(17th meeting) - Fifth Session of the Intergovernmental Negotiating Committee on the UN Framework Convention on International Tax Cooperation (INC Tax) - 3 to 13 August 2026

Good morning. It's me again. Can we all move towards our seats, please? And the quicker that we are able to do that, then the earlier we'll be able to leave today. Yes. Thank you so much for your cooperation. All right, so we're going to continue the discussions this morning on the protocol, protocol two. And I'm going to hand over to my colleague Michael as he takes us through the discussion this morning.

Thank you very much, Marlene. Good morning, colleagues and friends from member states and stakeholders. following us in the room and online. I can imagine that some of you are very sad since those two weeks are coming to an end, but the good news is that we still have the pleasure of discussing Workstream 3 Protocol 2 this morning. If we all make an effort, we may even be able to conclude our discussions by lunchtime. That means please everyone try to stay within three minutes in your interventions. So it is a moving target. We cannot make any promises. Same is true for coffee breaks. Yeah? But when I look in the room, it looks like everyone is well prepared. So before we continue, let me briefly look back at yesterday. And first there's a important disclaimer or a caveat, so it is just my own personal impression. It is not meant to replace the transcript of yesterday's discussions. So there were, first there were many interventions that actually related more to Chapter 5 and were related to the concept of optionality and core mechanisms. Well, that is one of the reasons why I'm optimistic that we might conclude today a little bit earlier because I assume that some interventions were already made yesterday. So from yesterday I took that there is still considerable support for the concept of optionality. Still, there are very different preferences on what should be a core prevention mechanism. It's different with the resolution mechanisms. I think it's fair to say that the MAP provision is a very good candidate. For the moment, we call it, we think it is useful to leave that question aside. As we were also saying yesterday, let's instead focus on keeping an open mind, and giving it a try to make each mechanism as effective and as attractive as possible. And we encourage us, encourage all of you not to approach the discussion from the perspective that you might eventually be forced or be asked to implement and apply any of the mechanisms. I would like to add that the same is true for The same appeal applies to arbitration. On arbitration, the room is clearly divided. We have again heard strong opposition among some members. Nevertheless, here too, let us focus and let us try to focus on how we can improve the mechanism rather than only to whether it should exist in the first place. And yesterday some delegations made some very interesting points in the context of arbitration that were related to ISDS. And I take from yesterday's discussion that there is some appetite to investigate and explore further what can be done in that regard. It also became clear to me that The expectations are particularly high when it comes to the MEAP provision. There's still a lot of work ahead of us. We have to strike a balance. On the one side, it is about ensuring some consistency with what countries already know and what they already use in practice. But at the same time, we heard some voices expressing a desire to improving the procedure where possible. And I'm optimistic that we can find the right balance going forward. So then what else? Yesterday, many delegations asked for leaner text. The concern is that the text in its current form, it contains too many details and it unnecessarily provide restrictions on the implementation and it would not be flexible enough to take account of future developments. Going forward, we will need to decide what is essential and what belongs in the protocol and what could sit elsewhere. And as for elsewhere, some possible forms were mentioned yesterday. each of which has probably pros and cons. So like annex were mentioned, travel, preparatory, competent authority agreements, as well as guidelines. So it will be up to all of us to see where we can put some of the parts of the protocol. Well, one final impression, maybe the most important one yesterday is that, and what stood out to me is the very active, a very strong engagement from the membership and the stakeholders, and as for the membership from all regions and from all groups, and to me that is a proof to the relevance of our work and that there's a strong interest in the work and really much hope that we can continue building on this. So as for today, today we are going to be discussing the remaining chapters. Chapter four on consultations and the absence of an applicable text instrument. Chapter five, reservations. And chapter six, other provisions. we are going to take them on block. So we are not, we do not take it chapter by chapter. It's a little bit like with respect to the time that is left to us, but also it's like take for example chapter six might be, might be not so many interventions compared to the other chapters. So in a moment, The floor will be open and we have prepared again some slides with some questions that are meant only to prompt some input. But let me quickly introduce in parallel the chapters or the provisions. As for chapter four, Chapter four is about, it establishes a voluntary consultation process for identified tax issues that may result in double taxation or double non-taxation where no applicable tax instrument is enforced between the parties or it needs to be added where there is something enforced but the case at hand just not is covered by its scope. The competent authorities may clarify the relevant facts, compare the respective administrative positions, and consider whether action may be possible under their domestic laws. Consultations take place only if all competent authorities concerned agree to participate. Taxpayer-specific information may be exchanged only where there is an existing legal basis for information exchange, Could that be? It could be a mark. It could be sorry, the mark. So the mutual administrative is lost and would have to look it up. It could be the mark. It could also be an tax information exchange agreement, the bilateral one, just to give you an example. But it could also be in regional agreement or another instrument. So any understanding that is reached, under that chapter is meant to be non-binding. It does not create rights or obligations, allocate taxing rights, or allows a competent authority to depart from its domestic law. So the important distinction here is this is not a dispute resolution procedure for an existing case of double taxation. It is a consultation mechanism concerning a tax issue that may result in double taxation or double non-taxation. So, and then this whole chapter that reflects earlier discussions. And in this context, I would like to refer to paragraphs 14, 16 and 18 of the CoLID's concept note of January 23rd this year. That was the basis for our discussion in the fourth session that formed In those paragraphs we have laid out also the evolution of the discussions going back to our scoping exercise summer last year. In addition to that, I think it is also worth pointing out that the underlying concept is not entirely new to us. So I would also like to refer to The commentary on Article 25, and there you can take both the OECD model as well as the UN model. Paragraph 55 explains that the second sentence of paragraph three, so I'm talking about Article 25, paragraph three, second sentence, that it allows competent authority to deal with cases of double taxation that fall outside the scope of the provisions of the treaty. And one example that is given there is an enterprise or a resident of a third state with permanent establishments in both contracting states. And the commentary says this could, for instance, be the case where one of both of the contracting states have no bilateral tax convention with the third state. So it is not like as if we are like inventing an entirely new wheel or I'd say it's rather an evolution than a revolution. So what we see in front of us is the only slide for chapter four and the question that we had here in particular is does the chapter provide a sufficiently clear and self-contained basis for consultations where no applicable tax instrument is in force. Quickly, can we kindly move to the next slide, please? Thank you. So as I said, we're going to take the chapters together. So therefore, let's move to Chapter 5. Chapter 5 allows states to make reservations with respect to individual mechanisms under the protocol. It is the same chapter that regulates the relationship between the protocol and existing bilateral or multilateral tax instruments. For overlapping mechanisms, the draft currently contains two alternatives. Under one approach, the mechanism under the existing instrument would generally continue to apply. and under the other, the mechanism under the protocol would generally supersede. In both cases, the parties may agree otherwise. So it's just a question what's supposed to be the default. This question is closely linked to the question, okay, what do we actually mean by a mechanism that is already included in another instrument, a mechanism considered to be substantially similar only if it has a comparable purpose, framework, level of protection, safeguards and legal effects that is meant to guide a little bit the response to that question what is substantially similar and what not. And the provision that merely allows competent authorities to consult or reach mutual agreement is not sufficiently by itself. So in our earlier discussions, there was already some direction on how to deal with existing instruments. So how do we want to tackle this situation that there are treaties out there with dispute prevention and dispute resolution mechanisms? Paragraph eight of this January's concept note, also looking back at earlier session, the third session in Nairobi, it states, And I quote, on opera, opera, that's a difficult word, on operationalization and functioning, there was broad agreement that the protocol should not have an automatic superseding effect on other instruments. It also states, the written inputs also generally supported an approach in which mechanisms would not automatically supersede other arrangements, although there was a diversity of preferences regarding the details of optionality. And finally, paragraph 12 contained three cases and case B then addresses the situation where a mechanism already exists. There it states the concept note in such scenario, the corresponding core mechanism under the protocol would not have an automatic superseding effect and the parties may choose to continue relying on the mechanisms under the instrument, but the protocol's optional mechanism could, if the parties concerned agree, coexist with and complement the existing mechanism. So, so far so good. So this concept like that was laid out in the in the Last concept note is reflected in our alternative A in article 5.2, paragraph one. So chapter five, first article, paragraph one. So after the session, so after the last session, a different position was introduced by a group of member states. That approach is reflected in alternative B, of Article 5.2, paragraph one. So it reverses what is supposed to be the default. So, and the two alternatives, they remind us very much of the discussion we had on Article 21 last week, 21 of the Framework Convention. So perhaps we are a little bit more fortunate than the guys discussing the Framework Convention because Possibly we have the lack of having a third option. The question is, do we really have to choose between alternative A and B? Could mechanisms under protocol instead coexist with existing mechanisms under other instruments? Could that perhaps work only for certain mechanisms? Maybe not possible for all mechanisms, but at least for some. So we should then ask, that's my recommendation, whether such an approach would be legally workable, would it support effective dispute prevention and dispute resolution, or would it rather instigate and cause even more disputes? Would it create more uncertainty among tax administration and taxpayers? And by answering the question, so what is interesting is that if we don't have to choose between alternative A and B, we could, perhaps we could avoid the difficult discussion of what is meant by substantially similar or not and is it clear enough or not. So chapter five. Chapter 5, we have also prepared one slide and we are going to ask which default approach should apply where another instrument contains a substantially similar mechanism. Should that mechanism continue to apply, alternative A, or should the protocol mechanism supersede it unless the parties agree otherwise, alternative B? And the question, is the proposed criteria for a substantially similar mechanism sufficiently clear? Just one more slide. Chapter six. Chapter six then deals with exchange of information and confidentiality. Information may be exchanged only where there is a specific legal basis for doing so and where the conditions of that legal basis are met. The protocol does not itself create an independent legal basis for the exchange of information. Instead, the relevant tax information exchange instruments as defined in Chapter 1 are applicable in the particular case and they remain decisive. Any information exchange remains subject to the applicable confidentiality, data protection and the purpose limitations. The question here would be are these safeguards sufficiently comprehensive and appropriately applicable across the protocol? So on that point, We are all aware that we have been discussing in the first week in the context of Article 11, provision for the exchange of information. So the protocol is to some extent agnostic in that regard. So the definition allows for the convention to provide for an exchange of information, mechanisms for an operative exchange of information, but it would work even without. Instead, it would then refer to other information exchange instruments. So now I have spoken enough. Happy to open the floor. Everyone is invited to intervene on chapters four, five, and six. Thank you. Mauritius, please.

Good morning, Chair. Good morning, co-lead and colleagues. I'm going to refer to chapter five, co-lead, specifically the alternatives mentioned on the application in relation to other instruments when it comes to the alternatives that have been proposed here. Now, as you rightly highlighted, there are several tests in those paragraphs, and one is the substantially similar in purpose and function. Now, probably we'll use what we in law say what is reasonable. because we are not going to dive into micro criterion, then to see how substantially similar the mechanism is there in the context. Now, this is one, however, when I look at the first one, it seems to be suggesting that you could have mechanism which is similar in nature to live alongside what is proposed in this protocol. But when it comes to alternative B, then we say that the current protocol will supersede the other instrument, whether bilateral or multilateral, again, to the extent that, you know, the mechanisms are substantially similar in purpose and function. Now, when this happens, I'm asking myself a number of questions, bearing in mind that these are instruments under international law, but they only make sense when they are domesticated. And when disputes arise, rights are affected the moment an action is initiated before the courts. The question is, in the application of not only one substance, therefore, what is substantially similar, second and more important is the application of that provision in time. The more so when a case has been started under regime and the law changes while that case is on, question is how does that impact on rights of the party whenever the case is not completed? What is for me disquieting is that when you look at the entering sub paragraph three, It says that once this is in force, whether it's in force before or after this protocol entered into force for those parties. The question is normally, but I don't know for other countries, but in the common law system, we have what is called savings provisions. So do we include a savings provision there for rights that are acquired whilst a case has already started? These are questions I have for which I don't have the answer right now. Thank you, Chair.

Yeah, that's a good question. Thank you, Mauritius. And I hope that together we will be able to come up with answers to those. I give the floor now to Italy.

Thank you, Chair. Good morning, all. And let us join the voices of appreciation for the huge work you have done. Thank you for that and for this presentation, for conducting in this bright way all this discussion of today. And we are happy to comment altogether this chapter. And if I may step back just to clarify that we also favor optionality coherently with the approach we have also on protocol one. We think that optionality allows, uh, more inclusivity and, uh, it should be, uh, read with the lenses of an open mind, with the idea of getting a compromise. and we agree on the idea of converging on some core mechanism, which perhaps on the prevention is more clear that it should, sorry, for the resolution, it is more clear that it would be the MAP, while it is not so clear what will be the core mechanism for the prevention. For us, we have strong preferences for the APA, especially on a bilateral, multilateral way, but we understand that for some other countries, this is not the case. For us, audits are not technically a prevention method, nor the cooperative compliance procedure are, but we are open to evaluate that if it is the case to get a compromise. And we would like to see more openness on the resolution size as far as arbitration is concerned, because we may end up in some mechanism that could be ensured more neutrality for this country that have concern on that. Having said that, and going to the matters that you are requesting to comment today, we see with favor the sui generis mechanism of consultation. We understand that in some cases it's just a procedural set of provision, but it's a beginning that could be useful in the case where competent authorities of some countries in a multilateral approach have no legal base for any MAP. So again, perhaps it's not the panacea, but it's a good thing that we appreciate to have in this protocol. As for the treaty overriding question, again, coherently with our position on Protocol 2, we think that the supersession of existing treaty by the protocol should be done in alternative A. So existing treaty should prevail unless the parties otherwise agree. And that perhaps could be done again with an annex where it is clarified which couple of treaties must, or also other kind of agreement that could be touched by that. We agree by the fact that the tax base of exchange of information should be found in something that is already in place because for us, the rights of the taxpayers are very important in this respect. We are referring especially to the privacy. and we welcome the approach you have taken. As for the other things, more technical things, we are quite flexible as far as timeline are concerned and other things, but we think that the whole project moves in the right direction. So thank you.

Thank you. Italy.

Okay, thank you, Italy. Just a comment on reservations overall. So once the intent is that once a country has indicated that they have made a reservation on any of the mechanisms apart from the core mechanisms, of course, then another another jurisdiction cannot compel or demand that they engage on that particular mechanism. So if, for example, you have reserved on arbitration, but the other state party with whom there is a dispute would want arbitration to be used, once there is a reservation, then that option is off the table for that particular dispute.

The relationship. The relationship, not only the concrete dispute.

Well, Michael, you better. Yeah. All right, Kenya, you have the floor.

Thank you. Thank you, Khalid. Well, I'll be making my remarks on behalf of the 54 Africa member states. And then as my Nigerian friend says, I remove my hat, but he has a hat, so I remove my coat. And and become a Kenyan and make my remarks on behalf of Kenya. So I think I'll keep it short. The African group appreciates the efforts of the colleagues and the secretariat for preparing this draft protocol on cross-border tax disputes prevention and resolution. So I'll be dealing with the two chapters, chapter four, five, and six, actually three. So on chapter four, we have process of consultations. information exchange and confidentiality. The Africa Group supports strong confidentiality protections and recognizes that effective information exchange depends upon robust safeguards. However, confidentiality requirements should not create unnecessary procedural barriers that will hinder legitimate cooperation among tax administrations. The protocol should strike a careful balance between taxpayer protection administrative efficiency and effective enforcement. Special attention should also be given to ensuring that consultation processes conducted in the absence of an applicable tax instrument did not inadvertently create obligations or practices that interfere with domestic sovereignty or exist the legal basis established under domestic law. That will be it for chapter four comments by the African group, but then I'll go to chapter five. which has Article 5.1 and 5.2 reservations and applications in relation to other instruments. The Africa Group supports an approach under which the protocol serves as the default framework governing dispute prevention and resolution unless participating parties agree otherwise. This approach is preferable because many existing treaty provisions reflect historical imbalances in negotiating power and do not adequately reflect contemporary principles of tax cooperation. The Africa Group recommends that the article on mutual agreement procedure, the MAP, should not be subject to any form of reservation under this protocol. As such, the current text of paragraph one should be redrafted to exclude the MAP. The Africa Group further recommends that clear guidance should be developed regarding the meaning of the phrase substantially similar in purpose and function in the article to avoid uncertainty and inconsistent interpretation. The protocol should establish transparent criteria for determining when another mechanism should not be considered comparable. Well, to conclude on this, will make our remarks, and I think this is a form of critical part of the whole protocol in general. So in overall, the protocol constitutes an important step towards a more multilateral and inclusive tax dispute prevention and dispute resolution framework. Nevertheless, from the perspective of the African group, it requires further refinement in terms of form and substance. so as to ensure that the mechanisms are legally sound, practical, equitable and responsive to differing levels of administrative capacity. A successful protocol should prioritize the following. Number one, it should look at capacity building. And secondly, it should preserve sovereignty. It should protect source country taxing rights. ensure inclusive and equitable representation in decision-making structures, and avoid creating obligations that exceed the operational realities of African tax administrations. These considerations will be essential if the protocol is to achieve its objective of fostering genuinely inclusive international tax cooperation. I thank you, colleagues, and I think that marks the end of the African group representation. As for me removing my coat, I'll do it in a different timeline. So thank you so much.

Thank you, Kenya, speaking on behalf of the African group. So I'm not sure whether I understood correctly. So if you intend to speak in national capacity, feel free to do so, so you wouldn't have to raise your hand again. Mike to Kenya, please.

Well, when you speak on behalf of the Africa 54 member states, you need to rest a bit and ease your shoulders. Thank you.

No, very good. Yeah, understood. Sure. Yeah, the invitation stands. So let's continue. Next, Spain, please.

Thank you, co-facilitator.

This is the first time I'm taking the floor. I'd like to thank you for all the work that you've done. I thank and congratulate the co-facilitators and secretariat. We have a few technical suggestions on the various articles to make the best use of the time allotted. We will refer to remarks in writing that we sent on July 8th. We would like to support the Netherlands. We agree with what they said yesterday about the time frames ought to be indicative in nature. We also agree with France and its comments yesterday saying that the arbitrator could come from one of the states concerned, the national of that state. As for chapter five and Like other States, we think that this article is not necessary. We don't think that it is necessary to establish rules on concrete links between the mechanisms under this Protocol and those that exist in other legal instruments, or determine which of them ought to prevail over the other or be replaced by another. Our experience shows that several mechanisms can coexist without any issues, and that is currently the case with the mechanism provided for in the convention to prevent double taxation and the mechanism in the process for mutual assistance, the mutual administrative assistance convention. And this did not create legal uncertainty, on the contrary. It allowed states to choose the mechanisms that were most adapted to the case in question. So mechanisms can coexist, and it's only when two states parties have decided to explicitly replace one mechanism by another legal instrument that we should allow for the conclusion of an agreement with this goal. However, we believe that the protocol should not provide for the replacement of mechanisms based on some similarity. This could lead to ambiguity as to the relevance of certain mechanisms. Thank you.

Thank you. Spain, United Kingdom, please.

Thank you, Mr. Co-Chair. On articles 5.2 and 5.3 and the interaction with substantially similar existing mechanisms, we are content with the description that has been provided as to what constitutes a substantially similar mechanism. I think I want to echo the comments of both Italy and Spain. Starting with the comments from the distinguished delegate from Spain, we agree to an extent that mechanisms such as this can exist in parallel. He made the point that we have you know, for instance, exchange of information under DTAs, exchange of information under the MAC. There may be exchange of information under under various regional agreements as well. And they they complement each other and don't generally create legal uncertainty or issues. And I think that is because these are, you know, fundamentally permissive mechanisms that allow for things to be done. I do think with dispute resolution, the situation may be slightly different when we're talking about mechanisms that confer rights onto taxpayers. It's easy enough, I think, for States when exercising these rights to, you know, literally pick which one they want or, you know, from personal experience, you know, you'll just tend to tick all the boxes when you're doing an exchange of information request and use everything. I think it's somewhat different for taxpayers. I think taxpayers would prefer to understand exactly what it is they have the right to do and under what procedure. So, Having, well, having not considered it in any great detail, my immediate reaction is we probably should specify which takes priority. And having done so, yeah, the UK supports option A. Throughout, we've made the point that the mechanisms in this protocol should not automatically supersede existing well understood and well functioning mechanisms. Particularly concerned in option B requires both parties to sort of derogate from it. We don't think that would be workable for us. So we strongly support having to positively accede to these provisions under article A, or option A, sorry, thank you.

Thank you. United Kingdom, the Russian Federation, please.

Thank you for giving me the floor. I will be talking about article, chapter 5.2, the proposed mechanism. We believe it's excessively complicated. We would support a simplified procedure for adopting a mechanism. If the parties want to use an existing mechanism, it doesn't need to have an assessment. If there's mutual agreement, the parties can adopt an alternative mechanism stipulated by the protocol. We also propose the reservation that the mechanism should be adopted if the parties did not approve existing mechanisms in effect. We also will give the comments in writing. Thank you.

Thank you, Russian Federation, uh, floor goes now to Germany.

Thank you, Chair. We have two comments on Chapter 4, starting with Article 4.1, para 1. If there is no applicable tax instrument in force, then there are also not specifically assigned competent authorities. To this end, it remains a matter at the level of tax administrations. Therefore, we suggest to use the term tax administration instead of competent authority in this article. On Article 4.2 part two, here we have a question of understanding. Consultation should be possible in cases where no applicable tax instrument is in force between the states concerned. According to our understanding, these consultations should also be case specific, in other words, aim to avoid double taxation for a specific taxpayer. This implies that the taxpayer must be identifiable. Generally, an applicable tax instrument also includes provisions on the exchange of information. If such a tax instrument does not exist, there is usually no other legal basis for tax-related exchange of information. Against this background, does para 2 fall short because it only enables exchange in anonymized form? This is our question. And then on chapter five, I have one question on article 5.1, part one. It is not envisaged that a reservation can be made at a later date. We would like to find out the background to this restriction. I thank you.

Yeah, thank you very much, Germany. The first question pertaining to chapter four, As I said earlier, there are means, so you can have an instrument that allows for the exchange of information without having necessarily a substantive legal basis. Like you don't have a DTA, but you have a tax information exchange agreement or you're signatories to the MAC. So to answer your question. So it is not necessary to limit the exchange of information to anonymous data. On Chapter 5, it is true, as it is currently designed, Member States would have to make the reservations or decide on which options, excuse me, which mechanisms they want to make use of at the time they sign the protocol. So they couldn't do that later. That is, well, of course, we could consider a different approach to it. But the idea is so it is according to the provision, it is possible to withdraw your reservation. And what we could end up in a situation where a country is opting in, is opting out, is opting in, is opting out. So it is also not very helpful for tax certainty. But yes, we could consider, for example, introducing a specific time frame, like once you have opted in, you are not, you as a country must not opt out again or withdraw the reservation for a specific period of time. So to ensure a certain level of predictability and tech certainty. I hope that answers the question. So the floor goes now to Brazil.

Thank you, Mr. Khalid. My comments on Chapter 4, consultations in the absence of applicable tax instrument. We understand that while the proposed framework provides a useful platform for dialogue between competent authorities in situations where no applicable tax instrument is enforced, Its practical effectiveness will be very limited compared to its drawbacks. The draft allows extensive consultation, exchanges of views and even joint fact finding. Yet any understanding reached is expressly non-binding, does not create rights or obligations and cannot require any departure from domestic law. As a result, the mechanism may involve significant administrative effort without providing a clear pathway for the resolution of double taxation or double non-taxation. In addition, the requirement for acceptance by all competent authorities, the absence of objective criteria for acceptance of requests, and the lack of any implementation mechanism may reduce the effectiveness and predictability of the process. So from the perspective of developing countries, the proposal may create an imbalance between administrative effort and practical benefits. competent authority could be expected to dedicate scarce resource to consultation and fact finding process that by design cannot generate binding outcomes, allocate taxing right or ensure implementation of a coordinated solution. The result, the resulting burden may be particularly difficult to justify where the mechanism offers no realistic prospect of resolving the underlying double taxation or double non-taxation. So thank you.

Thank you, President. We'll be back in a sec. Yeah, thanks for bearing with us. So the intention behind this whole chapter four is to provide an offer. We don't mean to offer something that is detrimental to developing countries in particular or any countries that are lacking a treaty network. The question is, is it possible to judge for all countries? Or is it rather that each individual country would have to weigh the pros and cons, like the administrative burden, but it's the possible benefit of having, of having, of using that instrument. And we saw the particular use case or the particular benefit we see, and we imagine that the INC has seen it so far, and those provisions is to allow for a means of consultation, so getting in touch with each other, consulting, speaking with each other and providing for a legal basis for that. And when it says that no deviation should occur from a domestic law, that is to provide comfort and not to limit the use cases or to unnecessarily limit the scope of application of that provision. You good?

Just to add to what Michael said, Claudia. So there are instances when we were conducting our research, there are instances, in fact, Jamaica is part of a regional treaty that has this very issue where there is no MAP procedure in the treaty. And what it refers to is a consultation between the tax authorities. We don't know how many other situations there are like that, but there are countries where there is no basis. So they do have cross-border issues, they do have disputes, but there is no basis on which they can engage with the other state. The intent of including Chapter 4.1 is to provide some kind of framework within countries, within which countries in that situation can reach out to the other tax authority and arising from that consultation, they can decide whether or not, okay, let us have a tier or they may even decide to have a double taxation agreement. We don't know. The whole point is that we are just providing guidance on how you can engage one another in the circumstances where there is no existing legal instrument and you have nothing in domestic law. So that is the intent of it.

Can we open Brazil's mic, please?

Thank you, Marlene, for your explanation. But I think that when you have this kind of provision in the protocol, it creates for the taxpayer the expectation to have some useful result. And we know that in the majority case, we will not have a solution. It is not possible. Of course, that you can in a specific case that we, to be honest here now in Brazil, we already have received something from other country that want to make some consultation without this protocol. But I think that the expectation for the taxpayer and also aligned with the burden for the tax administration that it will multiply when you have this. That's my concern, okay, just to share with you and the other jurisdictions. So thank you.

Thank you. I think it's a valid concern and we'll take it on board. We are consulting.

So thank you very much for your patience. I give the floor now to China.

Thank you, Curtis.

Our comment is also upon chapter five reservation, which is by the Article 5.2 application in relation to other instruments.

Lots of comments shared by other colleagues.

We also don't think the mechanisms under this protocol should supersede any existing mechanisms under other instruments automatically. So if we need to have some choice between alternative A and alternative B, we prefer alternative A. However, we are also trying to figure out the scenario that whether the mechanisms substantially similar could coexist. So we're open to discuss upon this further. Thank you.

Yeah, thank you very much for your openness and discussing a possible third alternative. Franz, please.

I would like to thank the college for your work on this protocol too and for your efforts in providing us with this proposal. I will try to be brief. Regarding Chapter 4, thank you for your previous answers. We have also some concerns about introducing this type of article. Nevertheless, we recognise the usefulness for some states of having a legal basis in the absence of a tax treaty. But we cannot support the implementation of such a mechanism without substantive rules. So to better understand how this consultation mechanism would work in practice, we would like an example of the type of dispute it addresses and the legal means available to reach a solution in this case. We would like also underline that there is still the diplomatic way if it's necessary. Regarding the chapter five, we prefer to apply the principle of optionality to the entire draft protocol and believe that the opt-in mechanism is the most appropriate for this purpose. Regarding the article 5.2 and 5.3. As Spain said, if we have to make a choice, we strongly support option A, which provides for an opt-in mechanism. We think it's also easier for us to manage administratively an opt-in mechanism, and it allows choices to be made on a case-by-case basis. without having to generally override all other instruments in force. We thank you for the definition given to the concept of a mechanism substantially similar in purpose and function, but we would appreciate further clarification to ensure proper coordination between existing instruments and mechanisms provided for in the protocol. That's all for me. Thank you.

Thank you, Franz. And as for the first point concerning an example for chapter four, if I remember correctly, we discussed an example. Must have been Nairobi, but of course we are happy to revisit that again in the next intercessional period. Okay, thanks. Singapore, please.

Thank you, Colleen. We have a few points on chapters four and five. On chapter four, we note the legal impediments highlighted by several member states in previous intercessional meetings that where there is no applicable tax instrument, there is no allocation of taxing rights and accordingly, no dispute. While we agree with this observation, we note that the absence of a dispute does not necessarily mean the absence of double taxation. In this regard, we think this provision could play a useful role in certain instances, for example, in transfer pricing cases where both jurisdictions wish to adopt arm's length pricing in their domestic laws, but lack an applicable tax instrument to jointly develop the appropriate arm's length price. We therefore welcome the inclusion of this provision in the protocol, which will allow member states to engage one another on a voluntary basis. On Chapter 5, we share the views expressed on Chapter 5, reiterate our earlier comments that optionality should be preserved to encourage participation and ensure effectiveness, and that APAs and MEP are the appropriate core mechanisms. On Article 5.2, we share the views expressed by Spain, Italy, the UK, China and France, and support Option A. Existing tax-related instruments are concluded after much negotiation and compromise and should be respected with any superseding requiring the consent of the parties involved. Thank you.

Thank you, Singapore. Just to quickly reflect on one point that you made, you were saying that not having a dispute does not necessarily mean not having double taxation. That's interesting. I had an exchange yesterday in the corridors and that goes back to the question what constitutes cross-border dispute or how are we going to define or not define dispute. Is a dispute only something that can be resolved or can you have a dispute that is unresolvable? You seem to be leaning towards the second interpretation, but at the same time we have to be mindful that We all acknowledge that there are instances where we have a dispute and we go into a MAP procedure and despite all our efforts, we cannot necessarily resolve the dispute. What is happening then? The dispute just not disappear. So kind of we are acknowledging that you have disputes that just can't be resolved and probably yet when you don't have a substantive legal basis, it might be true that it is a dispute that is just unresolvable. Very good. Austria, please.

Thank you, co-leads. As it is our first intervention on Protocol 2, we would like to express that we appreciate the considerable efforts by the co-leads in advancing the work of Workstream 3 and in preparing the first comprehensive and well-developed draft of Protocol 2. We recognize the significant work that has gone into bringing the various proposals together and facilitating our discussions. Austria is of the opinion that any mechanism established under this protocol should not supersede existing arrangements unless the states concerned expressively agree otherwise. Therefore, we support the inclusion of option A as expressed in Article 5.2. We would also like to emphasize that Austria already participates in a well-functioning international framework for dispute prevention, dispute resolution through its extensive treaty network and other established international instruments. So from our perspective, it is therefore of fundamental importance that the protocol complements rather than duplicates or undermines existing mechanisms that participating states already consider effective and efficient. Thank you.

Thank you, Austria. Ghana, please.

Good morning. And thank you, Chair and the colleagues for the opportunity once again. I think yesterday we gave you all the congratulating messages and so I'll proceed on that same message by saying we thank you for the work done so far. Ghana aligns itself with the statement made by distinguished delegates from Kenya, foreign on behalf of the Africa group. And as same has been seconded by other member states, Ghana want to make this statement or this comment in our national capacity. With respect to article four, there is a consultations, even though we appear to be indifferent, but then in terms of legalities, reading through article 4125, as distinguished delegates from Brazil just said, it appears that the end result is nothing really because whatever conclusion that will end up, it will not resolve anything. And I was just thinking, following from Melane's point that there could be situations where There could be a treaty but lacks a mechanism to resolve a dispute. So it means that there is a legal basis in that circumstances but the legal basis is short or fall short of a mechanism to resolve that dispute. So in that sense, which means that we can redraft the paragraph one to reflect that where there is no applicable instrument in force or applicable instrument lacks mechanism to resolve, then of course in that contest, there is applicable instrument, but it lacks the mechanisms of dispute resolution. For that matter, then you bring the person into this scope to resolve that dispute. But taking on Michael, the issue we raised with respect to what is a dispute, just on the, I mean, I think ordinarily we all know that one, the two parties have signed onto a particular agreement. And for example, there's a DTA as we have all spoken about, and somebody say, I have a taxing right, and you say, I don't have a taxing right. So we have a common ground to then come to, there's a dispute because we have a disagreement on a common basis. But where there's no applicable instrument in that regard, it becomes quite difficult. So which is why I'm proposing that Ghana is proposing that we can then look at it from that contest to refine it so that the competent authorities of the respective states can now come to the table either through consultation or they can do any of the mechanisms, particularly map that we are seeing as a core mechanism. So that is that on the article four. Chair, let me go on to the reservations. And as certainly stated by our distinguished delegates from Kenya, for the we have an Africa group. We are also in support that once we have the map as a core mechanism, which of course Ghana aligns itself 100% with that, then the paragraph one should be redrafted to exclude map article for being reserved. And I make this point because Michael, I think in your submission, you made a point that You don't want a situation where we have dispute resolution protocol and people just opt in, opt out, opt in and opt out. Then at the end of the day, what are we having here? The reason why we've gathered here is to ensure that we resolve disputes that are arising from cross-border tax matters. And that's the reason why this protocol has been given birth. If we cannot have a core mechanism to deal with it and we allow member state to make reservations as and when they wish, then of course, the whole protocol is of no essence to us so that is why we strongly support that the map become a call and not subject to any form of uh reservation now the issue with respect to then that leads me to the issue of uh relationship with other instrument um Ghana um strongly align itself with the Africa group position in choosing option B and with further refinement of that text to take away the issues of reservation in the last bath last line or last two lines paragraph in that text so that we can have a mechanism to resolve disputes that is I mean emanating from cross-border matters the reason being that that's why we are here so if we don't do that and allow member state to do options and allow existing uh uh uh mechanisms that we have all um to a large extent if you read the issue note member states have critiqued the existing Frameworks and that's what gave birth to this protocol and so it will be appropriate for us to have it as a the default rule and of course we will give room for transitions, which I think has been made available within the text that is under Article 5, where there's existing mechanism trying to replace, then there is already in place dispute mechanism ongoing under a particular framework. We give a transitional provision for those dispute to continue under the old framework until the time that the dispute is resolved under those frameworks. I so submit, Chair. Thank you.

Thank you very much, Ghana. We now move on to Switzerland.

Thank you, Madam Co-Lead. I had a couple of remarks regarding Article 5.1 and 5.2. Just a question for reservations because Michael had also mentioned the different, the numeration here. Are we to understand that we're going to have five reservations possible in part two and three, and two in part three? Is that already like giving us direction and the number of reservations or is this kind of a random list that we could add to or subtract to? And then that's my question. My remark is regarding option A or option B. Not surprisingly, we strongly are for option A. I'm wondering if there's a huge difference between the two options because it seems to me that in both situations, option A or option B, the default rule is there's no superseding since in option B, if there's a reservation, then we go back to no superseding. So do we really need option B here? Because both options need the agreement of both countries to have a superseding. And if they both agree to it, then the superseding rule is in effect. But if only one of them wants superseding rule, both in option A and in option B, we'd have the situation where the mechanisms that are in place do prevail over the provisions of the treaty.

So in answering your first question, Switzerland, in previous INC discussions, there was support for having a core mechanism for the prevention of tax dispute and having a core mechanism for the resolution of tax dispute. Despite the overall concept of optionality, which means that when you take all the mechanisms, so currently we have, in total we have six preventive mechanisms and three resolution mechanisms, so it will mean that, at a maximum you could reserve on five preventive mechanisms and two resolution mechanisms. And you're probably right that the question whether the protocol is going to have a superseding effect or not superseding effect is particularly relevant when it comes to the core mechanism because all the other mechanisms Member States would not want to have a superseding effect, it just would not need to opt in, but at the same time it would be unfortunate because it could want to utilize that optional mechanism vis-a-vis some other signatories with which there is no other mechanism already in place. But yeah, in particular when it comes to the core mechanism there, it is decisive. Did that help? No. Go ahead. Mike to Switzerland, please. Can we open?

Oh yeah, we can. Howdy. No. Yes, that's very clear and that's helpful. Actually, I was miss, because my next remark was, I was seeing reservation as reservation regarding paragraph 5 because if you look at option B, it says has made a reservation in accordance. Okay, yeah. I'm sorry. So I thought reservation was a reservation on the fact on 5 which you can't make a reservation on. So I understand. So it is true that option A is not exactly the same as option B and I understand So I understand that we need at least one core mechanism in the different parts. Does that mean we're going to have that many optionality? Have we already decided the number of optional, we're going to only have one core mechanism or can we have more core mechanisms? I was just wondering where we are in the process of our reflection.

Very good. We haven't decided anything yet. But we have discussed a lot. And according to those discussions, there is appetite for having one core mechanism for resolution, one core mechanism for prevention, at least. I deem it very unlikely that we will identify two preventive mechanisms as being core. Thank you.

Okay, next we have Lesotho.

Thank you, thank you, and good morning. The SOTR Alliance itself to the position advanced by the Africa group, SSS provided by Kenya. We just want to indicate that we are one of those states that we're looking forward to to see the kind of provisions that we see in chapter four, article four, because we have a limited treaty network and we don't intend, or it's not possible for us to extend that treaty network. But while that is the case, the trade relations and economic relations extend way below the treaty network that we have. We currently have practical situations whereby taxpayers have said such and such a jurisdiction is refusing to recognize the withholding tax that is so charged. And we have not had any recourse to what we can do. In some other instances, we have relied on a forum like this one to actually start to engage. So for us, it's a welcome remark. We understand the logic behind that because what it says is that you can only do what your domestic law allows in terms of the secrecy provisions that we have. in terms of having to resolve or assist the taxpayer. So that is the logic that we read in Article 4. And I think to make sure that in practice it works, because member states raised issues of whether there would be, technically there would be a competent authority for such instances because there are no instruments, legal instruments in place. I would say for practical purposes, it can work. Maybe one of the things that we can do is to have a list of competent authorities for purposes of the protocols on other instruments at the UN level. Otherwise, it's always easy to actually go into your website and find as to who the competent authorities are. And that being the case, it gives the safeguards that you don't just send the, the letter to the tax administration. So in short, I'm trying to say it is still possible to actually have a look as to who is the competent authority for other treaties that you are not part of, and then be able to send that. And then you are almost sure that the person would actually do all the necessary safeguards that are required. So you don't necessarily, we don't necessarily need to have to change the wording or reference to competent authority in the draft provision that we have. Otherwise, I think this is a very welcome remedy for us. Thank you, Chair.

Thank you, Lesotho. Okay, we next move on to Zambia.

Good morning.

Good morning.

Thank you for the floor. Zambia supports the position advanced by Kenya on behalf of the African group. In terms of chapter four, four one, under paragraph three, we acknowledge the safeguard with consultations being triggered by consensus.

Once the competent authorities involved all accept. We also acknowledge the fact that the process will be driven by the competent authorities who agree.

On the modalities and the scope.

In terms of chapter five, we echo what was submitted on behalf of the African group and.

State that there should be no reservation to the map.

Which in our view we submitted yesterday should be the core mechanism for dispute resolution. In terms of Article 5.2, we support option B, which was also supported by the.

African group and several countries which have spoken. Thank you.

Thank you very much, Zambir. Next, we have Morocco.

Good morning. Thank you very much for the document provided and for the presentation. First of all, Morocco Alliance fully supports the statements presented by Kenya on behalf of the African group. And we would like to highlight three issues. The first thing is to say that we agree and we share the concern expressed by Brazil about the procedure of consultations because as we said earlier, from our viewpoint, we think that this protocol should cover and should address only cross-border tax disputes. So leads us to the interesting question, what is cross-border tax dispute? So in our understanding, we might have cross-border situations like two countries each applying domestic law could lead to cross-border situation where there is double taxation, but there is no common instrument to solve it. So here it's cross-border situation, but it's not a dispute. So as expressed by the distinguished colleague from Ghana, to have a dispute we need a common legal instrument. So the two parties do not share the same interpretation or have divergent way of implementing the legal framework. So in this case, we think that if we don't have that legal instrument, that legal instrument, so each country should be able to apply its domestic law. There is no dispute. And even if we come to have a consultation on that situation to try to avoid it, there is no way, there is no legal basis for, at least for us, if we are party to the consultation, there is no way to depart from our domestic law to find a solution. So that, the solution would remain unless we have other guidance on that. So the second point is about the relation with other instruments. So here we have rules that discuss the relation with the tax related instruments, but we know that we have other instruments which are not tax related instruments as they are defined in the protocol, like investment agreements that in some cases provide for different dispute resolution mechanisms. Say for any disputes between the two states, this is a way to address it. And so they include also even tax disputes. And we know that this kind of agreements are not tax related instruments. So I remember that there is a work that was undertaken by the UN tax committee about the interaction between the tax treaties and investment treaties. And I think it is important and it is worthwhile trying to address the interaction between this protocol and those instruments. And the last issue I wanted to discuss is the fact that we don't see in the final provisions about the amendments, for instance, of the protocol, because in our understanding this protocol would be open for signing, I think, maybe. So should we expect to have additional articles to that protocol? just to define ways if we need to amend, for instance, this protocol. Thank you very much.

Thank you, Mr. Wacko, for your very good remarks and questions. As for other provisions, there are final provisions that still would need to be added to the draft. And then I also wanted to come back quickly on, which is a set about ISDS and investment agreements. Yeah, occasionally, more than just occasionally, they are being applied in tax related matters. That was something that was mentioned yesterday occasionally by some of the delegations. I think Given the current definition of what is supposed to be substantially similar, I would assume that it would be quite a stretch to consider investment, like dispute settlement provision and investment agreement as being substantially similar because it is about, in terms of objective Do they provide a comparable framework? Do they come with the same level of protection, safeguards and legal effects for achieving that objective? I would say no. But of course, it's not just to me, you know, to make the judgment. But for the time being, I wouldn't I wouldn't wouldn't say so. I don't know whether that gives a level of comfort or not, but at least that is my reading of the text. Can we get the floor to Marouk please?

Yes, thank you for the explanation. So I cannot reply right away. I just need to go back to the text and read it on the basis of your explanation and maybe discuss it in another occasion. Thank you.

Well, of course, happy to discuss. I also didn't mean to confront you with a follow-up question. It was just meant to be a reaction and clarification. Thank you.

Okay, thanks. Thank you, Morocco. And now we have Japan.

Thank you, colleague. We would like to echo the statement made by Italy and the United Kingdom and others. We also support option A, which would allow existing mechanisms to continue to apply.

At the same time, we thought it may be.

Useful to provide a mechanism through which the relevant competent authorities can reach a common understanding as to whether a particular mechanism should be considered substantially similar to help provide greater certainty for both taxpayers and tax administrations. Thank you.

Thank you very much, Japan. We know how Netherlands, please.

Thank you, colleague, for this. On chapter four, we do see merit in this provision and it provides, in our view, sufficient safeguards in practice to apply or not apply it because it's a country-driven procedure. So if a country does not want to engage in the procedure, it will not take place and it's not a taxpayer-initiated procedure as such. And we can identify some cases where this can be an helpful instrument where there's no tax treaty in force. For example, on the question if there's a PE or not, it would be helpful to have a factual exchange of positions and facts and circumstances. So you could be able to solve a case without having an agreement between two states. And we do echo the comment made by Germany on the fact that it's not the competent authorities per se that need to do this, but more tax administration driven. Secondly, on chapter five, we echo also the comments made by the distinguished delegate from the United Kingdom on this part, but in principle, we also would support alternative A, although we have some questions in terms of what is substantially similar, like has been raised by other delegates as well, For us, it's not entirely clear what is meant by the clarification given in paragraph three of article five point two, I would assume. For example, level of protection, safeguards and legal effects. What is meant by this? Is it meant to say that if you have a map provision that is modeled after the OECD or UN model provision, that is substantially similar and then there would not be a superseding effect. It would be helpful to get some clarifications on that point. But if we consider it on an overall basis, we think that only the MAP and potentially arbitration provisions are the one mechanism that have been foreseen in tax treaties and any of the prevention mechanism are generally not available yet. So there would not be a superseding effect, but it would be a new provision to be introduced. In terms of a coexistence, We see some difficulties that have been raised by other delegates as well as to the persons that have to apply these, especially taxpayers that do not personally be aware of which provision applies at what time and place. So it would be helpful, I think, not to have a coexistence, even though it has been mentioned that in other examples there can be coexistence for the dispute prevention resolution mechanism, it would be helpful to have more clarity and that brings us to a question in this regard. And maybe it's too soon to raise the question, but we thought it would be helpful to have an understanding on this, how this would be monitored, this may be a too big word, but how would this be in practice be seen? Would that become a publication of list where this would effect would be made clear or has it to be determined on a case by case basis with the protocol in hand? And we believe that it would be helpful to some extent that you could identify in a very easy way which of the protocol mechanisms apply for certain country or short treaty relations. Thank you very much.

Thank you very much, Netherlands. Next we have Algeria.

Thank you, co-chair. We also thank you in the Secretariat for all of the details provided and the various approaches presented to resolve disputes. With regard to Article 4, in the reading of this article, it's left up to each competent authority of each state to have complete discretion to accept or refuse a request for consultation without criteria for this preliminary assessment. That means that any request, even if it is insufficiently justified, needs to still be addressed, analyzed, and decided upon, and that requires administrative time from the very beginning of the review of the request. Therefore, we echo the statements made by the African group and the African states as well as Brazil, which raised a concern regarding this mechanism in the case of African tax administrations. They may be forced to dedicate a great deal of time and resources to these consultations without having the appropriate legal resources to be able to gather all the relevant information. This mechanism could require significant investment in terms of data collection, technical exchanges and meetings for a non-binding and non-guaranteed outcome. Therefore, we believe that the cost benefit analysis might not be favorable for an administration with limited resources because it needs to spend time and expertise on a result that may not provide any legal security. But we do believe that, and we are concerned with regard to consultations in this protocol because there is no possible reservation or option when it comes to using this process from the beginning. As for article 5, the mechanism is supposed to serve as a basis for dispute resolution. Lastly, the efforts in the protocol to provide for a structured mechanism for a harmonised application to effectively prevent conflict, we believe that this protocol ought to serve as a basic framework for prevent conflict prevent dispute prevention and resolution.

Thank you very much for those remarks. Algeria. Now we move on to Israel, please.

Thank you, Chair. We echo Italy, Austria, UK, China, Swiss, Netherlands and all. We don't think the mechanism in this protocol should supersede the existing mechanisms. We see it as an option in cases when we don't have any other tax related mechanism available. So it's option A. Thank you.

Thank you very much, Israel. Finland, please.

Thank you, co-lead, and thank you, co-leads, for all the work done with this protocol. First, it's very much appreciated that the draft presents alternative use as options. We would hope that this would be done in other work streams as well. As regards Article 5.2, we would like to express support for option A, although we do have questions on what is substantial similar, but maybe further work with explanatory notes could be helpful for these purposes as well.

Thank you.

Thank you. Finland, Denmark, please.

Thank you for giving me the floor.

As this is the first time we speak on this protocol, I want to take the opportunity to express our gratitude to all the work done also in this protocol. Prevention and resolution of tax dispute is, from our perspective, a key element of international tax cooperation, and we therefore support the work done in this workstream.

For the question on the legal grounds regarding exchange of information, we share the sentiment expressed by our Italian colleagues and we align ourselves with that intervention. For the question regarding Article 5, we have a preference for option A and hence we align ourselves with many colleagues that have spoken before, including Italy, Spain, France, Japan, China, Austria, just to mention a couple. Thank you.

Thank you, Denmark. Nigeria, please.

Thank you, Madam Co-Lead. Greetings to you. And thank you also for the good work that you have been doing since the commencement of this protocol. First, I want to say that Nigeria aligns with the position of the African group has been expressed. And we also want to make the following further intervention in our national capacity. Taking it from chapter four, consultation in the absence of an applicable task instrument. We've been so patient to listen to our colleagues. And I agree with those that said that we need to go back to the drawing board to ask ourselves what exactly is the objective, what do we intend to achieve? College, I believe our purpose is to develop a protocol that will preserve and resolve cross-border disputes. And if that were the case, and I, or if that is the case, then it is important that we first determine whether there's going to be a cross-border dispute when there is no applicable tax instrument. I've listened to the example that was given by the Kingdom of Netherlands and without an applicable tax instrument, you will be doing that argument based on the respective domestic laws of the parties concerned. I doubt if I will be able to convince you or convince any other state party based on the provision of your domestic law. So if I'm not able to do that, then we'll do a lot of merry go round. Under the provisions of the map, when there is an applicable tax instrument, we all agree how long it takes to even reach an agreement if you are able to reach one. most instances you agree to disagree. Resources that will be required are so intense, are so enormous. For us as a country therefore, if nothing is broken, we don't believe we should fix it. In that wise, we do not see any merit in this article at all. And I know that has been canvassed. by majority of other colleagues, including Brazil, that raised the issue. On the reservations, thank you for the two options, option A and option B. And the phrase, when they are substantially similar, I think that is the phrase, if I don't miss it up. And that will take us to definition, to begin to now define what makes it substantially similar and what makes the mechanism not to be. And assuming we take it that they are substantially similar, it therefore means whichever one that I choose will do the same thing. But we know they cannot in all terms and purposes. The current rules have certain imbalances. that have been addressed. And what I know, everyone preferred a newer thing. Why don't we go for a newer fashion that we are developing? So as a country, we therefore feel for option B. And also in that option B, I observed the last sentence and I recall that a distinguished delegate has raised that. the last sentence unless a party has made a reservation i think it was Ghana that raised it in accordance with article v one or those parties agree again in accordance with article v three that last sentence we do not see any merit in it again and we believe we will propose that we should take it off from that a further justification is that the reservation mechanism ensures that parties to the protocol can indicate their preferences and limitation when they are signing the protocol. So this has preserved the principle of optionality. In our view, option B is the most realistic choice, as I've tried to explain. Imbalances of the old treaties will be addressed. And we know that this is not really easy to renegotiate those treaties. I thank you so much, Madam co-leader.

Okay, thank you very much, Nigeria. Senegal, please.

Thank you, Madam co-facilitator. Good morning, everyone. Senegal echoes the comments made by the African group delivered by Ghana. In our national capacity, we would like to make a number of observations, especially with regard to Article 4 on exchange of information and confidentiality. Why are we exchanging information under this protocol? We're doing so in order to best resolve through mutual agreement transboundary disputes that could arise out of this protocol, whether these are disputes linked to double taxation or a dispute linked to different interpretations of a provision or provisions of the law. So what does this mean? This means that there is a legal and binding instrument that exists. And if you didn't read up this instrument, you would not be able to resolve double taxation or have any kind of misinterpretation because it wouldn't have any instrument that we have in common. And in this situation, it would be domestic law that applied. So I think that we need to understand that the very existence of the mutual agreement procedure is based upon an instrument. In the absence of an instrument, we would not be able to have a mutual agreement. That's the first point. And that is why I have questions about the relevance of paragraph two, where if the conditions under paragraph one are not met, then we turn to a negotiation and sharing of the anonymized information. Even if you share this information to resolve that dispute, that would be a different problem. which is why it would be useful to revise this provision to make it more in line with certain standards in the area. What could be used as an alternative and which would require further development would be to consider the protocol as a legal instrument. At that time we would be able to resolve these issues. With regard to reservations, I don't want to dwell on that for too long, but I am in full agreement with the comments by Nigeria on the notions that have to be clarified and on alternative B, which we think is the most realistic option. Thank you.

Thank you, Senegal. India, please.

Thank you, Madam Collett. On the issue of application in relation to the other instruments, we believe that the dispute prevention and resolution mechanisms available under existing tax instruments should continue to operate in parallel with those provided under the protocol, subject to the preferences exercised by the state parties. We recognize that the core mechanisms, as well as any optional mechanisms adopted through the protocol may involve procedural aspects that differ from those prescribed under existing bilateral agreements. In such circumstances, we believe that the procedures available under the existing arrangement should be permitted to continue alongside those established under the protocol. This may, however, result in different approaches to dispute prevention and resolution being available with the same Member State under the DTA on the one hand and under the Protocol on the other hand. At the same time, where such parallel application is permitted, an important question arises regarding the status and sanctity of a mechanism specifically negotiated and incorporated into the Protocol. If the protocol mechanism could effectively displaced whenever an alternative mechanism is available under an existing bilateral agreement, this could undermine the purpose and legal significance of the mechanism that the member states have expressly agreed upon through the protocol. The experience with the MAC visa with the bilateral tax agreements may be relevant in this context. In our experience, these instruments operate largely within the competent authority to competent authority framework. Accordingly, where mechanisms coexist, the competent authorities are to make an informed choice as to which mechanism should be applied depending upon the circumstances of the particular case. Such choices can be made based on certain objective consideration without necessarily creating an opportunity for strategic selection by taxpayers. However, where the taxpayers are directly able to choose between alternative dispute prevention or resolution mechanisms, the consideration may be different. There could be a possibility of taxpayers selectively invoking the mechanisms that offer greater procedural or substantial advantages. Therefore, while allowing existing arrangements to continue in parallel may be appropriate, The framework should ensure that such coexistence does not inadvertently dilute this entity of mechanisms specifically negotiated and agreed upon under the protocol or create opportunities for strategic selection of mechanisms by the taxpayers. And in this regard, it is important that more clarity is brought to the provisions of paragraph four of article 5.2, which presently describes substantially similar in purpose and function based on very broad parameters with comparable framework, level of protection, safeguards and legal effects. More clarity on these parameters would be really helpful in maintaining the balanced approach. Thank you.

Thank you, Indio.

What was your question?

Liechtenstein, please.

Thank you very much, co lead. I would like to echo the statements of Italy, Austria, the UK, Switzerland, Israel and others. If both States agree that a well functioning instrument is already in place, this instrument should not be superseded by another instrument. Therefore, we would like to indicate our support for option A. Also, as has been mentioned by the Netherlands and others, we would appreciate further clarification regarding what the similar mechanism is.

Thank you very much.

Thank you. Ireland, please.

Thank you, Madam Co-Lead.

A short intervention just to say that on Chapter 5, Article 2, we prefer alternative A and the other.

Chapters we will follow up with written comments. Thanks.

Thank you. And Portugal.

Thank you. My intervention will also be short, just to say that regarding Article 5.2, we support option A. Thank you.

Okay. United Arab Emirates, please go ahead.

Thank you, co-lead.

This will also be short, just to echo the sentiments of the last two interventions that we also.

Support option A as well.

Thank you.

Poland, please.

Thank you very much, Mr. Kolig. Just a short position. We support option A. Thank you very much.

Tanzania, please.

Thank you, colleagues. The United Republic of Tanzania aligns with the African group statement delivered by Kenya, and which of the African delegation have expressed their similar concern. On chapter four, colleagues, the consultation in the absence of the applicable tax instruments may create illegal and impractical uncertainties where there is no agreed instrument governing the allocation of taxing rights. It may be difficult for the competent authorities to resolve the differences from conflicting domestic laws provisions. We therefore support the proposal to be removed. On chapter five, Tanzania supports alternative B.

That's it.

Thank you, Khalid.

Thank you. Tanzania. Okay, I'm just giving some time if there are any other member states that wish to make an intervention before we move to civil society. Thank you. Okay, so I see Malta and then to be followed by Burkina Faso.

Thank you very much co-leads, um, as this is the first time we are taking the floor on protocol two, we would like to thank you for the work done on the draft, um, on chapter five and article 5.2. Malta supports effective dispute prevention and resolution mechanisms. However, any such mechanisms should be clearly aligned with existing treaty frameworks, should respect domestic legal and constitutional requirements and should not create binding obligations for a party unless that party has expressly accepted them.

I thank you.

Thank you very much, Malta. And now Burkina Faso.

Mr. President.

Thank you, Madam Co-Lead. Burkina Faso aligns itself with the position expressed by the African Group, which was expressed by Nigeria, and we also agree with what Nigeria, Morocco, Lesotho, Senegal have said, in addition to Brazil, India and several other countries. We are in favour of option B and we support the idea of the mechanisms criteria being further clarified so that we avoid any kind of misinterpretation that would render the scope of the provision difficult to understand.

Thank you.

Thank you. And Estonia, please.

Thank you, Madam Co-Lead. Just a short intervention to support option A in Article 5.2. Thank you.

Okay, thank you. All right, so we're now moving to civil society. BCAS.

Thank you, Co-Lead.

My comment is on Article 5.1.

The state gets rights to make a reservation at the time of signature and the state.

Is allowed to withdraw the reservation at subsequent stage. However, the article does not allow the state to make a reservation at a future date.

It is possible that the state.

Does not make a reservation at the time of signature, but based on its experience for couple of years, the state is not happy with the particular mechanism and wants to stop applying such a mechanism. Article 5 does not allow reservation at a subsequent stage in such situations.

The question is at a policy level should a state be allowed?

To make a reservation at a subsequent stage which means to stop applying a particular mechanism at a future date.

Now it was stated that a frequent opting and opt-outs will not be desirable but if an option to opt-out is not kept open a state may hesitate to opt-in to begin with.

Accordingly.

A desirable policy could be to allow the states to review its policy.

Decisions at least as regards to non-core mechanisms two years after opting in and every five years thereafter.

This will give desired certainty and stability to the regime and will also ensure that the state is not stuck with the mechanism which it doesn't like.

If this policy is desirable, para one of article five may be amended.

The revised text could be a state.

May at the time of ratification, acceptance, approval, accession or thereafter reserve the right not to apply.

And the balance statement will continue.

Thank you.

Thank you very much. We now move to IBDT. And I'm using that because if I attempt to translate Alright, let me make an attempt. So this would be the Instituto Brasileiro de Direito Tributario. So I hope from that you know who you are, the IBTT, IBDT, please. I'm sorry for butchering the Portuguese, but it's our civil society group.

Well, we kept them waiting for a while.

Oh, they're no longer here.

I cannot blame them for leaving.

Or was it the translation that or the attempt to identify them that scared them away? All right. No, I haven't.

No, really.

Okay. All right. So we're not nobody's responding. So let us move on to the DMUN Foundation, please.

Thank you for the floor. The financing for development constituency for children and youth of the major group of children, youth and the DMUN Foundation welcomes chapter four, article 4.1 as a practical framework for consultations where no applicable tax instrument is enforced between the parties concerned. This mechanism may be particularly useful for jurisdictions with limited treaty networks while preserving the authority of each party under its domestic law. Paragraph one establishes a balanced scope by addressing both double taxation and double non-taxation, The provision appropriately limits the purpose of consultation to clarifying facts, comparing administrative positions, and considering whether relief or other action is available under respective domestic laws. It therefore does not create taxing rights where require a party to provide relief unavailable under its law or operate as a substitute for a tax treaty. The reference to an identified tax issue provides an appropriate there are sold for initiating consultations in technical terms. The issue should have substantiality concrete connection with each party concerned such as the treatment of the same income transaction entity or taxable event this helps distinguish case specific consultations from general discussions on tax policy paragraphs two and three appropriately ensures that requested competent authorities receive sufficient information to assess the matter and that participation remains voluntary any identifying information should be reasonably necessary and proportionate proportionate, handled in accordance with applicable applicable conventionality requirements and requested with due regard to different legal mandates and administrative capacities. Paragraph four provides an important procedural safeguard requiring prior agreement on the scope and practical modalities. Such agreement can clarify the participating authorities issued covered timetable channels of communication, treatment of confidential information, and any arrangements for engagement with affected taxpayers. We encourage competent authorities to record the agreed scope, timetable, communication channels, and treatment of confidential information. Paragraph five permits the exchange of views, clarification of facts, and joint fact finding These functions should remain within legal powers of each participating authority. Any exchange of taxpayer information would require an applicable legal basis and would remain subject to relevant confidentiality, data protection and permitted use requirements. Joint fact finding should likewise respect territorial jurisdiction and domestic procedural safeguards. Paragraph six correctly confirms the non-binding character of any understanding reach. This is particularly important in the absence of an applicable tax instrument. The provision preserves each party's domestic tax authority and prevents the consultations from creating treaty-like obligations by implication. Any record of the consultation should distinguish clearly between agreed facts, administrative views, and unresolved issues. At the same time, an understanding may still have practical value of identifying agreed facts. areas of convergence and matters that remain unresolved. Clearly recording these elements can support consistent domestic consideration without determining tax liability or producing administrative and judicial remedies. Overall, the article establishes a technically balanced mechanism for dialogue in non-treaty situations. It may assist in addressing cross-border tax outcomes while respecting consent, domestic law, territorial sovereignty, and the independent taxing rights of all participating parties. We thank you.

Thank you. We now have ATAF, please.

Thank you very much, colleagues, and good day, everyone. We make the submission here to first and foremost align this submission to the comments already made by Kenya on behalf of African group, and of course some supported by a couple of other African countries. So just a brief comments to reinstate those submissions. One, on the first chapter in relation to consultations, whereas the provision tried to provide some flexibility on how that will work in practice, We have a significant concern on the lack of legal basis upon which such consultations would be based. In our previous submissions, we did give a couple of examples where this will be clearly frustrated. and I want just to reiterate those. For example, whereas many jurisdictions would have arms length standard reflected in their domestic laws, there are a couple of nuances in terms of the scopes and scope of those provisions that will be reflected in the domestic law. For example, there will be preference on certain methodologies or maybe the source of comparables and in relation to the permanent establishment, the definition could actually be different from one country to the other and even more deeper, uh, how profits will be attributed in those PEs. So in case of a concentration that is premised on those significant differences, uh, we struggle to see how you end up even having a solution out of it. because those consultations are intended to be non-binding as we see it, and what it does for a low capacity jurisdiction in terms of the resource base, then it takes away valuable resources in engaging those type of consultations which actually don't end up resolving anything due to limitation on the existing domestic law. So our preference, as members have already indicated, we don't support having this chapter. On the issue of reservation, we also want to support the comments made earlier by Kenya, of course supported by others. It's very important that the core mechanism is not open for any reservation that will relate to the map. And then in terms of Article 4.5.2, we strongly support option B, which is really intended to address the problems and the gaps that exist within the current mechanism. If that is the end goal, so it's good to take that option that seeks to address those challenges. Thanks.

Thank you, India. Sorry, ATAF, sorry. And now we have the Institute of Development Studies.

Thank you very much.

Co-lead for the floor, I want to reflect briefly on chapter four, the consultation mechanism.

I think the concern that this may lead to administrative burden without much benefit is valid and the protocol should.

Certainly not.

Lead to excessive costs for jurisdictions. Nevertheless, I do see the potential of that to provide benefit in certain cases, for example, where there are currently many domestic laws of countries that make reference to domestic laws of other countries, for example, in provisions on unilateral.

Elimination of double taxation, for instance, make reference to if a certain law tax is an income tax.

Or is not an income tax.

Or yeah, there are certainly other instances, like sometimes rules that provide for.

More heavy taxation in case the other jurisdiction has preferential regimes, circumstances like that.

So there, I think one can find many examples. And the domestic law of the other country is then interpreted by one country, and this interpretation might perhaps not be accurate, and the other country could raise or point out to the other country that the interpretation is.

Perhaps wrong and in that sense there might be scope for finding some kind of agreement in the consultation.

That said, as I mentioned at the beginning, the cost should not be underestimated, so it might be appropriate to allow a reservation for that kind of chapter. just as an idea for how to go forward with this.

Thanks.

Thank you very much, I guess. I don't see anybody else asking for the floor. Alright, so I'm not seeing anymore anybody raising their flag or your microphone for the floor. We just want to say thank you very much for the engagement over the past one and a half days.

Thank you.

I wanted to support what Nigeria said on behalf of the African group and I also wanted to express our support for option B. Thank you.

Alright, going once. Alright, so now I can extend gratitude to all of you who have engaged. I think we had some really good discussions. They were rich. in substance and has given us a lot of food for thought. Of course, we will reflect more on these in the workstream meetings. And just to remind you that for protocol two, the deadline for written inputs is August 24th, and so we look forward to your inputs there as well. I, at this point, apart from thanking you, I also want to say special thanks to the Secretariat, which I said before, but you know, there cannot be enough to say about the tremendous support that we have gotten from the Secretariat, from you, Rami, and of course, I'm always bigging up my co-lead, Michael. for the way in which we continue to work and the spirit in which we continue to work. And so at this point, I will hand over to Rami to take us home.

Okay.

Thank you, Marlene. Thank you, Michael. And by this, I think we reach the end of this session. And we discussed work stream one, the convention work stream two, protocol one, and work stream three, protocol two. And here we reach the end of this session. We can assure you that all your inputs, all your thoughts is very, very well taken from our side. And it will be the material in which you're going to use to update the versions heading to Nairobi session. So in hope that we'll be able to provide better versions as we go forward and to see what all expect in the upcoming versions. So at this moment, I would like to close the informal meeting to convert to a formal meeting in order to make the closing of this session. So the second plenary meeting of the committee is called to order. So now I'm going to give my closing remarks. Excellencies, distinguished delegates, dear colleagues, as we bring this fifth session to close, allow me to begin by expressing my sincere appreciation to the constructive inputs offered throughout our discussions. At the opening of this session, I noted that we had reached an important new stage in our work. For the first time, the committee had before it draft texts for the framework convention and both early protocols. Our task was therefore no longer primarily to discuss concepts or possible approaches in the abstract, but to test those approaches against concrete provisions and to provide the colleagues with the direction needed to take the text forward. I believe we have done that. Across all three work streams, engagement with the text was significant. We heard where there is emerging convergences and where provisions require clarification or further development. Just as importantly, many interventions moved beyond identifying concerns and offered alternatives and possible ways of addressing them. That is precisely the kind of engagement that will allow us to progressively narrow differences as the negotiations advance. Let me also outline the general path ahead. The deadline for written inputs is 24th of August for Protocol 2, 22nd of August for Protocol 1, and 28th of August for the Framework Convention. The objective should not be simply to repeat the positions expressed during this session. Written inputs should help us move closer to revised texts, either for encourage whatever possible to identify the specific provision concerned, explains the issue that should be addressed and where appropriate, proposes drafting or an alternative approach. Following the deadlines for written inputs later this month, workstream meetings will resume during the intersessional period. Those meetings will be used selectively to address issues where additional discussion can assist the preparation of the next text. The frequency and focus do not need to be identical across the three work streams. They should respond to the needs of each text and to the issues identified during this session and through the written submissions. The sixth session of the Committee will take place in Nairobi. The session is expected to focus primarily on the first version of the Framework Convention and of Protocol 2, both of which will be circulated by mid-November, at least two weeks before the start of the sixth session. This will give the Committee the opportunity to assess how the colleagues have reflected the views expressed by the Member States during this fifth session and during the intersessional period. Our work will continue to narrow down the issues that remain open in both instruments. Following the Nairobi session, we will have a very narrow window to revise the texts before we convene again in January in New York. Consequently, the discussions in Nairobi and the inputs that follow will form the basis for the revised texts to be presented in New York. I would like to remind everyone that January session will mark the final stage to submit written inputs regarding the revised text of the instruments after these submissions and as the negotiations progress, we will, we will trans, transition to the next and final phase of the negotiations. In this phase, the focus will be on resolving the differences between the views expressed by the delegations during that phase. No new full text suggestions will be considered, other than textual suggestions that are confirmed in the room or during the intersessional period to bridge differences between the different views. Excellences, the months ahead will require considerable work from all of us. But the progress made during this session gives us a solid foundation. If we use the intersessional period effectively, we can arrive in Nairobi and then in New York ready to make further substantive progress. Before closing, let me once again thank the co-leads for their steady leadership, Secretariat for its tireless support all delegations for the spirit of inclusivity, respect and partnership that continues to define this process. And stakeholders for their valuable contributions. I would also like to express my gratitude to the interpreters for facilitating our deliberations. I wish you all a safe return and a productive intercessional period. I look forward to reconvene in Nairobi with a revised framework convention that reflects the work we have done here and thereafter in New York as we continue advancing the three instruments toward texts capable of receiving broad support. Thank you all, and I would like to hand over to Ms. Sherry. the director of DESA for closing notes. Over to you.

Thank you. Thank you, Chair. I'm honored to deliver these closing remarks on behalf of UN DESA as the secretariat at the conclusion of the fifth session of the Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation. Over the past two weeks, your work has advanced significantly, as you know. For the first time, the committee had before it the zero drafts of all three instruments. It completed its first reading of each provision by provision. This was an ambitious program, and it was carried through within the time available. The committee has also engaged directly with a number of important and substantive questions. These included questions relating to the relationship between the framework convention, existing international agreements, and domestic law. the scope of the taxes covered and the allocation of taxing rights under the protocol on cross-border services, and the range and design of mechanisms for the prevention and resolution of tax disputes. These questions will be important in determining the effectiveness of what is being built. The discussion over these two weeks have given a firmer basis on which to revise the texts. What also stands out is the way in which delegations have engaged with one another. They did not confine themselves to restating positions. Rather, they sought the reasoning behind the proposals and put forward formulations designed to accommodate concerns other than their own. This is the work of building bridges and is what the stage now demands going forward. Positions are now on the table and the task ahead is to find the concrete solutions that reconcile different perspectives in a single text. That work happens both in this room and outside of it. in bilateral conversations, regional coordination, and informal discussions. Much of that has already begun, and I encourage delegations to sustain it and widen it. The work has also benefited from the broad and diverse perspectives of member states, reflecting the inclusive character of this process, and also greatly benefited from the stakeholder engagement. Your inputs, perspectives, analysis, ideas, and solutions have been critical to the discussion. And now that we are working directly on the text, your presence matters more than ever, and I really encourage all delegations to continue to engage with CSOs and other stakeholders actively. As we close the session, the work now shifts to the preparation of revised drafts during the intersessional period. The seriousness and depth of engagement shown here give confidence that the drafting stage can build on a solid base. UNDESA and the Financing for Sustainable Development Office will continue to support member states closely in cooperation with the chairs and the co-leads. So on behalf of UNDESA, again, I thank all delegations for their commitment and constructive spirit. I especially want to thank the chair, Mr. Rami Youssef, and as well for this wonderful leadership of this process as we continue going forward, and also the co-leads for their guidance throughout these two weeks and before as well. And I would like to express our particular gratitude to Ms. Lisa La Cana, who concludes her service as co-lead at the end of the session for her expertise and her strong commitment to this process. Finally, our thanks go to our partners from international organizations, civil society, academia, and the private sector for their valuable contributions. And finally, finally, I want to thank the staff in my office and those who are here and those who are working from home as well for their indefatigable, is that the right word, work and process around the clock as we continue on this process for a lean secretariat. But really thanks to all of the colleagues for their amazing work. And chair back over to you. Thanks.

Thank you. And before we close, of course, I as usual extend thanks to the secretariat. And it's not only who are here in the podium, but also we have many behind the scenes who are supporting and special thanks to Patricia who were not able unfortunately to attend with us this session, but she's there and she's working with us behind the scenes and following up. the sessions like minute by minute online and hopefully we will have her in Nairobi able to join us. So I would like to give her a big thanks for all the great work she's doing for this committee to continue and to progress the work. So by this, I think we reach the end. So I declare closed the fifth session of the Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation. The meeting is adjourned.