Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation - Second Substantive Session 2025, 7th meeting Economic and Social Council Date: 14 August 2025 Language: English Transcript: https://transcripts.un.org/en/asset/k1h/k1h3qyhyzu Transcripts available through this tool are created by using automatic speech recognition and are not official records nor official documents of the United Nations. Official records and official documents are available on the Official Document System of the United Nations. --- Chair · Rami [0:00]: Good morning everyone. Dear Excellencies, colleagues, today we are starting our first session for work stream three about dispute prevention and resolution. This work stream is co-led by our two colleagues, Marlene from Jamaica and Michael from Germany. They will take us through a presentation in which they give a feedback about how the work took place and how it was carried out in the workstream and give us some background about the discussions and the issue notes that was released in this regard. Then after that, we are going to open the floor to get your comments and reflections on the presentation and on the issue notes in general. So now I'm handing over to my colleague, Marlene, okay, to take us through the presentation. Jamaica · Co-lead · Marlene [1:14]: Thank you very much, Rami, and good morning, everyone. Before we actually go into the presentation, on behalf of Michael and myself, we think it appropriate to really thank those who have brought us to this moment. And that would include the Secretariat who worked tirelessly to turn the work around. To all the participants, we thank you so much for your engaged participation, your wisdom, and your guidance. in supporting this work. And we thank as well Rami for his guidance and leadership. On a personal note, I want to thank my co-lead, Michael, who for the first part of the work on the workstream really was doing the yeoman's task of carrying the work due to difficult circumstances that I was facing at the time in terms of losing my mother and then my mother-in-law and subsequently. And so Michael, I want to say thank you very much for being such a strong support during that time. Okay, so we thought that we would, before looking at the slides, just make mention of what we think really grounds this work, and that is the issue of tax certainty. The responsibility of any tax authority and by extension the state to ensure certainty to taxpayers that is clear, predictable and stable is a sign of good tax governance. Secondly, the measures which have been established to make this responsible have somehow fallen short over the years. What do taxpayers expect? They expect clarity of rules, taxes that are written in a way that is easy to understand and apply. They expect stability and predictability, that rules don't change unexpectedly or retroactively. They expect timely guidance, tax authorities publishing clear interpretations and rulings promptly. Consistency of application, that tax laws are applied the same way to similar situations. Fair, efficient mechanisms to resolve disagreements with tax authorities and prevent disputes. Advance assurance, where they can obtain upfront rulings on agreements, for example, advance pricing, to confirm how the rules would be applied to specific transactions. This matters. because for businesses it improves budgeting, investment decisions and capital allocation. For individuals, it reduces anxiety about future liabilities and simplifies planning. And for the overall economy, it encourages investment and reduces compliance risk and transactional cost. Notwithstanding the fact that most authorities have some or most of these elements, of certainty in place, many tax systems continue to be bedeviled by tax disputes. And I think, Katie, we can go to slide number two. Despite past and current efforts to improve in this area of prevention and resolution of tax disputes, there is still a persistent challenge for many member states that demands renewed attention. a challenge which has been compounded as business models become more globalized and dispersed and tax rules become increasingly more complex. The result is that tax disputes are not only more frequent but harder to resolve, a problem which affects both governments and taxpayers. To respond meaningfully and as a first step in addressing the subject of dispute prevention and resolution, the workstream has prepared an outline of issues overview and scope as a diagnostic tool that captures the concerns and challenges raised by member states. In this initial phase, the focus has been on identifying the main issues. The next slide will delve deeper into the specific reasons identified by Member States that explain why this topic remains a priority. We ask that you please consider the issues overview as a starting point for our discussions over the next two days. And it is our hope that between today and tomorrow, we will achieve our main goal, which is to gather feedback and inputs that will inform the next phase of the work. Slide three. Reasons for the work on dispute prevention and resolution. So let's now delve into the specific reasons identified by member states to work on prevention and resolution of tax disputes. To begin with, tax litigation is often slow, costly and resource intensive, both for taxpayers and tax administrations. Resolving a dispute through domestic courts can take years. Even once resolved, those outcomes may not be recognized in other jurisdictions, which leaves the risk of double taxation unresolved in cross-border cases. One of the underlying challenges is information asymmetry. Tax authorities often lack access to the same information that taxpayers have, whether individuals or corporations. The tools available to tax authorities in connection with fact finding vary with the procedural rules and their application in different jurisdictions, as well as with the legal basis available for intergovernmental administrative cooperation. These challenges are not new, but they have become more urgent as individuals become more mobile and business structures and global supply chains are more complex. In response, countries have developed a variety of mechanisms to try to prevent or resolve tax disputes. But these tools are only truly successful when they are fair, independent, accessible, and effective for both taxpayers and tax authorities. Ultimately, the goal of strengthening dispute prevention and resolution is to support domestic resource mobilization. A better functioning system helps attract cross-border trade and investment by offering legal certainty and reducing compliance burdens. Slide four. The roots of cross-border disputes. This slide tries to summarize the roots of many different types of tax disputes that member states have identified as common in cross-border situations. There was a strong convergence of views that most cross-border disputes concern corporations, although individual taxpayers may also be involved. The most frequently mentioned areas included transfer pricing, permanent establishments, residents by taxpayers, digital services, the taxation of capital gains, especially in relation to offshore indirect transfers and other tax treaty aspects. Transfer pricing was highlighted as especially problematic. Disputes in these areas often arise due to the ambiguity or complexity of the applicable rules, both substantive and procedural, divergent interpretations and application of those rules, or the underlying facts, or the absence of a tax treaty, meaning that each country applies its domestic rule without a common legal framework. These challenges underscore the need for more consistent and stronger prevention and resolution systems. Slide five, prevention and resolution of tax disputes. So now let's take a closer look at the issues found in the two thematic areas, prevention and resolution of tax disputes. Dispute prevention has been primarily a matter of domestic law and administration, starting with clearly drafted legislation informed by well-established tax policy goals and supporting by guidance for taxpayers. At the end, the goal is to ensure that taxpayers pay the right amount of tax at the right time. Practices and approaches that have been applied by some countries include adopting cooperative compliance practices with large taxpayers, developing programs for advanced pricing agreements, APAs, to deal with transfer pricing and income allocation issues, simultaneous controls or joint audits which can prevent disputes and support capacity building, each of them requiring legal frameworks for cross-border cooperation. Some countries have explored mediation between taxpayers and tax authorities in domestic contexts through experience, though experience remains limited. On the resolution side, The primary framework for cross-border tax disputes is a network of over 3,000 bilateral tax treaties, which provide for substantive rules, allocation rules, and a mutual agreement procedure, which remains the main tool for government to government resolution. However, several concerns have been raised about MAP. The lack of obligation to reach an agreement, long resolution times, limited access and a high volume of open cases. While mandatory arbitration is supported by some countries as a way to encourage resolution, others, particularly developing countries, raise concerns based on negative past experiences in investor state dispute resolution on the investment agreements and limited experience in general, lack of clarity of applicable principles or constitutional limitations. Finally, an additional challenge is that some countries have limited treaty networks, leaving them without dispute resolution options when dealing with cross-border issues. Possible scope and approach to the protocol. Regarding the possible scope and approach to the protocol, here we have a summary of the diverse views expressed during the workstream meetings. One view is that the protocol should be limited to disputes arising under the framework convention and its protocols and not affect obligations under other instruments. Another perspective sees the protocol as a way to rationalize and establish a hierarchy among the various dispute resolution mechanisms that currently exist. A further approach considers the protocol as an opportunity to provide a mechanism for resolving disputes in the absence of a tax treaty relationship. To allow for flexibility and broader participation, the workstream discussed the areas of opt-in and opt-out mechanisms within the protocol. This would make it possible for Member States to choose which provisions to apply depending on their interest and circumstances. In line with this, It is important to determine the best approach in different circumstances, for example, through the use of best practices, commitments in the framework convention or mechanisms in the protocol, having in mind that identifying the most suitable approach in each case will require a thorough analysis of how the protocol will interact with the framework convention and its commitments. Slide seven, the relationship between the Framework Convention and the Protocol. In that sense, it is important to understand how the Framework Convention and the Protocol on Dispute Prevention and Resolution will relate to one another. Both the Framework Convention and the Protocol are expected to interact closely and must be aligned to ensure coherence in the overall system. The Framework Convention contains two key elements in this area. One element is a dispute settlement provision that could address disputes specifically related to the interpretation or application of the convention itself, which could be similar to those in other multilateral conventions. The second element is a commitment to the effective prevention and resolution of tax disputes. It is intended to foster a tax climate that encourages foreign direct investment and domestic economic growth and resource mobilization and may not be limited to disputes arising under the convention. The protocol, on the other hand, could provide the opportunity to develop a comprehensive and potentially universal dispute resolution system which could include optional mechanisms to ensure broad participation by member states. Careful coordination across all three work streams is therefore essential to ensure consistency. And so what are the issues for the committee? Up there on this slide. A, whether the issues overview describes the primary barriers to prevention and resolution of tax disputes that Member States encounter; whether the Protocol should address only tax disputes involving cross-border transactions or whether it might be appropriate to include mechanisms for the prevention or resolution of purely domestic disputes; whether the concept of optionality with respect to mechanisms provided in the protocols is generally acceptable to the committee, with specifics to be elaborated as the protocol is drafted. We also included a slide which sets out our next steps. And so building on the input received from this current session, The workstream will develop initial proposals for solutions on these issues for the committee's first consideration at its November 2025 session in Nairobi. And additional guidance from the committee's plenary in November will also inform the next steps in the negotiating process. Thank you for your attention, and I turn over to Michael. Chair · Rami [18:26]: Thanks to Marlene for your, for the presentation. I think now it's time to open the floor to hear your comments and interventions in this regard. So the floor is opened. United Arab Emirates. United Arab Emirates [18:48]: Good morning, good morning co-leads, good morning chair, good morning everyone. We concur and support the pretext presented by the co-leads to this work stream and that tax certainty gives businesses confidence which ultimately supports economic activity and resultant tax receipts for all states. In the case of tax dispute and resolution, our strong belief is that dispute prevention is much preferred to dispute resolution. Not only does this again provide certainty to states tax administrations, but increases certainty to businesses. We appreciate that transfer pricing, which is often the source of tax disputes, is a complex issue and thus we would urge this committee to take stock of the transfer pricing certainty that has been developed by international fora so that efforts can be focused to support tax administration's resources, which can then be focused on dispute prevention and resolution in areas of higher complexity. We would once again stress the need that any solutions developed as part of this workstream are compatible with international model tax treaties and do not seek to duplicate or contravene provisions of treaties that Member States have entered into at the risk that the solutions devised may increase instead of decrease dispute resolution. Co-chairs, This workstream does, however, provide an opportune moment for this committee to address instances of double taxation where unilateral domestic safe harbours or restrictions, for example, interest limitation rules, are implemented and no such relief under current MAP provisions in international model treaties is available. To conclude, we strongly believe relieving or preventing instances of double taxation is a core facet in ensuring the reduction of tax disputes and enhancing its prevention. Thank you. Thank you. Chairman. Speaker 5 [20:36]: Distinguished colleagues, thank you very much for giving me the floor. First off, I want to thank the Secretariat and all those who partook in the working group for their work to prepare the issue note. It is our view that the issue note of workstream three lays out in detail the main complexities in terms of the prevention and management of disputes which were voiced by the participants during the meetings of the working group. However, from the standpoint of describing the barriers, I'd like to point out the following. On the whole, from the standpoint of overcoming barriers, there's a need to ensure equal access to dispute resolution mechanisms for all countries by simplifying and standardizing these procedures. We think that We need to focus in particular on the administration of tax dispute settlements. Right now, tax administrations are leaning towards viewing transnational corporations as single taxpayers for the purposes of international taxation, consisting of multiple separate legal entities and structures. In that regard, it would be reasonable to look into a single and unified approach to interacting with this type of taxpayer, for example, the possibility of submitting international reporting to a single window and also to ensure access to this reporting for the tax administration from the countries where these taxpayers operate. So there is a trend towards the creation of many different types of reporting for a single tax event. That is true, but here the principle of a single window is intended to decrease expenses, not only for tax administration but also for businesses in terms of reporting for the purposes of dispute settlement. So this mechanism, an attempt to look into such a mechanism, would be useful. Furthermore, I'd like to note paragraph 24 of the issue note, which has to do with international arbitration. And now I'd like to comment on the institution of arbitration. I'd like to note that it is important for if we are going to devise some panel for the resolution of disputes, which is -- it's important to have a non-discriminatory mechanism for setting up such panels. They should include participants from the financial and the tax agencies of all the countries where the transnational corporation operates. I'll turn now to the second question. we think it would be appropriate to concentrate on the resolution of disputes regarding cross-border transactions. As for the relevant mechanism for disputes, which are mentioned by the note, the note comments on disputes in quite some detail, but dispute prevention mechanisms can be based on more flexible tools for international cooperation by tax administrations where transnational corporations operate. For example, tax administrations can jointly conduct preliminary assessments of tax risks and analyses of tax positions with regard to a transnational corporation in every country where it operates. And this would create for businesses in their conventional international transactions some tax certainty with regard to the countries where it operates. And this would be more flexible and more timely in nature. I'd like to close now by noting that the mechanism of international arbitration is inaccessible for many countries due to domestic legislation, it's important to look into alternative flexible mechanisms that would help achieve tax certainty and that could achieve the resolution of disputes. Inter alia, we could look into the matter of mediation, the approach of a mediation. That's it for now. Thank you very much. Chair · Rami [25:49]: Distinguished delegate of Switzerland. Switzerland [25:55]: Thank you. Good morning, everybody. Many thanks to the co-leads of that workstream. You have done an excellent job, both with your issues note and also with the presentation you held this morning. So we cannot add much to that, but we would like to make some suggestions for future work in that work stream. At first, we agree that dispute prevention is essential. A dispute prevented serves the involved parties more than a dispute resolved. So we are ready to contribute to further work in that area. Furthermore, we believe that also the mandate to develop an early protocol regarding dispute prevention and dispute resolution implies the development of operational changes to the system of dispute resolution. But it is clear that dispute resolution touches on sovereignty of states, so any legally binding output would be optional for countries. So we suggest to do work in the field of dispute resolution with the view of an optional output. And we see particular potential for work in the field of arbitration. Again, let me underline that the output would be optional for countries in our view. And before outlining, and we'd like to outline a bit our experience and challenges in that respect. So since the BEPS project, we have to track our performance in the field of dispute resolution. And in the last 10 years, we had about 1,600 cases of mutual agreement procedures under a double tax treaties that include arbitration clauses. Seven of those cases had to be submitted to arbitration. So arbitration happened very rarely. but on the other hand it increased the share of cases resolved considerably. Before introducing an arbitration clause into the treaty with our main partner regarding mutual agreement procedures, one out of four cases of mutual agreement procedures was not solved. The outcome was no solution found with double taxation persisting. So overall, we have had a positive experience with arbitration. Taxpayers have had a positive experience with arbitration and I cannot speak for the concerned treaty partners, but I guess and I hope they have also had a positive experience. The challenges we face in that respect concern mainly the establishment of the procedure. So I would see merits in the development of a ready to use procedure and a particular opportunity for the UN because also more and more countries that are not member of the OECD and that are not member of the European Union agree to arbitration clauses. Besides the development of procedural rules, also the identification of suitable members for the arbitration panel. are a challenge. These are highly trustworthy persons, so you have to take into account many factors such as origin, residence, experience, professional background, also language capabilities. And so I would believe that the establishment of a panel that countries could entrust with the solution of their arbitration procedures would be an option. So before, uh, concluding, let me again repeat that, um, any work regarding arbitration would result in our view in a, in an optional outcome. And this is not intended to convince countries with other polities to agree to arbitration, but rather to support countries that have already committed with the establishment of the procedures. Of course, if this eventual work could help to increase trust in arbitration, this would be welcome as a side effect. Thank you for having taken the time to listen to me. Chair · Rami [30:38]: Thank you. Distinguished delegate of Ghana followed by China. Ghana · Africa Group [30:45]: Thank you, Chair. Thank you, Chair. Chair, we appreciate the contributions made by the co-leads and secretariat and also member states in the development of the issue note. Chair, I made this comment for and on behalf of the African group on Protocol 2 under the framework convention, which comes at a critical time as many African countries face complex cross-border tax challenges in an increasingly globalized economy. Due to prevention and resolution frameworks have often favored jurisdictions with greater technical capacity and broader treaty networks leaving many African countries exposed to prolonged tax dispute, revenue loss, legal uncertainties among others. Chair, with reference to the specific questions raised in paragraph 32 of the issue note, we hereby provide the following comment to the specific questions raised. On issue one, The African group believe that session three of the issue notes broadly captures the range of challenges faced by many member states. The outline issues include legal uncertainties, procedural asymmetries, lack of comparable data and institutional weakness in mutual agreement procedure and APAs. These issues are particularly relevant for developing countries, including those in Africa. However, Chair, AG notes that the session may still understate the limited or non-existent access to effective bilateral treaties or dispute resolution mechanisms faced by many developing countries. Capacity gaps in handling complex transfer pricing, entity-based dispute, and power asymmetries in arbitration proceedings and MAP engagement with more experienced tax administration. We therefore urge the protocol that will reflect the differentiated capacity of countries and offer scalable and regionally adaptable tools for both prevention and dispute resolution. Chair, on the question B, that is whether the protocol should address only cross-border tax disputes or also domestic disputes, the AG, that is the African group, recommends that the primary legal commitment under the protocol should remain focused on cross-border tax disputes as a central objective of the protocol, particularly as this is where the greatest legal uncertainties, revenue loss, and risk of double taxation or non-taxation occur. We also recognize further that any attempt to regulate purely domestic dispute through the protocol may come off as an overreach. We are therefore amenable to the protocol offering optional guidance of practices that may also support the resolution of purely domestic dispute, particularly where domestic and international aspects are intertwined. One of the ways of dealing with domestic disputes may also include holding parties to the framework to discharge their commitment to fair, inclusive, effective, efficient, and timely prevention and resolution of dispute for taxpayers and tax authorities by reaffirming their domestic tax dispute resolution process towards efficiency and timely resolution of tax disputes. We therefore propose an institutional level mechanism at a framework in line with paragraph 13 terms of reference. This mechanism may focus on state to state dispute resolution, both bilateral or multilateral, through other means such as facilitation or through such other approaches as parties may approve. Chair, on the issue three, that's the question on whether the concept of optionality within the protocol is generally acceptable. The African group posits that the protocol becomes a universal framework for dispute resolution. We call for further discussions on the concept of optionality with respect to specific mechanisms which may be needed to ensure wider participation. Two, the African group do not support the resolution of tax disputes under certain types of arbitration, especially investment style, baseball, final offer, or any similar arbitration frameworks. We also recommend that the protocol should seek commitment from parties that tax dispute should only be resolved through established procedure for certain tax dispute and not through trade dispute resolution mechanism. We propose that any tax dispute prevention or resolution forum that may arise from the protocol must be inclusive in its constitution, substance, and procedure. The African Group proposes that the protocol be drafted with flexibility, fairness, and capacity support at its core. The protocol should deliver practical solutions for countries with limited treaty networks and avoid important mechanisms that replicate known imbalances in existing fora. Chair, on this note, the AG once again appreciates the immense effort that have gone into the development of the workstream issues. note and reaffirm its commitment to continue contributing to the discussions. Thank you, Chair. Chair · Rami [36:38]: Thank you, distinguished delegate of China, followed by Colombia. Colombia [36:47]: Your honorable chair, dear colleagues, distinguished delegates. China [36:51]: I would like to begin by thanking all who have contributed to the work relating to the future protocol two. We believe that during. Virtual meetings held previously and the current in-person. Session, the INC has conducted extensive open discussions and achieved significant progress, thus laying a solid foundation for future work. Second, we believe that the possible scope of the protocol should focus on areas of the most widespread concern. Judging from the issues note prepared by the Secretariat and the views expressed so far in the process, how to further improve the resolution and prevention of cross-border tax disputes, is an issue of common concern. We support the proposed focus of Protocol 2 on the prevention of resolution of cross-border tax disputes arising from the Framework Convention and its protocols, with a view to providing tax certainty for taxpayers operating across borders as well as for tax authorities of member states, thereby promoting sustainable economic and social development. Third, like many other member states, China supports the idea of optionality, which allows member states to opt in to certain tools offered by the protocol in order to enhance the flexibility of the instrument and promote broad participation. By way of concluding, I can assure you of my delegation's continued active contribution to this discussion on this issue relating to Protocol 2. Chair · Rami [38:08]: Thank you. Thank you. Colombia [38:16]: Thank you very much, Chair. We believe it is essential that the prevention and dispute resolution mechanisms be viable and accessible for developing countries and avoid imposing arbitration. We think a specific protocol should be included on prevention for tax disputes. Currently, a lot of these disputes internationally do not have effective resolution mechanisms. Therefore, this protocol could offer multilateral effective solutions to address disputes that are not covered by bilateral conventions to avoid double taxation. Colombia recognises that there are differences between developed and developing countries that we cannot ignore in terms of strengthening of capacity, legal interests and frameworks. If we ignore those differences, that could compromise the fairness of the results and reduce the effectiveness of the protocol for countries that most need these mechanisms. We feel that discussions on the scope of this temporary second protocol should be limited to the dispute settlement resolution. We don't agree with introducing unilateral prevention mechanisms. This could lead to new disputes. and affect local taxpayers negatively. We also believe that the main motivation for this protocol is related to disputes involving more than one jurisdiction. Finally, we agree with mechanisms that should be accessible and viable for jurisdictions of developing countries. ensuring fairness for taxpayers as well as for the tax administrations. Thank you. Chair · Rami [40:14]: Thank you. Distinguished delegate of Canada, followed by Nigeria. Canada [40:28]: Thank you, Chair. And let me thank the co-leads for all of their work in this area. I think we had very productive meetings between sessions and produced a very good issues note. So congratulations for that. Also want to support the importance of this protocol and underline the importance of dispute prevention and resolution, which is critical to increase cross-border trade and investment, which will then result in increasing domestic resource mobilization, which is kind of underlying the value of what we are doing in this forum. To address now more specifically the questions, uh, that have been posed to us, the first one, whether the issues note describes the primary barriers, I think in general, yes, it does. I think the one issue that, that perhaps there could be more focus and a bit more, uh, digging into and understanding is one of capacity and capacity building. I think we have heard that both from the intervention from the Africa group, which was provided by Ghana, also heard that from Colombia that underlined there are some capacity issues for some countries in terms of fully participating and having access to all methods of prevention and resolution of tax disputes. And so I think we could perhaps further explore that separately as a barrier. With respect to the second question, I think that the protocol should focus on cross-border transactions and not include at this time mechanisms that would look at purely domestic disputes. Moving to the third question with respect to optionality, I think yes, optionality makes sense in the context of this protocol. Providing for optionality will allow us to address many different forms of possible mechanisms that can prevent and resolve disputes. It will allow us to include different forms of mechanisms that not everybody in the room may be comfortable with today, but may at some time in the future become more comfortable with as there is more experience with dispute resolution and mechanisms. In this respect, I note in particular arbitration, I do recognize that there is not widespread support among all countries at this time, but I do think there is support among a large number of countries and providing for it as an option would be a positive development. I also think it would allow us to address other areas. I note that a number of countries, and I think the Africa group raised the issue of disputes where there is no tax treaty in place. And I think the challenges here are twofold. One, there is no legal basis on which to resolve the dispute. The other challenge is there is no common legal basis on which to resolve the dispute if you don't have a treaty in place that provides for that common legal basis. I recognize that some countries may be able to resolve those disputes without a common legal basis. I think a number of countries will find that more challenging. That being said, I do think there are opportunities for all countries to participate or at least be a part of discussions with other countries. So if we can provide a facility that would allow for the exchange of information and provide for the discussion and perhaps a better understanding of the case on both sides would allow for a resolution, even if it's on the basis of your own domestic law. So I do think there is opportunity there for us to make some progress in the area where there is no tax treaty. So I think those are my comments at this point. Thank you. Chair · Rami [45:15]: Thank you. Distinguished delegate of Nigeria followed by Morocco. Nigeria [45:21]: Thank you, Chair and good morning, distinguished delegates. I want to appreciate Marlene and Michael, the two colleagues for this wonderful presentation and congratulate them on the success of the workstream meetings. Nigeria, we had submitted our written comments on these three questions that we have before us. So I'm not going to really dissipate energy trying to read that statement. But we support the statement that has been presented by Ghana on behalf of the Africa group. So Nigeria aligns with that statement and supports a universal and inclusive protocol on the prevention and resolution of that dispute that will be responsive to the capacity and realities of member states. We want to state that the protocol should focus on cross-border disputes while offering optional guidance in respect of domestic disputes that may be linked to international transactions. We emphasize the importance of a mechanism that will address information asymmetries, capacity gaps, and procedural imbalances, and the inclusion of preventive tools such as joint audits and cooperative compliance programs with PINK will be suitable. We also want to advocate that the protocol will not be the one that will conflict with the constitutional provisions of members, but it must be fair, efficient, and must be supported by robust capacity building. Thank you, Chair. Chair · Rami [47:16]: Thank you. Morocco, followed by Cote d'Ivoire. Morocco [47:23]: Thank you, Chair. First of all, I would like. To congratulate the effort that has been made with respect to the workstream three issues note. And we would like to support the statement made by the Africa Group and Nigeria, especially with respect to the protocol that should only deal with the cross-border dispute, and we do not support arbitration, the same as the Africa Group statement. Thank you. Chair · Rami [47:55]: Thank you. It's the delegate of Cote d'Ivoire, followed by Zambia. Côte d’Ivoire [48:03]: Thank you, Chair. I would like to congratulate the workstream for its excellent work, including for the exhaustive diagnosis, which provides us with a good point of departure for our work. Cote d'Ivoire issued a statement at the beginning of this session with certain elements. I'd like to return to some of those points. Cote d'Ivoire supports the statement delivered by Ghana, delivered on behalf of the African group, and we endorse the statement of Nigeria and of Morocco. We support a multilateral protocol aiming to improve the prevention and settlement of tax disputes to strengthen legal certainty, avoid dual taxation, and facilitate the mobilization of domestic resources. Turning now to the scope of the protocol, the protocol, as we see it, should address cross-border transactions as a matter of priority. It should cover cross-border digital services and cross-border capital. One should mention that dispute settlement has to do with tax sovereignty. As for the resolution of disputes, Cote d'Ivoire wants to see coherence of the protocol This is all the more so because the ineffectiveness or the difficulty of enacting dispute settlement mechanisms stipulated by the convention was clearly outlined in the diagnosis of the work stream as posing problems. The protocol also needs to offer the possibility to offer dispute settlement procedures at a purely national level when it has a direct impact on cross-border transactions or on the implementation of the framework convention. Cote d'Ivoire believes that the protocol should serve as a legal framework even in the absence of a bilateral tax agreement so as to meet the needs of developing states which have limited tax networks. As for dispute settlement, Cote d'Ivoire is in favor of the establishment of advanced pricing agreements which are accessible to developing countries, including with technical assistance and information sharing. The development of cooperation programs could also be envisaged in order to guarantee the prevention of disputes. We are also in favour of encouraging other forms of administrative cooperation, such as joint controls or simultaneous controls among tax administrations. As for the settlement of disputes, we advocate for maintaining mutual agreement procedures as an important element with targeted deadlines. so as to avoid delays in procedures. Cote d'Ivoire fully opposes the adoption of obligatory binding arbitration such as for investment disputes. This is because it is not friendly to developing countries. We could also envisage alternative mechanisms such as mediation. As for optionality or the flexibility of Cote d'Ivoire, we opt for optionality in order to guarantee broader participation, but we need to clarify clearly the scope of every option. The optional mechanism needs to reflect a obligatory basis Finally, Cote d'Ivoire stands ready to work together with all delegations and with the Secretariat in order to see a protocol that meets the needs of all countries. Thank you. Chair · Rami [52:47]: Thank you. Distinguished delegate of Zambia. Zambia [52:54]: Thank you, Chair, for giving me the floor, and good morning to all distinguished delegates. We didn't submit our written comments to Zambia, therefore I'd like to present them to the floor. So Zambia fully aligns itself with the statement made by Ghana on behalf of the African group, as well as the supportive statement that had been given by Nigeria, Morocco and Cote d'Ivoire. And let me also take this opportunity to commend your leadership to the co-leads on guiding this process and the work undertaken by secretariat and the co-leads. specifically Jamaica and Germany and our extreme three. So from Zambia's perspective, the focus of this protocol should be clearly on resolving cross-border tax disputes, particularly those between governments. While existing bilateral mechanisms such as mutual agreement procedures have provided some relief, they're not sufficient on their own. And as mentioned earlier by many developing countries, we do not have an extensive network of tax treaties. And for those that do have the network, you find that some of the treaties are actually outdated and do not have the map article sitting in. Therefore, there's no legal basis to resolve those disputes through map. And therefore, this leaves them without effective recourse when disputes arise. So this protocol has the potential to fill that gap. and by establishing a robust multilateral treaty-based dispute resolution mechanism that is accessible to all countries, we think this will help resolve the problem. So we see real value in the protocol in creating a legal framework to prevent disputes by supporting international collaborations that currently exist such as simultaneous tax examinations, joint audits, and multilateral risk assessments. as these tools are critical in identifying the potential areas in which disputes are likely to arise and in essence preventing them in the long run. So without a clear legal structure, many developing countries will continue to face challenges in applying these tools consistently or at all. Therefore, the protocol should provide concrete standards and guidance on how to implement them effectively. Then with regards to issues with the protocol addressing domestic disputes, we are of the view that this will undermine national serenity. Therefore, the protocol, as we've mentioned earlier, should focus on cross-border tax disputes and not domestic disputes. We also want to reiterate our firm position against resolving tax matters through investment style arbitration mechanisms. These have historically created imbalances and eroded trust, particularly from the perspective of developing countries. The protocol should include clear language to prevent tax disputes from being diverted into forums designed for trade or investment disputes. On the issue of optionality, Zambia envisions that the protocol envisions the protocol as a universal framework for tax dispute resolution to support broader participation. We believe further dialogue is needed on the concept of optionality, particularly regarding specific dispute resolution mechanisms that may not be suitable for all legal systems. Chairperson, Zambia remains committed to working collaboratively to ensure that this protocol addresses the current challenges and provides practical, fair and sustainable solutions. I thank you. Chair · Rami [56:42]: Thank you. Now we're going to have the colleague Michael to just reflect on some of the interventions that we heard. Michael, over to you. Germany · Co-lead · Michael [57:05]: Good morning. So what that is fairly new that I don't have to ask for the mic to be opened. So, dear colleagues, first of all, I wish to thank all delegations for the interventions made thus far. This may be a good opportunity for a reminder and our distinguished delegate from Zambia made me think of that. So this today and tomorrow is an opportunity for all of you and for everyone to weigh in your views on the discussions regardless whether you have participated in the workstream meetings, maybe not always on a regular basis, or all others who simply haven't. So we are interested in all of your views and it is -- there is no issue in like maybe even repeating yourself or what has already been provided in writing. So Based on the interventions we have heard so far, I think there is a trend kind of emerging that is not new. So there seems to be a greater overlap in the positions when it comes to the overarching purpose of this endeavor for second early protocol and dispute prevention and dispute resolution. So I have been hearing now that this is meant to be something that benefits everyone and This is, I'd say, like also my kind of vision and Marlene's, I guess. Can I speak on your behalf? So something that takes into account different frameworks. So this includes legal frameworks, administrative cultures and traditions, political considerations too, capacities, the taxpayer landscape, which also differs. So not all our jurisdictions have and of the same amount of MNEs while others maybe have more small and medium enterprises entities. For others, it is more important to provide dispute prevention, dispute resolution for individuals next to corporations. And then finally, something that always differs is the international relations. So typically, or it is maybe more common that disputes arises with neighboring countries, for example, less frequent to have disputes with countries that are far, far, far away. So in order to cater for all those circumstances, the idea was brought up to make use of what you utilize the concept of optionality. So to have in a nutshell to have something like a toolbox with several instruments that can be utilized by the countries and to which the countries can either opt in or opt out, not like on a daily basis of course. And a tricky part lays ahead of us and this will be to determine what is the default. So because it goes without saying that to some extent in order to make this work, we will need to have something like a common basis of a minimum set of instruments that would be applicable for everyone and would provide for kind of a basis to prevent and resolve text disputes. But we are not there yet. Then I would also like, well, so what was also mentioned by some of the colleagues so far was the importance of capacities or the acknowledgement or recognition of the fact that the capacities are, that the situation differs across the across the membership and it was not the intention, we didn't wish to understate the importance of capacities, in particular not in the issues now, but that was considered to be something that is a kind of cross-cutting issue to which specific, something that the Framework Convention as a whole will have to deal with. But of course, in our task to flesh out the instruments, We will have to bear it always in mind, so to provide for instruments that are as easy as possible to administer, to apply, that are less resource intensive, of course. But maybe it is too much of an ask for the second early protocol, for this protocol, to provide all capacities that will be needed. to eliminate all inequalities in that regard when it comes to dispute prevention, dispute resolution. Okay, so some of you touched also on something that isn't specifically mentioned in that slide. But it is a little bit between the lines in the second question. So we have here the question whether the protocol should address only tax disputes involving cross-border transaction or whether it might be appropriate to include mechanism for the prevention or resolution of purely domestic disputes. So there is something in between and it was also mentioned by some of you. So there is this desire to a greater extent apparent for the protocol to provide for like the means to resolve tax disputes, cross-border disputes without having an underlying substantive legal framework or legal framework that provides for the kind of substantive provisions. So this is a concept we should also consider and we would be pleased if we could discuss this further. We do know that for some delegations, for some member states, this concept is more puzzling than for others. And to overcome that puzzlement, I think Marlene would be happy to chip in and to elaborate a little bit more on that. Speaking about further elaboration, I would like to follow up on on the intervention that, if I'm not mistaken, came from Ghana on behalf of the African group who referred to paragraph 13 of the terms of reference and spoke also to the effect that dispute prevention, dispute resolution protocol should not try to resolve, should prevent the resolution of dispute through trade agreements. So, and on that, I was wondering whether it would be possible for either the delegation from Ghana or any other who has aligned with that to elaborate a little bit more on that because I think Marlene and I, we both were a bit puzzled by the reference to paragraph 13 and I think this is also something, there is a link to a discussion we had yesterday in the afternoon and we can happily pick up where we left off yesterday and that was about the relationship between the protocol and the framework convention. Either the commitment or we have the third element which is about dispute settlement provisions. I stop here and I hope I haven't led to more confusion than before. the floor remains open unless the secretariat or want to add something to that. Chair · Rami [1:05:45]: Thank you, Michael. Back now to the floor, the distinguished delegate of Netherlands followed by Austria. Netherlands (Kingdom of the) [1:05:53]: Good morning to you all. Um, we would also like to thank the colleagues on the organization of the workstream meetings, uh, which facilitated in our view, uh, very fruitful discussions, um, and we would also like to congratulate you on the publication of the issues note. The Kingdom of the Netherlands is supportive of any additional efforts to prevent and resolve tax disputes and we believe this is an important topic. We would like to note that the protocol is not limited to the resolution but also to the prevention of tax disputes. This would in our view support the argument that there may be different options included in the protocol to which Member States may opt in or opt out as they wish. This may also include a mechanism to share best practices, for example, cooperative compliance mechanisms that may not necessarily be limited to international or cross-border situations or may not necessarily undermine national sovereignty, as it should be up to each Member State to opt in or opt out of such a mechanism to share information or best practices. But, uh, that would, we will leave that up to the, the plenary to decide, of course, on that, um, so that, uh, that is all that I wanted to contribute to the floor. Thank you, Chair. Chair · Rami [1:07:18]: Thank you. Thank you, delegate Austria, followed by Chile. Austria [1:07:22]: Thank you, Chair, and thank you very much to the co-leads for the presentation, also for the issues note, which we think covers the issues that need to be considered in our work going forward. We haven't handed in any written comments, so let me quickly answer the questions that are on the screen. I think, first of all, let me state that tax certainty is definitely something that Austria is very supportive Uh, a lot of work in the international tax rules, uh, over the last couple of years have gone into designing rules that meets the re- rising complexity of, of rules and to make sure that disputes can be solved, uh, efficiently, but also prevented. Therefore, we would agree with most of the delegates so far that we should focus also on these cross-border situations where our common rules kind of create disputes that need to be prevented or resolved. As to the question of optionality, I think we would also agree that this is a good way forward. I understand optionality also in the sense that others have mentioned that Member States should be able to opt in and opt out of certain tools or mechanisms that are going to be developed under this protocol, especially because I think that there are different levels of cooperation among the Member States already. So coming from an EU country, for example, we do have quite a sophisticated toolbox already in the context of dispute prevention, for example, simultaneous audits, joint audits, or other administrative assistance tools. And therefore, it wouldn't make sense to implement new rules for intra-EU relationships, for example, but rather also kind of be able to, to opt out with, with, uh, from, from the new tools. And I think one, one thing that also we have to bear in mind in this, uh, question of who, who might implement what type of, of tool is that, having existing mechanisms already, and I think I heard it a little bit from Switzerland, that there are also always questions of procedure, and the more instruments that we have in parallel, of course, that include different procedures, can be difficult for Member States. Again, experience from Austria, having MAP under treaties, under an EU directive, with different procedural rules, complicates the matter. So I think it should be, it is very important for member states than to be able to choose also which mechanism would eventually be the best for them. Finally, and because also Michael brought it up right now, I would like to echo what Canada said about resolving disputes without the underlying substantive legal rules. So I completely agree with the Canadian position here. And finally, I would just add a question because I've heard from the floor that some delegations have proposed the instrument of mediation. Of course, I have heard the word before, but more in the context of divorce or some other civil law matters. So I was just wondering in our context, in an international law context, how mediation could work if there are already ideas out or if this is already on the on the agenda for the workstream to define it a little bit more. Thank you. Germany · Co-lead · Michael [1:11:28]: So before giving the floor next to Chile, followed by Saudi Arabia, I think a good point, thank you very much, Austria. Mediation is indeed something that I think it was also shown on one of the slides, something that could at least be investigated further. So it has been brought up by some delegations as a possible, like as a supplement, for some maybe as an alternative to arbitration, but indeed it is worthwhile discussing where actually the difference lies. So with that, Chilly, please, the floor is yours. Chile [1:12:09]: Thank you very much. Thank you very much to you, co-leads, Chair and Secretariat for producing this excellent issues note and also to delegations who have made input to today's discussion. It's been extremely interesting and it's actually very little that we wouldn't agree with what we've heard. Perhaps going to the questions. The issue notes on A, yes, we agree with that. On the question in B, we would say that we would like to focus on cross-border disputes. And perhaps coming to C, we have perhaps a slightly different view here. We are of the opinion that our goal should be mandatory resolution of tax disputes. But we also recognize that we are very far from that in our country. So the question is how we get there. And in that sense, we think that the UN is the unique place for creating a forum for resolving international disputes. And therefore, you know, the procedures and the panels and the way that this could be set up will depend very much and the discussion on that will actually enable us to think about signing up to something that we would be quite happy with. Now, recognizing that we're very far from that, we also would like to favor options, but perhaps also options in the sense of staged incorporation into the schemes so that you can perhaps have, you know, building up confidence in this forum, these panels or whatever, with a advisory group perhaps, especially if you are, country who signs up to this convention or protocol, sorry, you can actually adhere to or speak to or get involved with an advisory group, an advisory committee that could sort of help you to come with a solution to an international problem. Perhaps it could be called mediation, but it can also be called an advisory group. So What we think in summary is that we need to build… build up confidence, we need to have a forum and we think in that sense that the UN is unique and the right place for that type of forum. Thank you. Germany · Co-lead · Michael [1:15:18]: Thank you, Chile. Saudi Arabia, please. Saudi Arabia [1:15:24]: Thank you, Chair. Good morning. And thank you to the co-leads for the excellent work. On the issue note, it is comprehensive and provides valuable basis for our discussion, and it does capture both elements of dispute prevention and dispute resolution. We believe that there is significant value in strengthening mechanism that can address potential disputes before they arise. This includes expanding the use of rulings, as well as advanced pricing agreements, and also issuing more clear and practical guidelines to the taxpayer. Providing certainty upfront not only minimizes the risk of disputes, but also enhances compliance and trust. between taxpayers and tax administration. However, we would like to note that for low capacity countries, starting with unilateral ABA is often the most practical entry point, allowing them to build administrative experience and technical capacity before gradually expanding to other forms such as multilateral or bilateral ABAs. We would like also to note that a timely correspondence between competent authorities and submission of documents by taxpayers are critical to avoid delaying the outcome of dispute resolutions, and we think addressing these procedural elements is essential to ensure efficient and predictable process. Finally, we do support that the protocol should focus only on cross-border issues and optionality must be preserved. While we recognize that some jurisdiction view arbitration as a useful backstop, we do not support it. Instead, our preference is to focus on effective prevention and efficient resolution. These approaches are more conductive to providing certainty to taxpayer and in our view, are better suited to foster a stable and attractive climate for investments. Thank you. Germany · Co-lead · Michael [1:17:22]: Thank you. I would like to give the floor now to Singapore, followed by Algeria and then Kenya. Singapore first. Singapore [1:17:31]: Yeah, good morning everyone. First, we would like to express our thanks to the two co-chairs, Marlene and Michael, for leading the discussions. at Workstream 3 and putting together this very comprehensive issue notes. We believe that this topic of effective prevention and resolution of tax dispute warrants the urgent attention of tax administration. especially in this today's complex and rapidly evolving global environment, tax certainty has become very, very essential given the substantial volume of cross-border trade and investment. And the effective and efficient prevention and resolution of cross-border disputes would provide tax certainty for taxpayers as well as facilitating the cross-border trade and investment. And we think that this would ultimately contribute to domestic resource mobilization and also drive individual member states' economic growth. Tax administrations can play a pivotal role in fostering this tax certainty through transparent tax guidance, robust dispute prevention and resolution mechanism, as well as consistent implementation of tax rules. Hence, we are supportive of the work that's been undertaken at Workstream 3. Moving on to the questions, I would like to say that we support the focus of the protocol to be on cross-border tax disputes, recognizing that unresolved tax disputes can hinder international trade flows and undermine the economic growth of all countries. We also note that the paper contains some interesting ideas, for instance, the suggestion of having the protocol to be used as a legal basis for resolving cross-border tax disputes where there is no tax treaty in place. We note that the proposal will likely benefit Member States with limited treaty network. We are open to discussing it further at future meetings to better understand how this can be implemented and to look at the potential issues that we may need to work on in advancing this course of the, uh, this discussion. Uh, secondly, we also recognize that the capabilities and experience in dispute prevention and resolution, across member states and believe that all of us here can contribute in providing support for capacity building. The development of the protocol will facilitate discussion on dispute prevention and resolution mechanisms adopted by different member states, enabling us to share experiences and learn from one another's best practices. We believe through this process, member states can collectively strengthen the capabilities of our tax administration to implement effective dispute and resolution mechanisms. mechanisms. And in this context, it is essential that the protocol incorporates optionality to support a flexible and inclusive approach, allowing member states to opt in or opt out of specific mechanisms within the protocol based on their own unique circumstances, such as the level of readiness and policy priorities, would foster broader participation and enable all member states to fully realize the benefit of the protocol. In conclusion, Singapore remains committed to this work stream and we will continue to work with all delegates on this important area of work. Thank you. Germany · Co-lead · Michael [1:21:01]: Thank you, Singapore. Next is Algeria. Algeria, please. Algeria [1:21:08]: Mr. Chair, distinguished delegates, Algeria commends the intergovernmental negotiating committee for the progress achieved so far and acknowledges the work carried on the issue note on the prevention and resolution of disputes prepared under work stream three. Algeria aligns itself with the statement delivered by Ghana on behalf of the African group and wishes to add the following in its national capacity. Over the past three decades, the volume and complexity of cross-border transactions, as well as the tax system governing them, have given rise to a significant number of international tax disputes. Consequently, countries must coordinate their efforts to ensure legal certainty for taxpayers. Tax administrations, particularly in developing countries, face difficulties stemming from the complexity of legal frameworks, divergent interpretations of treaty provisions, procedural asymmetries, a lack of comparable data, and delays in processing mutual agreement procedures. In this regard, the United Nations Framework Convention on International Tax Cooperation should prioritize dispute prevention through clear rules in haste tax cooperation and transparent multilateral dialogue. Establishing dispute prevention mechanism is essential with particular emphasis on the importance of administrative assistance. Moreover, we stress that the effectiveness of dispute prevention measure depends on robust capacity building activities as this support the effective implementation of treaty provisions by fostering better understanding and more consistent interpretation among states. Regarding the scope of protocol, which could extend to purely domestic tax matters, Algeria believes that domestic litigation procedures fall within the sovereignty jurisdiction of states. Therefore, Algeria supports a protocol dedicated exclusively to cross-border tax disputes, while also providing for non-binding guidance and mechanism that could help improve dispute resolution procedures. Algeria considers that the mechanism to be included in Protocol II should cover disputes arising from both the framework convention and its related protocols. To secure broad adherence by countries to the protocol and the prevention and resolution of disputes, the principle of optionality for the mechanism to be included in the protocol is essential. A flexible approach will allow countries to adopt mechanisms suited to their national context and level of development while contributing to shared objectives. Algeria once again values all efforts made in preparing these issue notes and reaffirm its commitment to contributing to the work of the Framework Convention and its two protocols. I thank you. Germany · Co-lead · Michael [1:23:48]: I do thank you for this valuable and extensive contribution. Thank you. The floor is now Kenya's. Kenya, please. Kenya [1:24:00]: Thank you, Chair, and thank you to the co-leads, the secretariat, and the participating member states for the documentation that has been provided so far. We would like to start by aligning with the comments that were made by Ghana on behalf of the Africa group. Regarding the questions, with the first questions, we do believe that the issues notes captured the discussions that we had in the work streams. But we also know that with continued discussions and with increased participation from member states, that there could be other issues or challenges that come up. And we hope that the future work is going to be able to address those concerns as well. We agree that for the second question, that the focus of this protocol should be on disputes involving cross-border transactions. and that purely domestic disputes are well covered and provided for under the national laws of member states. We also take the view that mandatory binding arbitration has been unfavorable for many developing countries, and this is not a provision that we would be able to adopt. On the concept of optionality and with the clarity that the co-lead has provided on this, we will remain engaged in the discussions to see what this could look like, once the specifics are elaborated. And we do hope that the basket of tools will also be able to provide us with guidance on the policies and the practices that could be adopted, especially with regards to how disputes could be prevented. Protocol two should also be able to provide countries with a multilateral framework within which countries can resolve disputes, especially for countries with limited treaty networks, and we don't believe the answer lies in expanding our treaty networks, but in providing a multilateral solution to resolving disputes. And we agree that the UN is the best platform to be able to do that. And we're also grateful for the guidance that Michael has just given us regarding the discussions that we were having yesterday afternoon. because those questions were new to all of us and we were not able to make informed responses to that. So we welcome that and we'll be able to give our comments once we are done with the general, with the initial positions of countries. Thank you, Chair. Germany · Co-lead · Michael [1:26:31]: Yeah, thank you for that, in particular for the last part of your intervention because I have also a little bit the feeling that we are right now we are still in the stage of kind of general statements which is fine. So this is for you the opportunity to be general. That is good, in particular for everyone who hasn't provided comments in writing or participated as I said in the work streams. That's good. And we have those guiding questions but apart from those there are a little bit more. So as we have seen yesterday, for example about the relationship between the framework convention and the protocol and something that came up quite a few times. So what did I say? Did I say something? No? Well. So I've heard a couple of times delegations saying or writing, for example, that the protocol should be limited in terms of scope. to disputes arising from the application of the Framework Convention and the Protocol. But this leads then to the question, okay, what is meant by a dispute arising from the Framework Convention in contrast, for example, to the Protocol? Excuse me, I have to stop because I'm getting here some advices. Well, yeah, my colleague is flagging and even another dimension of maybe the complexity or something that is worth while discussing is the relationship also between our protocol, we talked about that yesterday, and the first protocol, terms of dispute prevention, dispute resolution, but we always have to be mindful that we won't stop there, but going forward we will see future protocols. This is just to give you, I'm pretty sure that all of you, you have already your speech prepared, but maybe if you could also weigh in on those additional questions, you are happy to do so. Having said that, the next delegation on my list is Germany. Germany, please. Germany [1:28:45]: Thank you, co-lead, for giving me the floor and yeah, welcome. Germany appreciates the efforts, organization and the detailed preparatory work within workstream three. We look forward to continue to work on the second protocol as an essential component of the framework convention. In the regard of the concept of optionality, Germany supports inclusion of optionality in the protocol. In our view, broad participation is essential. Allowing states to opt in or out of mechanism is a pragmatic approach to support that goal by preserving national sovereignty. However, to ensure coherence and efficiency, optionality should only be used where appropriate and necessary. We should aim for a degree of optionality that allows state to opt in at any time as their capacity and readiness develop. Please also allow me to share Germany's perspective on the scope and applicability of the protocol. In our view, the main issue is the fragmented landscape of numerous parallel mechanisms. Against that background, Workstreams 3 offers an opportunity to create a unified legal basis covering a wide range of mechanisms. We support embedding both dispute prevention and resolution mechanisms in this single instrument. This may include risk assessment procedures, simultaneous as well as joint audits, advance pricing agreements, mutual agreement procedures and MIT arbitration. Beyond that, we believe that provisions should not be limited to disputes arising under the Framework Convention and its protocols. We support a broad application of the protocol's provision. Therefore, Germany advocates for a protocol to also be applicable to tax treaties and similar tax-related instruments. Thank you. Germany · Co-lead · Michael [1:30:39]: Thank you, Germany. I am happy to give the floor now to Sierra Leone. Sierra Leone, please, followed by Honduras. Sierra Leone [1:30:44]: Thank you very much, co-chair. And I also want to thank all the delegates for the diverse presentations given so far with regards to issues on floor. And we believe our purpose of being here is well defined. And we also believe because of our diversities in thinking and doing things, we at the end of the day are going to have a common ground on which based our ideas and then focus on what the way forward will be. And we definitely also believe that we are going to sail through on all of these issues by having that common ground. Sierra Leone is totally in alignment with the African group and the presentation made by Ghana on behalf of the African group. And the statements made by Nigeria, Morocco, Zambia, and Kenya, of course, is of the view that the protocol should be focused on cross-border services only. And the protocol should be done in a manner that is flexible, fair and supports capacity in developing countries. We also recommend and support that the protocol should seek commitment from parties that the tax dispute should only be resolved through established procedures for settling tax disputes and not through trade dispute resolution mechanism. And that any prevention or resolution should be inclusive in its constitution, procedure. And substance. CILN also appreciates the immense efforts that have been gone into the development of the workstream three. In conclusion, CILN is always ready to work to ensure fairness, transparency, inclusivity and flexibility, taking into account the diversity. Of all that is here. Thank you very much. Germany · Co-lead · Michael [1:33:00]: Honduras, please. Honduras [1:33:05]: Thank you very much, Chair, colleagues. Thank you for the PowerPoint that we had at the beginning. Honduras would like to share some thoughts with regard to provisions on dispute resolution as part of this process. In general, developing countries are more cautious with regard to these kinds of mechanisms. Our position is experienced by negative experiences that we've had in the past with investment Uh, arbitrations, for example, uh, and bilateral investment agreements and other kinds of things. We also recognize, however, that for a lot of countries, uh, solving, uh, tax, uh, disputes could put them into a disadvantage in arbitration proceedings that could be very, um, extensive. And in some cases, uh, arbitration, uh, might not be on previously known, uh, provisions before the process, uh, begins, and that makes, uh, legal certainty and predictability more difficult. However, we do appreciate the ideas. expressed with regard to transparency, for example, fair composition of the panels to ensure that there are equal and impartial conditions. When it comes to Honduras, currently we have a convention to avoid double taxation, and that's very important with regard to the legal basis that is used for these tools. We also think it's important to look at different options to arbitration, given that that mechanism tends to be onerous for certain tax administrations. We believe that prevention of disputes should be a fundamental pillar of the protocol and that we should look at various alternatives that will help taxpayers and tax administrations. Finally, we believe that any mechanism that's included in the protocol should be mandatory for countries that sign up to that protocol. That will make it easier to solve disputes in the future. And we also believe that the protocol should address prevention and dispute resolution mechanisms with regard to cross-border transactions? Thank you. Germany · Co-lead · Michael [1:35:12]: Thank you, Honduras. The floor is now Senegal, followed by Ghana. Senegal, please go first. Senegal [1:35:28]: Good morning, dear colleagues. Thank you, Mr. Chairman. Allow me to begin by echoing the congratulations to Marlene and her collaborator for this sterling presentation, which allowed us to delve into the details and conduct our discussion in relevant fashion. I think that this initiative should be carried forward in work to come. Senegal has already aligned itself with comments or has already sent comments in writing which, rather we endorse the statement by Ghana on behalf of the African group. Senegal believes that Chief importance should be given to the settlement of disputes. Some mechanisms were already mentioned, joint audits, exchange of information, but there's a determinative element here. It is access to declarations country by country. Many countries in this room don't have access to this documentation for confidentiality reasons, but also due to reasons that have to do with the procedures for obtaining this information. So it's important for countries to be able to access declarations while ensuring the confidentiality of this information. This would allow for better guidance on transfers, and it would allow for building capacity. especially because in the African context most disputes have to do with transfer pricing. As for the resolution of disputes, we think dispute resolution should be limited to disputes stemming from the Convention or its protocol. that is disputes that have to do with characterization or disputes that have to do with the interpretation of the implementation of the convention. This is something that the working group should look into in further detail. As for optionality, Senegal thinks it's a strong approach because it will ensure broad participation while also guaranteeing the sovereignty of states. but it will also help to respect the differences that exist among various jurisdictions. Nonetheless, it's important for the options not to derail the effectiveness of the Convention. This is why it is important, even when implementing these options, to define robust mechanisms that will contain minimum commitments. so as to implement these options and so as to guarantee its effectiveness and the effectiveness of the protocol with regard to dispute settlement mechanisms, various dispute settlement mechanisms. So, the options should be in keeping with clearly defined modalities, which should be defined in other ways. Thank you. Germany · Co-lead · Michael [1:39:23]: Thank you, Senegal. I do not overlook the fact that Ghana has already spoken. Nevertheless, I would ask you for your understanding if I give Ghana the floor again, particularly because I addressed why I had an explicit, like a follow-up question to Ghana. So therefore, I would like to give the floor now to Ghana, followed by Portugal and then Norway. Thank you for your understanding. Ghana [1:39:48]: Thank you, Chair, for giving us the floor once again. Michael and the team, yes, we've come back because you asked a question with regards to the comments that we read. And just to bring your mind to the fact that that comment was made in respect of paragraph 28 within the issue note where a number of agreements or instruments were listed. And that's bringing it into paragraph 13, which of course of the TOR, that paragraph talks about commitment of alignments or trying to have relationship. So our comment basically was to the effect that in trying to align with or trying to have a relationship with other agreements as stated in paragraph 28 of the issue note, It's important that we support or we want to see the protocol being a state to state led, not any style or any form of investment arbitration format basically. And also we believe that as stated by Chile and other members that possibly as it is the UN now could be the forum for states to have tax disputes particularly resolved at the UN level. Possibly there's a time for us to have what you call maybe tribunal for tax dispute settlement under the UN body. It could be one option that can be explored further just to, so basically what I'm saying here is that, that comment is just to bring to the forward attention that it's important that in drafting the protocol, we focus on state to state and making sure that in trying to align it with other international instruments, we don't recopy or bring back the imbalance in terms of the investment style arbitration that already exists in those existing protocols or agreements. Thank you. Germany · Co-lead · Michael [1:42:08]: Thank you, Ghana. Thank you for clarifying. So that was for me at least helpful, and I'm pretty sure for the rest of the of the room too. I take this as an opportunity to for an ask. So I would advocate that we make a try to make a clear distinction today and tomorrow between the issues themselves and what we aim to achieve or what we aim to avoid with the protocol. I know it is not that straightforward because we have questions, guiding questions to both effects, because to some extent, yes, we are talking about the scope. It is about also the relationship with the Framework Convention. Primarily, as was laid out at the very beginning by my colleague Marlene, at this point in time we try to identify the issues. So it is probably more helpful for all of us if we try better to understand each other, okay, where are the issues with, for example, what had just been mentioned like the arbitration or investment style arbitration. That is and that's my second point. Yes, there are, so the starting point is that for whatever reasons there are concerns about specific instruments. But let's not stop there. So I do not want to be the one who now starts talking about options and scope, but we have to -- I think let's keep an open mind in the sense that we do not have to take the current instruments for granted, but we can evolve them to something that works better, right? So maybe not now, maybe rather in Nairobi in our next session, as was presented at the beginning, so we will on the basis of this session's input. We're going to develop ideas, proposals, how to tackle the issues, but here now it is a little bit more about identifying the issues. With that, thank you very much. I would like to give the floor now finally to Portugal, followed by Norway. Portugal [1:44:19]: Thank you, Mr. Kowalits. No problem. When we are having these discussions, waiting a little bit more just helps to our thinking and the structure of what we are to say. And I want to start by congratulating the team of co-leads as well as the chair and also the UN Secretariat for the presentation and also the issues note in respect of this work stream. And I believe that saying this, I'm upsetting and I'm recognizing the fairness of the description of primary barriers to prevention and resolution of tax disputes that was made in the issues note. In relation to the question on B, we are convinced that in the context of this protocol, what is crucial is indeed to have mechanisms that would help us to prevent and obtain resolution of tax disputes that are somehow cross-border in nature. And by saying this, I believe that I am also pointing out that during our work, we will have to be somehow careful when we try to distinguish these cross-border situations from the what we are calling purely domestic ones. But I believe this is an effort for us to have in the future. In respect of the question in c, we agree that internal optionality of this protocol, by this meaning that Member States will be confronted with the possibility of opting in or opting out some of the tools that will be present in the protocol. We agree and we recognize that probably this is the best approach that we can have to this protocol, having in mind that right now we are facing some difficulties related with some entrust in relation to some mechanisms and also with different capacities between member states. And I hope that during this process and during the period that the protocol will be enforced, this situation will somehow be different. These optionality should give an opportunity for member states in the future to opt in or opt out from instruments that they still start to feel comfortable with. And I believe that the optionality will somehow allow this and in this sense we think that it's a promising approach to this protocol. Let me just share with the membership some thoughts in respect of if this protocol should aim to solve tax disputes that are generated or derived from what is not a common and shared legal basis. In this particular, we pretty much agree and support what has been said by the distinguished representative of Canada and supported also by the distinguished representative of Austria. We believe that we have here a problem. In fact, it is quite difficult to solve these kind of situations when we don't have a common and shared legal basis. Of course, if we are still trying to solve this problem, through a mechanism that is based on a legal-based decision. We could somehow try to aim this to solve this kind of problems or disputes, tax disputes using other instruments or mechanisms that are not based on legal decisions that could take, that could be based on equity or could be based on, I've already heard the mention of some methods, different methods. in respect of how these mechanisms can work, but at the same way, simultaneously, we are understanding that these are somehow no way solutions, and therefore we could be on a dead end in this respect. And as a way out of this conundrum, probably we can give some time during our works on future works in the work stream to try to approach this issue somehow in the lines that were also mentioned by the distinguished representative of Canada by trying to probably to create some channels that would allow us to establish some networking between tax authorities that could support these kind of solutions but not I believe, as a mechanism that are based on deciding, informing the decision and basing the decision on legal considerations. That, I believe, it's quite impossible when we don't have a common and shared legal basis. Thank you. Germany · Co-lead · Michael [1:49:40]: Thank you, Portugal. The floor is now Norway's. Norway [1:49:45]: Mr. Koli, then let me start off by expressing our appreciations for the hard work the two co-leads have done and also commending all the participants in the workstream for all their hard efforts and at the same time encouraging other Member States to participate in the workstream. We have sent in written comments, so I won't answer too comprehensively. on these questions here, but try to fill out on some issues that I haven't heard. With regards to question A there, a comment we haven't really heard much about or we didn't see touched upon in this overview, it is the importance of a robust risk assessment programme in tax administrations. might be perhaps not that intuitively why that would be linked to tax certainty, but in short it's our experience that if you put that in place, that allows you to identify areas or taxpayers transactions that are particularly risk. and hence that allows you to spend the audit resources where they are of the most use and otherwise put, not chase after cases not worthwhile. So that is perhaps something worth having in mind. It would certainly also perhaps go into the basket of capacity building, or at least, which I think Canada also touched upon. With regards to the question B, I think we understand that there are those jurisdictions that would want to see dispute resolution mechanism in place for cross-border transactions where there are actually no tax treaty in place. And I think also Portugal and some other had touched upon that issue or at least the technical challenges with that. And I think at least from our perspective is that, well, you would need a common framework for solving such a dispute, at least something along the lines of Article 5, 7 or 9 of the OECD or UN multilateral convention and I think the paper refers to resolving disputes only on similar domestic legislation in countries and we at least question the viability of that. I think also the issues note the point to that many have introduced the TPGs in their domestic law but It might also be that countries only use that where there is a treaty. Moreover, you could also in such a context have cases or the domestic courts having further elaborated on the principle. So I think at least just telling or saying that it's applying such a dispute resolution mechanism based purely on what might be perceived as similar domestic legislation, which if you further dive into and have a look at that, might not that be similar, perhaps would not be that effective or even viable. With regards to question C there, just short, yes, we do see the merits of having some optionality. Thank you. Jamaica · Co-lead · Marlene [1:54:08]: Thank you very much, Norway. Before we go to Korea, just to our civil society groups, we are just craving your indulgence and thanking you for your patience in allowing member states to go before you. So thank you very much. Germany · Co-lead · Michael [1:54:32]: Yeah, thanks from my side too. Thank you also Norway. If Norway, no, at the beginning Norway said that it would only be the essence of the intervention. Everyone can imagine how intense and engaged everyone was in the work streams, in the work stream meetings. No, honestly, thank you for that and the distinguished delegate from Norway, he flagged something that that is probably relevant for all of us. He spoke about risk assessment. I think, yes, it is mentioned to some extent in the issues note in paragraph 16 in the context of APAs, at least it speaks about the, yeah, kind of the necessity of having risk analysis included, but I believe that Norway was always also referring to risk assessment in a broader sense with view to more also in the domestic context in order to prevent disputes from arising. With that, the floor is now Korea's, followed by Bahamas and then India. So Korea, please. Republic of Korea [1:55:43]: Thank you, Chair, for giving me opportunity to have the floor. And also thanks to colleagues and the Secretariat for their efforts in prepare the workstream three issue note. Korea has already submitted its written comments on the issue note, so I will make a quick intervention. With regards to question of slide, I support the broad application of mechanism including to potential double taxation arising from future protocols, but protocol two should be limited to resolving cross-border disputes since domestic disputes are matters of its jurisdiction sovereignty. And like many other member states, we support the concept of optionality as it increase the acceptability of the protocol. And in terms of mandatory arbitration, Korea does not currently implement such a system and has some concerns about its effectiveness. should arbitration be included in the protocol, we believe it is important that the option to make a reservation to that provision be ensured, at least based on our current position. Thank you. Germany · Co-lead · Michael [1:57:10]: Thank you, Korea. It is now Bahamas. Bahamas, please. Bahamas [1:57:17]: Thank you, thank you, Chair, and good morning, everyone, or rather, good afternoon. As this is my first time taking the floor, I would like to thank the co-leads, in particular, in this case, Germany and Jamaica, and also the Chair and the Secretariat for all their hard work. With regards to the three questions before us, the Bahamas wishes to emphasize a critical dimension that we believe deserves explicit inclusion in protocol two, which revolves around state to state dispute resolution mechanisms. The issue note addresses taxpayer authority and authority-authority disputes, but we must recognize that some of the most damaging barriers arise from disputes between contracting states themselves. These may include disagreements over treaty interpretations, allegations of noncompliance with exchange of information standards, and most significantly, the unilateral application of blacklisting and graylisting mechanisms. The current blacklisting regime creates systemic instability in our international tax framework. When jurisdictions are unilaterally designated as non-cooperative without due process, or clear recourse mechanisms, it undermines the multilateral principles we seek to establish. Therefore, the Bahamas strongly emphasizes that the dispute resolution protocol should address disputes between states with the overarching principle that unilateral dispute resolution mechanisms by states are not acceptable. I thank you, Chair. Germany · Co-lead · Michael [1:59:17]: Thank you very much. That was kind of a clear statement. Thank you for that. The floor is now India's. India, please. India [1:59:30]: Thank you, Chair. First of all, I would like to congratulate the co-leads for effectively streamlining the work undertaken through the various workstream meetings. India's comment on the second protocol on the prevention and resolution of tax disputes pertain to tax disputes arising specifically in the context of international taxation and transfer pricing matters for cross-border transactions only. We look forward to a clear and specific definition of tax disputes, which will form part of the protocol scope, and we expect that this will be developed at a subsequent stage of the work. We also believe that disputes arising directly under the provisions of the FC itself should be addressed through a separate and distinct dispute resolution procedure in a manner which would be consistent with the dispute resolution framework established under other UN negotiated conventions while preserving our right to make specific reservations if the need arises. We have already provided detailed written comments on the various issues discussed during the workstream meetings. Based on our experience, we believe that the most effective and principled means of resolving tax disputes is through bilateral cooperation between sovereign states. However, in situations where no bilateral tax treaty or dispute resolution framework exists, India acknowledges the need for an alternative multilateral solution. A protocol based on a multilateral instrument approach could serve this purpose by establishing a framework for jurisdictions that are signatories to the instrument and such a mechanism could enable competent authorities to resolve cross-border tax disputes in a manner similar to the bilateral map process but under a shared multilateral agreement. Importantly, because this mechanism would function through government to government negotiations without involving independent third party adjudication, it would avoid the risk of taxpayer forum shopping and thereby preserve the fairness and integrity of the process. We reiterate our longstanding and principled opposition to arbitration as a means of resolving international tax disputes. The lack of capacity and expertise in many developing countries makes arbitration particularly challenging and may lead to unfair outcomes in disputes with more experienced nations. Tax matters are central to a country's public policy and private arbitrators may not be adequately positioned to safeguard these fundamental interests. Also, it is difficult to find qualified and neutral arbitrators and the high cost associated with mandatory arbitration make it an impractical option for developing and transitioning economies. To conclude, India advocates for a sovereign, cooperative, and principled approach to tax dispute resolution under the protocol, one that offers a common set of adaptable dispute resolution options supported by a range of procedural choices and safeguards that can be aligned with the domestic legal frameworks of member states. Germany · Co-lead · Michael [2:02:46]: Thank you. Thank you. briefly, to brief here internally. Sorry, thank you for your patience. Before giving the floor now to Tanzania, I have a question that all of you might keep in mind, so when giving your interventions or responding. We have now heard, not for the first time, that when it comes to arbitration, for example, there are those concerns related to Some tax administrations might be more experienced than others and it is also maybe there are concerns regarding the impartial attitude of arbitrators. Well, yeah, so I hope I summarized that correctly. And that made me thinking kind of for the first time, sorry for that, but is it about asymmetry in experience? and expertise between only the tax administrations or is it also a concern that the taxpayers who are subject to the arbitration procedure are deemed to be more experienced so that there is no like you are not on an equal level, so to say? And a somewhat related question to this is, What is when one consider, for example, an arbitration procedure between two developing countries in contrast to a developing versus developed country? Does it make a difference? So on that, it is really like a question I'm trying to identify, you know, the issues. Is it something that mitigates a little bit the concerns? I'm not looking for solutions. I'm just trying to, you know, understand better the issues at hand. With that, thank you for Again, thank you for your patience. The floor is now Tanzania's, followed by Estonia. Tanzania, please. United Republic of Tanzania [2:06:40]: Thank you, Chair. The United Republic of Tanzania congratulates their colleagues on working stream three for their hard work to produce the issue note and for helping the committee to understand and consider various essential issues required to make tax dispute. Prevention and resolution mechanisms more effective so as to promote cross-border trade and investment. which is essential for sustainable development. Chair, we align ourselves with the settlement made by Ghana on behalf of the Africa group and interventions made by Morocco, Zambia, Nigeria, Kenya, Cote d'Ivoire, Sierra Leone, Senegal, and many others that have made similar interventions. On our national capacity, Chair, we would like to emphasize that the protocol on dispute prevention and the resolution. Needs to clarify, to carefully consider and define the scope of the tax disputes to be covered by the protocol. On this issue of scope, we understand there may be. Many options on the table for consideration, but we would support coverage of only cross-border tax disputes without affecting the rights for countries to use any of their domestic mechanisms. For prevention and resolution of tax disputes. We also emphasize not to include any form of arbitrations, including trade and investment related nature that were proven work. Against many of developing countries, including Tanzania. Chair, Tanzania stands ready to work with other delegates and shaping a protocol that is rooted in fairness while safeguarding the taxing rights and capacities of developing countries. Thank you, Mr. Chair. Germany · Co-lead · Michael [2:08:34]: Thank you, distinguished delegate from Tanzania. The floor is now Estonia's. Estonia, please. Estonia [2:08:40]: Thank you, and thank you to the co-leads for the issues note. It's obvious that you two have a very good working relationship, and I believe this helps a lot in achieving the result. Estonia is a country that doesn't really have many cross-border tax disputes, neither the domestic ones. And we in the Ministry of Finance attribute this to the effectiveness and efficiency of our tax administration in preventing the disputes and also to the quality of the underlying tax rules. So I will refrain commenting on the question A. As to question B, we believe that international mechanisms should address the cross-border situations and the resolution of purely domestic disputes should be left for the domestic courts or other dispute resolution bodies. In the recent days, I've also been thinking about how to solve or address the disputes between countries where there is no underlying bilateral or multilateral tax treaty or any agreement that would divide or allocate the taxing rights between those two countries because as we have heard here, this is the main source of conflict and the disputes that there is a misunderstanding how these taxing rights that have been allocated between contracting states how these rights should be exercised. And if there is no such instrument, well, surely we can all imagine a situation where a taxpayer could go to the tax administration and tell them that they don't like what the other country is doing. But then the question is that how should this be addressed? And now if there is no underlying agreement and somebody would be there to decide on how is the right way to proceed, then I would see serious issues with sovereignty there because that kind of decision would surely be overruled by the domestic courts in most cases. And if not, then in many countries, it may raise the constitutionality issues. So yeah, I'm, At the moment, I really can't see how you can really solve the disputes without underlying legal, common legal basis. As to the optionality, it's a bit early to say, but if it should increase the adoption of the protocol, then it would be a good solution. Thank you. Germany · Co-lead · Michael [2:11:41]: Thank you. very much. So far we have been hearing a number of delegations questioning the feasibility of the concept of having cross-border disputes resolved without the underlying substantive basis or common basis. I would like to encourage at this point the proponents of this idea to chip in and maybe to elaborate on the question as to why and how this should be possible or become possible. So because if we are not entirely mistaken, at least in the intercessional part of our works, in the work stream meetings, there was the desire for such a concept was clearly expressed by a part of the membership. So with that, I give now the floor to Sweden, followed by the United Arab Emirates. Sweden, please. Sweden [2:12:52]: Thank you, Mr. Co-Lead. And let me also start with the, to thank the Co-Leads for such an excellent work. I think that this work stream has been the work have been very efficient and also I think the issue note has really identified most of the problems that we are seeing in this area. So I think it's an excellent work. We have sent in written comments, so I will not repeat again what has been said, but I wanted to add something that was It was actually Norway raising that issue and also listening to the conversation. I think there has been a lot of focus on dispute resolution and I think that's great because that's, of course, a very important issue. But I would also like to put focus on dispute prevention. I think Estonia, you mentioned that also just in your previous intervention. because if you do that in a good way, there would not be so many tax disputes. In that context, I've also heard many countries saying that transfer pricing is where you find the most difficult types of disputes and of course, those are the disputes involving most of the money as well. So the revenues at stake are quite high. So there I also wanted to add a couple of things. I think that the UN tax committee of experts has done some job here. I just want to put your attention to the work on risk assessment as have been elaborated. There are risk assessments tools and maybe some kind of best practices could be drawn from there as inspiration. Uh, because I think that in those area, there could really be, uh, a lot of ex- shared experience, um, the same for APAs where the last committee of experts has also elaborated, uh, work on that, and I think that that has been very appreciated by developing countries because it's, uh, also because it's a pros and cons. I mean, why you need it, why you don't need it, what you can do if you like it, because we all know that if things go to dispute, if things go to court, that will also cost you a lot of money and you don't know the outcome. So I think I just wanted to draw your attention to that. And finally, when Estonia made, distinguished delegate from Estonia made a comment, it also made me think about Uh, which is extremely important is the relationship between the taxpayer, um, the tax administration, uh, because if you have good relations there. then you will also be much more likely to, to, to be able to collect the tax that you, that you should be able to collect. And I think a lot of work has there been done actually by the Swedish tax administration and I would be very happy to contribute because I think that I've understood that there has been a lot of interest to share that experience. experience and maybe that could also be something that could be reflected somewhere in this work. So thank you so much. And on the issue of cross-border transactions, I think that's, I really feel very strongly that we need to have something at least when it comes to dispute resolution, there needs to be some kind of treaty for that. So I also appreciate the question you just asked, Mr. Kowalick. Thank you so much. Germany · Co-lead · Michael [2:16:50]: Thank you, Sweden. So indeed, one could get the sense that we are discussing here primarily about tax dispute resolution. That wouldn't be quite fair because indeed, at least in the intersessional work and in the written input, there is a huge emphasis on tax dispute prevention. And maybe that we are currently focusing rather on something else on the resolution part is because there is a broad agreement on the matter that the best way to -- or the best approach is to prevent tax disputes from arising in the first place. Then I had a thought, but I've lost track of my thoughts. We will come back on that later. But now I'm going to give the floor to United Arab Emirates. United Arab Emirates [2:17:43]: Thank you so much, co-chair. And thank you again for giving us the floor a second time around. I'll try and keep this brief. Michael, you mentioned that the, I think during the session that you'd like to focus, as you said, on the issues that give rise to disputes. From our perspective, I think the issues that are currently subject to spontaneous exchange of information are a good source, particularly because they touch on many of the aspects we've discussed today, whether that's transfer pricing, taxpayers that are benefiting from preferential regime, for example, or of course permanent establishments. But I think this, and this touches on your next point, which was around, well, why are we focusing on the, the disputes? I think from a resolution perspective, we're also quite, we're, we, I think we should also be quite mindful of the fact that, Such, such issues like this, particularly transfer pricing, that's an area where we all have the most common, I think, understanding in terms of the methods that we deploy, the guidelines that we use, and even then we have lots of disputes. So I think one of the things that we're also thinking about as well is, as you develop this work stream, can you think of a toolbox or mechanisms to prevent disputes, that's clearly going to go beyond this workstream. So I think it's important that we also think about what does that mean? Does that mean that we're going to have a new set of guidelines or rules? And I know it's something that we might have to think about in the future, but I think that is something to bear in mind. The second issue really is around, I think it was the comments made by the distinguished delegates of Canada and Austria a while ago, but again around the legal framework of this. I mean, we are a country that has over 100 double taxation agreements, so this is a significant issue for us. And I think we need to find, whilst I appreciate the majority of delegates in this room may not have as many treaties. What we found is, obviously, what happened typically even in a MAP case where we've got lots of treaties, we often find that a counterparty to a MAP issue is, well, sorry, the case has gone to a certain stage in the legal proceedings from a domestic level and it can't then proceed to MAP. So how will this be different in terms of... trying to solve those issues because there's certain barriers that already exist in the existing frameworks that we have today. One way, and I appreciate we give you lots of issues to think about and not necessarily solutions, but I think one solution that we've found that works quite well where you don't have a DTA in relation to information sharing at least is the tax information agreements. So I'm not sure if this kind of protocol or this work stream can be used to develop some sort of template for those countries that don't have DTAs in which case they might want to enter into that on a bilateral basis, but at least it's a common template. And then I think finally, I'll just echo the point around my distinguished delegate made from Norway in the sense that obviously we all have scarce resources and that risk assessment that you referred to, I think that would be very much welcome to ensure that all of our resources are being deployed as efficiently as possible on the most complex and most material of cases. Thank you. Germany · Co-lead · Michael [2:21:01]: Thank you. The floor is now Lesotho's, followed by France. And I don't know whether we will progress any further because we have 11 minutes left. We're going to see, but it is first Lesotho, then France. Lesotho [2:21:17]: Thank you, Chair. And we thank the two of you for leading us up to this stage. We first align to the comments made on behalf of the African group and the individual member states that also echoed their sentiments in support of that statement. We'll not go into the specific questions that we have put on the screen because we fully subscribe to what the other colleagues that have gone before us have indicated. But in our national capacity, we want to specifically support what the distinguished delegate from Chile proposed in terms of having an advisory panel at the UN level. I think such a panel will address some of the issues that you've talked about. You've talked about capacity issues. which is why, one of the reasons why we fear, if I can use that word, we fear or we are opposed to using arbitration because arbitration hasn't gone well because most of the time you find there's imbalance in the panel itself. And so if you have such mechanism, I think, to address capacity issues and also address issues related to legal and constitutional challenges that we are facing. So for us, that platform would be very much welcome, sir. Germany · Co-lead · Michael [2:23:05]: Thank you. Thank you very much, Lesotho. The floor is now France. France, please. France [2:23:19]: Thank you, Chair. Since it's the first time I'm taking the floor this morning, let me take this opportunity to thank you for your work, very high quality. France has already made a written contribution, so I won't repeat the responses to A, B and C, because you already have our written contribution. But I just wanted to put a question I mean, we are here today, aren't we, to put some good questions and try to find some good answers. What legal type of protocol are we looking at? I hear that there's a willingness to have a mechanism that is known, APP, or if it's a arbitration, there could be an opt-in and opt-out, but anyway known mechanisms that enjoy a certain resonance and that are legally binding. But I'm also hearing a lot of people in the room echo what you said, co-chair, with regard to how we can resolve disputes without having common standards on which we take the decision. What would be the legal form of that kind of decision. And also a number of countries have asked that when it comes to purely domestic disputes but that have an international dimension to them, could there be in the protocol guidelines or if not guidelines then, well, some sort of guidelines that could better cover these kinds of disputes. And there I have two questions. First of all, what is a purely domestic dispute but with international implications? It's not clear to us which other countries would be involved. And then if it's a guideline, would there be a hybrid protocol that would apply and that it would be legally binding? or do we want to have several instruments included in this work stream, legal and non-legal? So that's a lot of questions. I don't have the answers to them, but I'd certainly be interested in hearing from States what they think, those that have requested these kinds of mechanisms. Thank you. Germany · Co-lead · Michael [2:26:09]: Yeah, thank you very much. As you just said, the most important thing is that we're going to hear from the member states what their take on this is. So when you ask me and reminding all of us of the slides that we have seen at the beginning, there was mentioned that it will be part of our exercise to identify with a view to the scope and what we have in mind. well, to what extent something -- what can really be, like, addressed with the protocol in contrast, for example, to best practice or other, like, mechanisms outside of the protocol. That is definitely -- it would be premature to decide anything or to say anything definitively on that yet, right? So with a view to the What? So I think we have five minutes left. I give now the floor to India and we quit after that. India, please. India [2:27:11]: Thank you, Chair. This is in regard to the question which was raised by Chair in pursuant to our last intervention on the issue of arbitration. And in addition to the points which were already submitted, I would further like to add on that it is important to recognize that we are dealing with in most of the cases with multinational enterprises as our taxpayers. These are the entities that may be engaged in tax disputes with administrations in both developing and developed countries. And in such disputes, the significant financial, legal and technical resources available to MNEs often backed by the expertise, funding and strategic direction of their parent headquarters create a clear imbalance. This disparity inevitably places countries with more limited administrative and technical capacity at a disadvantage, meaning that developing countries are more often on the receiving end of unfavorable outcomes. Our direct experience in handling cases involving certain MNEs has reinforced this perspective. We have observed instances where the sheer scale of resources, global reach, and sophisticated dispute strategies of MNEs have placed considerable pressure on the capacity of tax administrations, particularly the resource-constrained ones. And this reality underscores the need for a dispute resolution framework that is sensitive to these imbalances and provide adequate safeguard to ensure a fair and equitable process for all the parties involved. Even in situations where cross-border disputes occur between two developing countries, The primary affected party is still the taxpayer, often a large MNE. In such cases, regardless of what constitutes a fair allocation of taxing rights between the jurisdictions, the MNE's objective will be to pursue a resolution that minimizes its overall tax outflows. And this reality underscores the risk that resolution process could be steered towards outcomes that are more favorable to the taxpayer than to the legitimate revenue interest of the jurisdictions involved. Thank you. Germany · Co-lead · Michael [2:29:21]: Thank you, Inge. Although I might have looked like a distracted observer, I was really listening attentively and I appreciate the clarification. Thank you very much for that. Give me a second, please. Jamaica · Co-lead · Marlene [2:29:36]: No, no. We're going to break. We're going to take a lunch break and when we come back, We will start with Japan and then civil society. Okay, so enjoy your lunch.