to be versions of the same question: can this Convention actually change anything, or will it sit politely alongside the system it was created to reform?

Article 21

Article 21 governs how the Convention relates to everything that already exists — the thousands of bilateral tax treaties, the multilateral instruments, and states' own domestic law. Paragraph 2 preserves rights and obligations under agreements concluded before the Convention enters into force. Paragraph 3 then requires parties to take progressive and meaningful steps towards aligning those agreements, including renegotiating them in good faith where a treaty partner asks.

The African Union averred that a commitment is only as good as the mechanism that carries it into effect, and Article 21 is that mechanism — the bridge between what is promised in the room and what citizens eventually receive. Zambia, for the African Group, called it a load-bearing provision and made a sharp drafting point. The first sentence of paragraph 3 creates a freestanding duty to align. The second makes renegotiation depend on a party requesting it, which converts an unconditional obligation into a triggered one and hands every party the power to defer by simply declining to ask. An obligation that awaits the trigger, Zambia said, is an obligation deferred. The Group therefore proposes deleting that second sentence, and empowering the Conference of the Parties in paragraph 4 to set the timeframe for bringing treaties into conformity — placing the pace of alignment, in Zambia's phrase, in the hands of the collective rather than the reluctant. Nigeria, Côte d'Ivoire, Morocco, Mauritius, Algeria, Cameroon, Lesotho, Senegal, Kenya, South Africa, Tanzania, Ghana, the African Union and ATAF all aligned.

India mentioned that this is the first forum where 193 countries have agreed anything as equals, and there will be situations where what is agreed here takes precedence over what was agreed elsewhere. Deleting paragraphs 3 or 4, India warned, would make review under the Convention a dead letter. Brazil described paragraph 3 as a best-efforts obligation, conditioned both on necessity and on request, and twice reminded the room that this is a convention dealing with the overlap between human rights and taxation.

The opposing bloc was large and consistent. The UAE, Czechia, Switzerland, Austria, Luxembourg, China, Italy, Germany, Norway, Estonia, the UK, France, Belgium, Israel, Japan, Korea, Sweden and Ireland sought deletion of paragraphs 3 and 4 or their reduction to guiding principles. Norway said it could identify no other UN convention that expressly requires renegotiation of existing treaties. Germany argued the article should create no binding obligation regarding future changes to national law.

Mexico occupied its own position, and it is worth attention. It supported the direction but warned that paragraph 3 is leverage language as it opens the door for developed countries to demand that developing countries reopen treaties, a practice that has happened before. Mexico offered to lead a drafting group, and repeated its request for a standalone article on human rights.

Civil society sharpened the legal point. Under Article 30 of the Vienna Convention on the Law of Treaties, the later treaty prevails where the parties overlap — unless the later treaty says otherwise. Paragraph 2 says otherwise. The old treaty network therefore governs not because international law requires it but because this Convention chooses it. And paragraph 3 is a duty to negotiate, not a duty to agree: for the party benefiting from the current allocation, deadlock is always a victory. Tax Justice Network Africa, CCFD and the Asian Peoples' Movement on Debt and Development pressed for COP-defined criteria, timelines and a compliance mechanism. UN Independent Expert Attiya Waris told the room that the repeated demand for certainty misreads the moment: the only certainty now is change, and the treaties that ended slavery and secured women's votes were rolled out stage by stage.

Article 25: no reservations

The afternoon returned to the provision barring reservations. Malaysia, the UAE, Mexico, Norway, Germany, Spain, Japan, Korea, Belgium and the Netherlands pressed for flexibility, the Netherlands claiming the current text reflects a minority view. Kenya rejected that count directly. India challenged anyone to name the article worth reserving on. Lesotho compared reservations to naming players on a team sheet who then announce they will not play. Tanzania warned of optional international tax cooperation. The text held for now.

Protocol negotiations begin Monday.

Day 6. August 10

Negotiations on the UN Tax Convention resumed today in New York with discussion of Protocol 1 on taxing income from cross border services. Delegates focused on its objectives, interaction with existing treaties, allocation of taxing rights, and the taxes covered under Arts. 1 and 2.

Here are 10 key takeaways from Day 6:

1. The central divide remains whether the protocol will meaningfully shift taxing rights toward source countries, including by moving beyond rules based primarily on physical presence. The Africa Group backed by other source countries including Brazil and Russia, supported greater source taxing rights. Several Western European states defended closer alignment with existing treaty concepts, in favor of complementing OECD approaches.
2. Optionality became a major point of contention. The protocol is already optional to ratify, but Hungary, Spain, Liechtenstein, Israel and others supported allowing states to opt into or out of specific provisions. The Africa Group warned that this could hollow out the protocol’s core obligations.
3. Consensus versus majority decision making moved to the center of the debate. Mexico and Jamaica called for greater dialogue and common ground. Current positions in the room place the 54 Africa Group countries against expanded optionality, compared with 13 EU member states and nine other countries supporting it. This raises concerns that consensus could push the protocol toward the lowest common denominator, lowering the ambition for the redistributive potential of the Convention as a whole.
4. The relationship with existing tax treaties remains unresolved. Algeria highlighted the cost of treaty by treaty renegotiations, while Cameroon pointed to Article 21 as potentially establishing the Framework Convention’s relationship with previous agreements. Liechtenstein, France and the United Kingdom opposed automatically overriding existing bilateral agreements.
5. CSOs, including CESR and partners, called for a clear objectives clause anchoring Protocol 1 in the Framework Convention and operationalizing Article 5 on the fair allocation of taxing rights. The current draft still resembles a traditional bilateral tax treaty and risks reproducing reliance on physical presence, transfer pricing and existing unequal tax agreements that favor rich countries.
6. The gross versus net taxation debate sharpened. Developing countries emphasized that gross basis withholding taxes are simpler to administer and harder to manipulate. The United Kingdom, Italy, Norway and business groups raised concerns about overtaxation and effects on low margin services but offered few concrete alternatives under net taxation. CSOs proposed combining gross taxes with an agreed formula for sharing profits or income between source and residence countries.
7. CSOs supported the principle behind Article 1’s low taxation rule. It would allow a source country to recover taxing rights when income is taxed below an agreed rate in the residence country. Questions remain about the applicable rate, different service margins, treaty shopping, double taxation and whether the rule should cover all income or only cross border services.
8. Article 2 exposed significant uncertainty over definitions and scope. The Africa Group supported covering digital services taxes that function like income taxes while excluding excise and consumption taxes. Norway, Burkina Faso and Azerbaijan also requested clearer distinctions, while Mexico stressed that remittances should not be taxed.
9. A possible area of convergence emerged around examining how a tax functions rather than relying only on its domestic name. However, delegates still need objective criteria for distinguishing income taxes, digital services taxes, equalization levies and indirect taxes. Co-leads invited concrete drafting proposals, clearer exclusions and an explanatory note.
10. Human rights remain relevant to the allocation of taxing rights. Brazil, the African Union and CSOs connected stronger source taxation with domestic resource mobilization. This is central for states’ ability to finance rights. CESR continues to caution against treating corporations as rights holders rather than duty bearers with an obligation to “do no hard” by not engaging in abusive tax practices within the emerging international tax framework.

What’s next?

Negotiations will continue on the scope of Article 2. The wider question remains whether Protocol 1 will create a coherent multilateral framework for a fair redistribution of taxing rights or whether extensive optionality and continued dependence on bilateral treaties will preserve the status quo.

Day 7. August 11

Day 7 of the #UNTaxConvention negotiations remained focused on Protocol 1 on the taxation of income from cross border services. Delegates moved from scope and definitions under Arts. 2 and 3 to nexus, taxation methods and profit allocation under Arts. 5, 6, 8 and 9.

Although the discussion became increasingly technical, the same political question kept resurfacing: will the Protocol meaningfully redistribute taxing rights toward source States or reproduce existing rules and inequalities?

Here are 10 key takeaways:

1. Art. 2: The scope of covered taxes remains unsettled. The Africa Group supported limiting the Protocol to income from cross border services, including digital services taxes that function like income taxes, while excluding consumption and excise taxes. Ghana supported this direction, while the UAE favored a narrower scope. The co-lead is steering toward coverage based on how a tax functions rather than its domestic name, while calling for more precise criteria.
2. Art. 3: Definitions will determine the scope and distribution of taxing rights. The Africa Group, supported by Kenya, Honduras and ATAF, identified missing definitions, including income, business, consumer, payer and international traffic. The draft defines royalties in order to exclude them and defaults to definitions in existing tax agreements. This raised concerns that divergent bilateral definitions could narrow the Protocol’s scope and produce uneven application.
3. Art. 5 returned the debate to nexus and source taxing rights. The Africa Group, Ghana and ATAF argued that digitalization, remote services and artificial intelligence require rules that move beyond physical presence. Norway, Switzerland, Spain, the United Kingdom, Germany, France and Italy sought clearer ordering rules to prevent overlapping source claims. The co-lead also questioned whether the “special relationship” provisions are appropriate given the difficulty of auditing transfer pricing.
4. The gross basis versus net basis taxation divide continued. Norway, France, the UAE, Japan and Italy opposed or questioned gross basis taxation, with Italy favoring net basis taxation as the primary method. The Africa Group maintained that the draft permits both and defended gross basis taxation as an important and administratively workable option. The co-lead pressed critics to provide concrete alternatives.
5. Art. 6 raised new questions about automated digital services and artificial intelligence. The provision is closely based on UN Model Double Taxation Convention, but negotiators must decide whether AI requires specific treatment or can be covered through existing definitions. CSOs called for clearer nexus rules based on significant economic presence, including where no payment occurs, and for the list of digital services to remain open to new technologies. They also proposed empowering the Meeting of the Parties under Art. 13 to update the list. The co-lead signaled that the revised text should confront, rather than sidestep, whether digital services taxes can be covered and credited across jurisdictions.
6. Art. 8 reopened the question of excluding international shipping and air transport. The Africa Group proposed limiting the exclusion to income from carrying passengers and goods. Panama, Belgium, the UAE and Singapore supported retaining the exclusion, while Russia asked how road and rail transport would be treated. The co-lead requested a more precise proposal from the Africa Group.
7. Art. 9 exposed major gaps in the net taxation and profit allocation rules. The Africa Group called for clearer physical presence rules and for “reasonable allocation of profits” to be defined or removed. Kenya and Zambia supported this direction, while Switzerland, France, Peru and Russia requested clearer rules and practical examples. The co-lead acknowledged that Art. 9 requires further work to ensure it does not produce the opposite of its intended result.
8. CSOs, including GATJ, PSI and ITUC, advanced concrete proposals. We opposed unrestricted taxpayer choice and called for multinational groups to be treated as single enterprises, with profits divided across jurisdictions according to a clear and objective formula. They also challenged a tax treaty non-discrimination rule that could restrict developing countries’ fiscal and industrial policy space.  GATJ members, including CESR, cautions that any maximum source tax rate should not leave source States worse off than under existing treaties. This would further erode fiscal space and work against States’ ability to fulfill their obligation to mobilize the maximum available resources to finance the realization of economic, social and cultural rights, and planetary obligations as required by international human rights law.
9. Optionality remained unresolved. India and the Africa Group warned that extensive opt-ins and opt-outs would enable cherry picking and undermine the Protocol’s multilateral character, while Malta supported greater flexibility. The co-lead characterized the room as a broad majority favoring mandatory rules and a significant minority favoring optionality. Further discussion of Art. 20 was deferred until Convention Art. 21 is settled.
10. Questions of inequality and the human rights stakes were explicitly raised. The UN Independent Expert on foreign debt and human rights cautioned against returning to business as usual and called for the Protocol to address the inequalities identified in the Convention. She also warned that classifying taxes as direct or indirect could have unequal legal and trade consequences for States, suggesting distinct treatment and transitional safeguards. Definitions, nexus rules and taxation methods are not neutral. They determine States’ ability to tax an increasingly digitalized global economy and mobilize resources for realizing rights.

What’s next?

Workstream 2 concluded with a commitment to prepare enhanced text for further consultations. Current co-lead is stepping down for retirement, with the Chair temporarily overseeing the workstream while nominations are sought. Negotiations move to Workstream 3 and Protocol 2 tomorrow.

Day 8. August 12

Negotiations on the UN Tax Convention moved today to Protocol 2 on the prevention and resolution of tax disputes.

Protocol 2 is meant to help countries avoid costly disputes and protect their tax bases. Today’s debate exposed a deeper struggle over whether it will address the unequal rules and power relations that produce disputes, or build on existing or new procedures around corporate certainty and the existing tax system.

11 key takeaways from Day 8:

1. The legal form of Protocol 2 remains contested. The Africa Group called for concise provisions establishing States’ rights and obligations. With support from India and Mauritius, stressing on separating binding obligations from operational guidance. Germany and the Netherlands colead the “toolbox” approach, offering States a menu of mechanisms they could choose from. Switzerland favored detail mainly where established mechanisms do not already exist.
2. The Protocol’s scope remains unsettled. The Africa Group stressed that it should cover cross border disputes, not domestic tax matters. Mexico called for high net worth individuals and illicit financial flows to be addressed. Whatever  their placement,  it stressed these issues must not disappear from the Convention’s wider agenda.
3. Definitions revealed competing legal foundations. The Africa Group called for definitions to be harmonized across the Convention and both Protocols. Delegates sought clarity on “tax dispute,” “taxpayer,” “competent authority,” “transfer pricing” and “applicable tax instrument.” Relying on existing bilateral or regional rules could reproduce the fragmentation the Convention is intended to overcome.
4. Optionality remains a central divide. Switzerland, Germany, the Netherlands, Israel and Liechtenstein, alongside China, supported flexibility and reservations across the Protocol. India warned that excessive optionality could make it ineffective. The Africa Group supported MAP as the core resolution mechanism while arguing that resource intensive prevention mechanisms, such as APAs, advance rulings and cooperative compliance arrangements, should remain optional. It stood firmly against arbitration, including as an optional mechanism.
5. Optionality remains a central divide. Switzerland, Germany, the Netherlands, Israel and Liechtenstein supported flexibility and reservations. India warned that excessive optionality could make the Protocol ineffective. The Africa Group favored a core mutual agreement procedure while keeping resource intensive prevention mechanisms optional. It stood firm against arbitration.
6. MAP emerged as the preferred core mechanism. The Africa Group, India, the UK and the UAE supported the mutual agreement procedure as the foundation for dispute resolution. Brazil cautioned that the draft adds taxpayer centered procedures that could alter MAP’s traditional State to State character. MAP also already exists under UN Model Art. 25 and many bilateral treaties, raising questions about the Protocol’s added value.
7. Advance pricing arrangements exposed unequal capacity and bargaining power. Germany, the Netherlands and the UAE supported APAs as certainty tools. India recognized a possible role but stressed capacity and transition needs. The Africa Group warned that APAs require extensive information, expertise and resources. CSOs common position cautioned that they can entrench flawed transfer pricing practices and constrain source taxing rights.
8. State-led prevention tools received more qualified support. The Philippines supported simultaneous and joint audits where they respect domestic law, valid information exchange arrangements and confidentiality. The Africa Group and African Union recognized the value of prevention but stressed differing administrative capacities.Taxpayer initiated mechanisms received a lot of criticism by global south states.  Properly financed cooperation between tax authorities offer a fairer approach.
9. Arbitration produced the clearest divide over sovereignty and constitutional authority. The Africa Group rejected its inclusion. India raised serious concerns, Mexico referred to the experience of investor State dispute settlement, and the Philippines warned that compulsory arbitration could undermine fiscal sovereignty and domestic courts’ authority over public revenue. France, Germany, the Netherlands and Japan supported retaining arbitration. The United Kingdom and Russia favored optional or consent based approaches.
10. The co leads intend to retain optional arbitration. They referred to Alternative B of UN Model Art. 25 and said arbitration would not be a core mechanism. AG & CSOs continue to stress that optionality does not resolve concerns about costs, constitutionality and unequal bargaining power, particularly where powerful States can pressure less powerful treaty partners to accept arbitration.
11. Resources, human rights and institutional power remain central. Developing countries warned that complex procedures, fees and rigid timelines could exclude less resourced administrations. GATJ members, partners and allies, including CESR, support the position that prevention must address transfer pricing, the arm’s length principle and the unequal allocation of taxing rights that generate disputes.  We call for transparent State led mechanisms, a Convention wide financial mechanism and properly mandated subsidiary bodies.

Corporations should not gain new procedural entitlements or be elevated into rights holders. Costly and unequal dispute mechanisms can erode developing countries’ fiscal space and undermine States’ ability to mobilize the maximum available resources required to fulfill economic and social rights and #gender equity and planetary commitment. 

What’s next?

Negotiations will continue on reservations, existing agreements and the Protocol’s architecture. The central test is whether Protocol 2 will implement the Convention’s objectives by addressing the structural causes of disputes, or merely manage them through mechanisms that remain more accessible to wealthy States and multinational corporations.