(3rd meeting) Intergovernmental Negotiating Committee on the United Nations Framework Convention on International Tax Cooperation - Fourth Session

Okay. Welcome. We are starting the session now. I'm happy to open this third meeting of the fourth session of the Intergovernmental Negotiations on the Framework Conventions. As many of you have noticed, I am not Remy. He will be joining us later today, and until then, I will be chairing this meeting. So bear with me for any inconvenience this might cost for you. But I will give the word to the secretariat to have some housekeeping rules, and then afterwards I will give the word to Daniel, and we can continue our discussions on Article 5 from yesterday. So please.

Thank you, Madam Chair. Just I want to repeat the housekeeping message from yesterday afternoon because I think some People might not have been in, might have already left or not been in the room when I said it. So this is with respect to what we'll call the rotating or swing seats for civil society. You may have noticed that we do not have microphone seats for every civil society organization. We are a victim of our own popularity. We were able in Nairobi, it was sort of touch and go, but in Nairobi we had a microphone seat for every organization. So we did not have to do the rotating seats, but If you were paying attention to the accreditation yesterday, we have 40 new organizations that have been accredited and therefore we do not have microphone seats for everyone. So a couple of basic rules, seats one share stakeholder seats one through eight generally should be kept open unless our intern has directed you to a seat. So first rule is if you have, if there is a seat that actually has been assigned to the organization, the only organization that should be, or the only person that should be sitting behind that nameplate is someone from that organization. Do not sit in somebody else's seat. I think that happened yesterday and it was a little confusing for the chair and the co-lead because the chair and the co-lead has to know who they're calling on. So first rule, sit in your seat, sit in nobody else's seat. If you have not been assigned a seat, you should sit in a non-microphone seat behind someone else, et cetera, unless and until you have asked for the floor. When you ask the intern for the floor, they will direct you to one of the swing/rotating seats, and you can then take that seat. As soon as your intervention is complete, you need to vacate that seat. So Normally, those eight seats should not have anybody sitting in them right now. Do we still have the list? Okay. Okay. So if you did ask, and my colleagues are confirming that if you asked for the floor yesterday and the intern directed you to sit in the seat, then you can stay in the seat. But again, you need to vacate once you make your intervention. So let's see how this goes today. And if this doesn't work, we'll have to figure something else out. Thank you.

Thank you for that clarification. I will give the floor to Daniel that will steer us through the discussions on Article 5 that will continue where we left yesterday.

Just give me a few minutes.

Just give us a minute. We're trying to confirm the list from yesterday.

Thank you. We're just sorting out those who are outstanding from yesterday so that we could follow that order. And, but then a good morning to everybody and you are welcome to today's session. And I want to ask that you allow me to express our appreciation for the constructive and sustentive exchanges we held yesterday. The discussions continue to enrich very much our process and assist all of us to carefully weigh the options before us as we work towards our shared objectives. I can be noted the diversity of perspectives around the table reflect our differing and various national circumstances. and importantly strengthens our collective ability to identify solutions that are workable for all of us, recognizing, of course, that no outcome will fully satisfy every preference. By the end of the day, I believe we'll get something that works for all of us. And I also like to address some matters that arose from yesterday. And What I became aware of that it seems all the remarks that were made yesterday were perceived as being directed towards particular member states. That wasn't really the intention. Actually, most of those points were in my notes for yesterday, but I did not raise them in the beginning. And so I want to start this morning with my comments so that there won't be any misunderstanding as we go along and so that I can clarify the views I have too. I want us also to take some time to remind ourselves of why we are here. And the basic, or should I say the main purpose of this particular work stream is to gather member state inputs for development of a draft text of the framework convention for consideration by the INC and subsequently presentation to the general assembly. And now there's a clear genesis to the work we are undertaking. And it will be useful for us to periodically visit the foundational documents that have guided us to this point. Not necessarily because they are circumstance or they are immutable, but rather because they can offer a helpful context, provide clarification, or some insight into some of the issues currently under discussion. as you have seen in other processes, where reference to agreed definitions or prior factor would have helped to advance those deliberations. It was in that spirit that I suggested that we revisit certain key documents, including the Secretary-General's report, which actually contains a matrix which outlines the features of the various options that were tabled, the three options. There's a matrix there that indicates all of the things that relate to the three options so we can refresh our memory on that. Resolution 78230 provides some guidance on both the substance of our considerations and the manner in which we might conduct our work. And the terms of reference itself, among other elements, offers some direction on the principles that should guide us. So the idea of asking us to look at these documents was to provide that basis and refresh. And I find it important and interesting because there's a young man at home who always reminds me of things I say. I remember one day I raised an issue of interpretation and he said, but you actually told me that if I go to the law, I'll find this there. Why is it that today you are contradicting yourself? I'd forgotten what I told him. But then it was a document that we had, you looked at, I had mentioned, so sometimes it does happen. that we've read something in a document, we've sort of slipped our memory. So just going back to those documents helps us. There recently there was an issue of interpretation we discussed for several hours, only to find out that that item had been defined in the law that we're discussing and all of us had forgotten that definition was there and we're all over the place trying to define it. So it's just to help us to refresh our memories so that it will help and enrich the discussions. I also suggest that we also have some reading for those who have read it, rereading, or those who haven't read it, to read the document on the roadmap and working methods, which would also assist us as we move forward in the processes that are women, the reasoning behind what we are doing and how we are doing it. Now, there's been some calls for explanation of the reasoning behind elements of the current discussion text. We've tried to provide some brief introductory notes where it's possible. But we have actually refrained from offering any detail, commentary or rationale, as it will not be feasible to comprehensively capture everything everybody has said. And so it becomes difficult otherwise you end up leaving bits and pieces out. But our primary objective has been that we want to faithfully reflect what Member States inputs, both oral and written, have been. And in this we wish to thank all the delegations that have submitted some texts for consideration. and all the other suggestions we received. We also agreed that Article 15 merits some discussion, and we'll take it at the appropriate time so that we will be able to address it adequately and in the manner in which we should do so. I want us also to remind ourselves that the framework convention is intended to provide a stable and durable foundation for future task cooperation, and I'm encouraged very much by the manner in which we've had our discussions, and our contributions and interventions, which is bringing us closer to that goal. I want us to also understand that our strength really lies in our diversity. The various ideas, the various thoughts that we bring to the process helps to enrich it and make it far better. And so as we carefully examine each of the articles, we continue to move and get closer to our objective. which is to have that convention that will benefit us. So with this remark, I want to welcome everybody to today's session, and we look forward to our continuous engagement to make this process one that at the end of the day, we'll all be proud of. Thank you. We will now move to continue from the interventions from yesterday on Article 5. And from our list yesterday, the next member states is Tanzania. Is Tanzania in please? Can we give the mic to Republic of Tanzania for them?

Alright, thank you colleague. Uh Tanzania Airlines with the statement made by Zambia on behalf of the Africa group as well as Ghana, Nigeria, Kenya, Morocco, and Senegal. We consider the Africa group's proposal to be responsive to the realities many countries including Tanzania must address through this convention. Particularly we need for location rule that reflect today's patterns of value creation in revenue generation. On draft article five we support a general principle for allocating taxing rights that takes into account market allocation, user participation and the role of data. In an increasingly digitalized economy, user and data linked factors are most essential. They are relevant location factors today and will remain so as business models continue to evolve. Secondly, Tanzania supports the view that taxing rights should not be determined solely by physical presence. Modern enterprises can maintain sustained revenue generating participation in a market without a traditional permanent establishment. Article five should therefore recognize nexus and allocation outcomes that are fit for purpose in a digitalized and globalized economy as mandated in TOAR. Lastly, Chair, we underline the importance of coordinated approaches that avoid both over taxation and non taxation. At the same time, we stress that this process was not intended to simply replicate existing instruments. If we revert to the status quo, we risk falling short of the mandate in the terms of reference, which call for a convention that is flexible, resilient, and able to respond as technology and business models evolve, supported by clear commitments including on the fair allocation of taxing rights. Thank you, Chair.

Thank you, Tanzania. Sierra Leone, please. The mic to Sierra Leone, please.

Thank you, Chair, co-lead secretariat. We deeply appreciate your efforts put into this work. Sierra Leone fully align and echo the position of the African group and support the comments made by Zambia on behalf of the African group, as supported by Ghana, Cameroon, Nigeria, Kenya, Morocco, and Tanzania. Central importance of fair allocation of developed in countries, Sierra Leone considers fair allocation of taxing rights to be a cornerstone of an effective and equitable international tax system. Article five should correct longstanding imbalances in global tax rules that have favored residence jurisdictions at the expense of source and market jurisdictions, particularly developing and least developed countries. For Sierra Leone, fair allocation is essential as in alignment with the African group. for safeguard domestic revenue mobilization, reduce reliance on aid and borrowing, and support financing for sustainable development and public services. CILO supports Article 5 by placing greater taxing rights with source jurisdictions, especially where economic activities occur, value is created, and natural resources, labor markets, or users contribute to profits. This includes taxing rights over extractive industries and natural resources, infrastructure and construction projects, digital and automated services delivered across borders, payments such as royalties, technical services fees and management fees. Sierra Leone emphasizes that Article 5 must respond to the digitalizations of the global economy where profits are often generated without physical presence. Accordingly, Sierra Leone supports expanded nexus rules that go beyond permanent establishments, allocation of taxing rights based on economic presence, users participation on market engagements, simplified mechanisms suitable for countries with limited administrative capacity. Article five should ensure the digital multinational enterprises contribute fairly to revenues in countries where their markets are located. Rebalancing residents versus source taxing rights. Sierra Leone supports a rebalancing of taxing rights by limiting excessive residents based claims on income, preventing double non-taxation arising from mismatches and profit shifting, ensuring that tax treaties and global rules do not unduly restrict source country taxation. Article five should explicitly discourage treaty practices that erode the tax base of developing countries. Given capacity constraints faced by many developing countries, CILOS stresses that fair allocation rules under Article 5 must be simple and administrable, clear and predictable for taxpayers and tax administrations, supported by international cooperation, technical assistance and capacity building. Complex allocation formulas that are difficult to implement exclude developing countries from the intended benefits. Therefore, Sierra Leone continues to align with the African group. Thank you.

Thank you, Sierra Leone. We now have Ireland, please.

Thank you, Mr. Coeli, for giving me the floor, and thank you and the Secretariat for a revised article. However, like many others, we have some issues with it. We would echo the sentiments of the delegates for India, Czechia, Norway and others that the language of this article and the framework convention more broadly should be kept high level with the detailed obligations agreed in protocols. The current wording of Article 5 is not aligned with this approach. Secondly, granting all jurisdictions where value is created, markets are located, revenues are generated and/or economic activity takes place a right to tax a portion of that related income is not appropriate in all situations and the article has to allow for other scenarios. We look forward to examining the proposals from Norway and Sweden and the African group. We see merit in reviewing both proposals. Regarding the second part of the article, like many others, we can't agree to the current wording regarding the requirement to renegotiate existing tax agreements. Any treaty renegotiations should only take place where both parties agree to such. Additionally, as the delegate for Saudi Arabia mentioned yesterday, how would the current wording work where one bilateral treaty partner has not signed the framework convention? And to reiterate one point from yesterday, we would appreciate a draft Article 15 as soon as practicable. Having a clear understanding of the relationship with existing agreements will allow for a more meaningful discussion. The current wording of Article 5, as the delegate from Norway pointed out yesterday, presupposes what we will agree in Article 15. And finally, I think this article, more so than most, would really benefit from an explanatory statement. clarifying what we mean and what we want each sentence to achieve will help us find a way forward. Thank you.

Thank you Ireland. We will now have Mauritius please.

Thank you colleague for giving me the floor to address this assembly. Good morning to all of you. In our discussions yesterday, a number of times there have been reference to the importance of clarity, understandability and certainty. These are indeed key qualities for ensuring that the convention can be interpreted in a consistent manner and applied effectively in practice. In our perspective these considerations should serve as guiding elements across the convention as a whole. We consider that the revised wording proposed by the Africa group moves in a constructive direction particularly in articulating the underlying principles in a manner that is accessible and aligned with the broader objectives of the Convention. For that reason, we express our support to the proposal as introduced by Zambia. At the same time, from a country perspective, we consider that continued work will naturally be needed to further enhance clarity and certainty, particularly in relation to the practical application of the provisions. Some of the concepts are framed in a high level manner, which we understand is appropriate at this stage in order to capture common principles and accommodate different perspectives. As discussions progress, there will be opportunities to further strengthen clarity and certainty, particularly with respect to practical application. In this regard, we consider the approach reflected in paragraph three of the Africa Group proposal to be important. The development of appropriate protocols and related instruments provides a constructive pathway to add detail and guidance over time. This can help translate the agreed principles into more operational approaches, supporting predictability and coherence while preserving the inclusive and forward-looking nature of the Convention. Thank you.

Thank you Mauritius. We now have Algeria, please.

Thank you, Mr. Khalid. At the outset, we subscribe ourselves to the Africa group, Nigeria, Kenya, Morocco, and other groups and states interventions. I wanted to revert to some of the issues raised during the previous days regarding Article 5 of the Framework Convention. We support the criteria of a nexus covered in Article 5 so as to strike a better balance in terms of taxing right. Current rules contain limitations as they have an unfair allocation to the detriment of source countries and the situation is unsustainable. We agree that existing tax conventions were negotiated in such a way as to strike a balance for stakeholders between the advantages for the parties but the reality is that the rules on the basis of which negotiations were held were based on physical aspects and substance which are no longer relevant. We have new models, new economic models which have changed a great deal. We have digital activities for instance which mean that current rules have become obsolete. Thus we are not in favour of this wording which covers the taxation of a portion of the income generated, we reiterate our support for the African Group's proposal, which is a sound basis for negotiations. It proposes mechanisms which can be used to achieve our stated objective, that is a fair allocation of taxing rights in light of existing models or models which might emerge in the future. Thank you, Mr. Chairman.

Thank you, Algeria. Now we have Saint Kitts and Nevis, please. Microphone to Saint Kitts and Nevis, please.

Chair, colleague, the discussions yesterday and today have been elucidating and important. Having listened attentively to the member states, it appears that the two real questions we must ask ourselves and our capitals are these, do existing international tax cooperation mechanisms provide for fair allocations of taxing rights or unfair mechanisms? And does this article truly express the high level principles of intent that are at the heart of this process? For small island developing states, the current system is clearly unfair and inequitable. Therefore, our goal in this committee is to assist in the drafting of articles and protocols which reflect at a high level what the General Assembly tasked us to do in the terms of reference. With respect to Article 5 specifically, it is presumed that those who remain in the room have already committed to shift away from a system where taxing rights disproportionately benefit a few, toward one where value creation, market presence, and real economic activity determine taxing rights. That is exactly what the TOR states that the framework convention must contain, a clear and principled foundation on which the technical details and protocols can later be built. In these turbulent times, it is important that we show the world through an honest approach to this process, that pragmatic multilateralism is still possible. The broad consensus we speak of should therefore be based on the already existing consensus, the consensus that the status quo is not working. That is the political foundation for why we are here. In our view, the article is pragmatically high level as it should be. The framework convention is about principles and setting the direction. The precise rules, safeguards, and implementation tools will be addressed in the protocols. But without this expression of collective intent, the framework would lack a center of gravity. We note that the renegotiation language may be more appropriately located in Article 15. That technical placement, however, should not distract from affirming the high level commitment here. Further, clarity may be needed to ensure tax certainty and to avoid double taxation potholes. But I wish to repeat, we are in this room because there's a widely recognized need for change. This article expresses that need in clear tax style language. For those of us seeking greater equity in global tax rules, this article must be broadly explicit. The Norway Sweden proposal does not, in our view, meet the related TOR commitment. It merely acknowledges the status quo and creates no commitment whatsoever. The Africa Group proposal maybe goes too far into the realm of language more appropriate to protocols. The reasonable solution, we believe, is in fine tuning this well drafted article. Saint Kitts and Nevis therefore has no objection to existing terms submitted, but humbly recommends careful amendment to satisfy the genuine concern raised by member states regarding tax certainty and double taxation and removal of the renegotiation element. Thank you.

Thank you, Saint Kitts and Nevis. We now move to Egypt, please.

Thank you, Mr. Chair.

Please kindly note that my intervention will be in Arabic.

Thank you, Mr. Chair, for the effort in drafting Article 5. We have some observations regarding this drafting, as it might create uncertainty and ambiguity in relation on some aspects. First, the right to taxation is on part of the revenue generated from these activities and not the revenue stemming. Second, the reference to such activities in line three might indicate it's only economic activities and not other cases, which is the creation of value or where markets are located or where revenues are generated. Third, In relation to the renegotiation of existing tax agreements that are inconsistent with this article, this drafting, this wording might create uncertainty as to the meaning of tax agreements referenced here or indicated here. Therefore, we support the proposal of the African group on Article 5 supported by Zambia, Ghana, Nigeria, Morocco, Tanzania, Sierra Leone, Algeria, and we see they are consistent with the framework agreement, which includes the establishment of an international tax system that is inclusive, fair, transparent, efficient, and equitable to enhance the legitimacy of international tax rules, their flexibility, and to make them more certain and fair while addressing the challenges related to mobilization of local resources. Thank you, Mr. Chair.

Thank you, Egypt. We now have Canada, please.

Thank you, Mr. Kholid, for the opportunity to come in a second time because I did come in yesterday. But reflecting on some of your comments yesterday that we should go back to some of the foundational documents, I have reflected on those, and I think that the comment was made yesterday. I think we also have to recognize that those documents were not all adopted on consensus. In fact, many of them were voted. But that aside, I was reflecting on, again, the paper produced by the Secretary General in terms of setting out the options that we have before us. And it occurs to me, I think one of the issues that we are encountering in this process. If I look at what is being asked for and what is the current draft, what is being asked for, for example, by the Africa group, if I understand their draft, and I would appreciate having a copy in writing because I was not able to write it all down. But if I look at what they're asking for, if I look at the binding commitments that it seems the co-lead and the chair seek to achieve in Article 5, that looks to me like a multilateral convention on tax, which is option one, is not the option that was chosen in the resolution. explicitly a framework convention was chosen, which was generally seen, I think, as the compromise option since many had argued for option three. And so I think that we need to be clear and we need to be fair to what we are setting up is a framework convention. Because if I read what is a multilateral convention on tax, and this is from the Secretary General report, binding legal agreement that establishes enforceable obligations regarding international tax, such as exchange of information, thus potentially modifying parties' taxing rights, it's primarily regulatory in nature. To me, that is exactly what we're trying to do here, and that is not in accordance with what our mandate is. Our mandate is to develop a framework agreement, which is described as establishing a general system of governance in the area of international tax cooperation, primarily constitutive in nature, with regulatory aspects adopted through protocols. And so I think the call for having high-level commitments and and those high level commitments not being self executing, that that be left to protocols, I think is very consistent with the option that was chosen and the underlying foundational documents to which you asked us to reflect on. So thank you, Mr. Khalid, for the opportunity to come in on that. I just wanted to share some of my reflections and to note that I had taken to heart what you had asked us to do and I'm sharing some of my reflections. Thank you.

Thank you, Canada. We now have Italy, please.

Thank you very much, Mr. Khalid, and thanks also for the work done trying to progress on this article. As a general remark, we believe the framework convention should include high level commitments while the operational provision and legal obligation should be covered by the protocols. From this perspective and as also outlined by other Member States yesterday and this morning, the language currently included in Article 5 is problematic from our perspective. In particular, we have difficulties to accept that the renegotiation of the existing tax treaties may come as a direct consequence of the provision of the Framework Convention. Also we have concern about the lack of clarity with respect to the role of the connecting factors whose interaction without qualification in order to create nexus and coordination among the cells may lead to multiple taxation with a risk of uncertainty and clearly of double taxation. Against this background, we are ready to work on the proposal submitted by Norway and Sweden from one side and the Africa group from the other side. We see certainly merits in the Norwegian and Swedish proposal, which particular makes reference to the international law and policies that in our view should be preserved where they work. We appreciate that the proposal of the African group recognized that there should be a link between the relevant connecting factors and the real economic contribution in the jurisdiction, but we believe that this concept should be further developed in the protocols. On the other hand, as drafted, the proposal of the African group still does not properly address, in our view, the issue of possible multiple taxation and the consequent uncertainty. In particular, because of the assumption that the right to tax in a given jurisdiction cannot be denied for the reason that the income has been derived by a taxpayer without physical presence in that jurisdiction. This is an assumption that we are not prepared to follow. I will stop here for now. Thank you.

Thank you, Italy. Colombia, please.

Thank you very much.

Given that this is the first time that I am taking the floor in this session, I wish to express my gratitude to facilitators, co-facilitators, leads and co-leads and the secretariat for their work to ensure that these discussions can progress smoothly. and as best they can, Colombia is championing a balanced approach which encompasses many factors, including equity, taxation neutrality, and the economic realities of each jurisdiction in the market. This stance is in line with the goal of building a tax system which is international, fairer, and more representative. With that in mind, Colombia is of the view that the term economic activities is more appropriate given the broader scope that it encompasses. It encompasses all modes of value generations, professional, commercial, any other, and any other revenue generating activity. So using that term avoids limited and limiting interpretations and guarantees consistency in the application of international conventions. Moreover, and I'd like to take this opportunity to underscore that Colombia is in favor of incorporating the possibility of renegotiating agreements which could create greater tax collection capacity. Thank you.

Thank you, Colombia. Belgium, please.

Thank you, Mr. Chair. I would like to fully echo the intervention made by Canada. And if we look further on the concept of framework convention, which we can also find in official UN documents by UNECE, it clearly states that A framework convention does not contain concrete targets. It is not less legally binding than a protocol, which does contain time-bound targets and concrete obligations. Also, the fact that a framework convention, which thus establishes broader commitments for its parties and leaves the setting of specific targets either to subsequent more detailed agreements, usually called protocols, or to national legislation. The whole thing that we still need to reassess here, I think, too, the fact is that this is, we are now talking about the framework convention and the way it is stated in Article 5 now, it creates, it really emphasizes concrete legal obligations and they are out of place here. And we can agree that they are put in protocols, but the whole way UN framework conventions have worked in the past is that they do not entail the concrete obligations that the parties have to, but they do entail the principles, the principles objectives and the rules of governance of the treaty regime. we would like to also see how this framework convention should operate differently than the way other UN framework conventions work. Thank you.

All right, thank you, Belgium. Russian Confederation, sorry, Russian Federation, please.

Thank you, Mr. Co-Chair. We made the intervention yesterday regarding the substantial issues on this article. My intervention here is just of the technical nature. Maybe I missed something, but I would be very happy and appreciate if we receive the both texts of the proposals made by the African group and the Sweden and Norway in order to compare both of these texts because it's rather difficult just to listen to the and make certain comments when you are listening to this very important documents, I believe. So if it is possible to circulate both of these documents, I would be very appreciative. Thank you very much.

Okay, well, That's noted, we'll get back to you on it later. Thank you Russia. Switzerland, please.

Thank you Mr. Kowalick for the opportunity to speak again on that issue. I would like to lend our support to the call of Canada that described very well the need for high level language, in particular in relation to the provision on a fair allocation of taxing rights. Another issue I would like to address is the problem of unfair tax treaties. Tax treaties, they are a complicated issue sometimes. They are comprehensive. They touch on different types of income, sometimes also assets if the countries involved have a wealth tax. There are, for example, rules for income from immovable properties, for business properties, sometimes for income for service fees, sometimes income for shipping, different rules for dividends, another rule for interest and so on. I assume that most of you are familiar with the list. So then when you negotiate the treaty, you have to give up on some issues. And for example, let's say on dividends, and the other country will give up on another issue, for example, pensions. And then you arrive at a compromise, which is fair and balanced. And there you have then the solution. So it's not just the model, you know, not just take the model of the UN or the OECD or any domestic model. And those treaties, they are also individual, they're tailored to the needs of the involved countries. They are therefore often unique and for that reason we doubt that it will be possible to develop a one-size-fits-all magic formula to make those treaties fair through the framework convention. What should be possible is to develop high level principles that should be followed for a fair allocation of taxing rights and I think examples for such language are on the table. And what should then be done of it? The rest should be left and must be left to the countries involved in our view. If a country now thinks that the treaty is unfair, what can be done? The best thing is to address the issue with the other party. the one that could change it and to see whether you could fix it through negotiations. And sometimes you maybe you arrive at the conclusion that the relationship is not healthy, it's not balanced, it cannot be fixed, then you can also cut the relationship, you can cancel the treaty. And then the unfairness is gone, but of course also the relationship is gone with all the benefits you get from that relationship. So this all is to say that there are means to fix unfair treaties. And the framework convention is in our view not the right tool to do that. Thank you very much.

Thank you, Switzerland. We now have Estonia, please.

Thank you. Unfortunately, I couldn't be here yesterday, so I have missed Yesterday's conversations and cannot refer back to them, but I would like to support what Canada, Belgium, Italy and Switzerland have said before me. But since, you know, these interventions packed a lot, I will briefly address our most pressing concerns. And first of them is the commitment to renegotiate the existing tax treaties in a framework convention. Also, when we look at the text that precedes this commitment and to which we should base our future tax treaties, then it's rather vague. And being a tax treaty negotiator myself, I don't get much guidance from this text. Surely it does try to fix the problem that we currently have, that the criterion of physical presence does not address appropriately all the situation in the taxation of services that we may have. But while the first part of Article 5 tries to give us guidance, it's not enough to go to the tax treaty negotiations with. And like Italy already mentioned, we are here, we are faced with a potential multiple source issues. So if we are trying to make our tax treaties fairer, then we may fail if we are only keeping the tax treaties bilateral because we may have two countries where value is created in one country and revenues are also generated in another one. This situation would need to be solved and we don't get much guidance here. And while, of course, the unfairness of the tax treaties is not a desirable situation, it doesn't mean that we are not going to get into the same situation with the help of this article as well. At the moment, we are operating at a very general level, but if you really put all these countries, where the criteria listed in that we see in this screen, you know, when they appear and try to make these countries agree how much of the taxing rights each one of them should get, this is when things get complicated. And we have heard that the current profit allocation rules are very complicated and as a representative of a small country, I totally agree with it, but I'm not sure we are leading to an easier solution here. Thank you.

Thank you, Estonia. Brazil, please.

Thank you, Chair. Sorry, I always mix those terms. At this point, there's not much to say that it should be new or insightful or that could change anyone's mind, but I think that looking at the text, maybe we can split the text into two different sentences because that's what it does. It has one initial part, one initial element that is enlisting several connecting factors that should be seen as proxies or elements that would guide what a fair taxation is. So, and the idea underlining it, I think it's also present in the African group proposal, that is that countries should not be prevented or the argument that they cannot tax just because there is not a physical presence in that country, that argument has to be softened. There are some of those elements that are outdated, so that's why we should mention them and some elements maybe even if not outdated but they have led to unreasonable results, that's why there is this strong claim to renegotiate treaties. So there is not only the reason that times and development has changed and caused a lot of modifications, but also that in the end, the result of application of those rules are now perceived to create unbalanced situations. The first part goes until the third line. I also agree with the remind I think from Egypt that the word activities there in the third line is a bit ambiguous so they should somehow change such activities and then we should split or we could split the and create another paragraph starting from and shall take such action then there is the problem that we have with the shall in all of those commitments commitment articles and the problem is that shall leads to a perception that it creates obligations of result, obligations that are too specific, too restrictive. And what we see in the room is that there are diverging views how to interpret that part. Some countries feel that they are obliged to take and to renegotiate treaties, whereas other countries will read that as a best efforts obligation. obligation that they shall try to renegotiate treaties they will enter, they will remain open to renegotiate treaties that are perceived as being unbalanced or leading to unreasonable results. So another way of correcting it could be changing the shall for shall endeavor to take actions, not such actions because there is no reference to what actions are to have the word such. And for at least for a non-native speaker, such actions should remind something else in the sentence that is not there yet. And the final part, including the renegotiation of treaties, well, it depends how we perceive the second part of the sentence. So if we see it as an obligation of result, then it will create a difficult situation for several countries. But if we see it as an obligation that it guides to best efforts obligation so the countries will try to renegotiate when they see, when they perceive that the result of the text treaties are outdated or that they lead to unreasonable results, then they will do their best efforts. So it depends how it will be interpreted. I think we can adopt somehow the text or study the proposal of the African group could also be a good way, but definitely we can make some minor corrections and maybe split that paragraph into two new paragraphs and being more precise and specific in those two paragraphs being kept under the same article. Thank you.

Thank you, Brazil. India, please.

Thank you, Chair, for giving us the opportunity to take the floor a second time on this article discussion. Distinguished delegates have carefully considered the proposals put forward by the African Group, as well as the joint proposal forwarded by Norway and Sweden. Both proposals have their own merits, and Member States have provided thoughtful reflections on their respective strengths and implications. India acknowledges the concerns expressed by the African Group, that commitments under this article should not risk becoming a dead letter. We agree that the provision must go beyond a mere acknowledgement of nexus factors and should meaningfully advance the fair allocation of taxing rights. We also recognize that international taxation principles must evolve in response to changing global economic dynamics, particularly in the context of digitalization. At the same time, we understand the perspective underlying the Norway-Sweden proposal, especially the concerns regarding legal and legislative uncertainty inherent in the present article due to the reference of words which are including renegotiation of existing tax agreements. that are inconsistent with this article. Simultaneously, we also recognize that the prevailing international taxation principles laying greater deal on emphasis on physical presence needs to evolve and change. In light of these considerations and with a view to balancing the concerns of both groups, India proposes the following language as an intermediate and constructive approach which may be considered and further refined by the INC. As we believe that a coherent and balanced formulation will be essential if this article is to be effective and long lasting. The proposed text from our side reads as follows. Paragraph one, States parties agree that the allocation of taxing rights must reflect the economic contribution of each relevant jurisdiction taking into account where economic activity occurs, value is created, markets are located, revenues are generated or users or data are located and that Taxing rights shall not be based solely on physical presence. Paragraph two, state parties agree to pursue and explore cooperative approaches to support the fair allocation of taxing rights, including through domestic measures, suitable protocols, and appropriate nexus and allocation rules with a view to reducing the risk of double taxation and non taxation. It is submitted for the consideration of INC. Thank you, Chair.

Thank you, India. Okay, I don't see any more requests from member states. So before we move to the stakeholders will take a 10 minute break and then come back. Thank you.

Play all songs of Jio Dhan Dhan Dhan Live.

Play song, Manoj Kumar. Play songs from the movie, The Girl from the Other Side.

Please settle down so we can start again. Okay, we are starting again. Please find your seats. Please find your seats. I'm going to give the floor to Daniel to continue the discussions.

Okay, thank you and welcome back from the break. We want to continue and now move to the African Union to now take up this. So the delegate from the African Union, please.

Thank you, Chair, for giving us the floor. Since this is the first time we're taking the floor, we want to appreciate the Secretariat, the co-lead, and colleagues working in the inter-session meetings for producing the text. Chair, fair allocation of taxing rights is in the heart of the convention and may be the single most important reason for which our members have agreed to undertake this work. And for this reason, Chair, the African Union have listened carefully to interventions and comments supplied by our esteemed delegates since yesterday, and we have noted four key issues for which we intend to respond. We believe that resolving issues around these four issues will point us to the way forward. Number one is what is high level. We've seen some delegates insist that high level language must be a language without substance, a language that conveys no obligation whatsoever. We want to note, Chair, that in the spirit of all of the terms of reference, both in the spirit and aspiration of terms of reference, as well as the document upon which this work is based, we cannot accept that high-level language would be one without any substance whatsoever. As a middle point chair, it is our view that leaning and driving from other framework conventions which we have had a look at, high level would mean being high enough not to preempt the protocol that we outline the substantive rules, and then also being specific enough to establish what the obligation of parties would be, or at least how such obligation can be further elaborated under the protocols. In the light of the current articles, we want to align with the proposal made by the African group, especially by Zambia on behalf of the African group. We want to note that the high level language with respect to this very important article must provide guardrails as to what consists the general principle that is contained in Article 5.1 of the proposal, what will be the standard of allocation of taxing right, and what would be the guide rail for the implementation using guidance or protocol or whatever supplementary instrument there could be. Chair, we believe that the proposal have covered this element in a fair and balanced manner. We believe that that proposal would serve as a key pointer to how we must move forward with respect to this very important article. Then on the issue raised by Korea regarding over taxation, we note that the proposal by the African group have sought to address this where it provided a party to seek coordinated approach in ensuring that MNEs or taxpayers are not over taxed, present to possible triggers of taxing right across many jurisdictions and as well as ensuring that there is no non taxation. The third element is the issue regarding review. We believe that parties are negotiating this convention in good faith, and we believe that parties who signed under this convention will implement it in good faith. Implementation in good faith means that if obligation is placed on parties, parties will take necessary actions, which may include some domestic measures, some bilateral renegotiation of existing treaties where necessary. And we say this knowing that this is not an outlier, there is a precedent. We recall when we did the rules around the base erosion and profit shifting, parties agreed to amend existing treaties. in order to ensure that the aim of the work was realized. This proposal, I think, is in line with such suggestions, and we want to encourage parties to approach it with broad mind, ensuring that they take necessary obligation if they sign on to the treaty to realize the object and intent of the convention as expressed by the obligation of allocation of taxing right. A colleague mentioned yesterday that it may require renegotiation of 3,000 existing tax treaties. If we accept by implication that 3,000 existing tax treaties have shared taxing rights in an unfair and imbalanced way that goes to reemphasize the need for us to be very careful in consideration of this article and to take decisive actions towards amending those treaties to ensure that they reflect the realities of parties to those treaties. But in doing that, a colleague have also said that it may impose obligation on third state which goes contrary to Vienna Convention. In this sense, Chair, I am suggesting that there's urgent need for this committee to be assisted by the services of the Office of the Legal Counsel or the Office of Legal Affairs to ensure that parties are guided properly, especially when referencing existing instrument. Because looking at the Vienna Convention and looking at what have been proposed, there is no instance upon which this proposal will confer obligation on third state, if you have two parties, parties to bilateral tax treaties, and those two parties are also parties to this convention, they are the two relevant states and no obligation in place on the third state. And in this instance, whether or not we even have this provision on the text of the convention, there's an implied obligation by the of the Vienna Convention on Laws of Treaties. that in such instance, the later treaties will definitely be the one to prevail as the provision of the earlier treaties will be effective only subject to its inconsistent or lack of it with the current treaty. On this ground, Chair, we yield and we encourage members to continue to engage constructively towards our common objective and purpose. We thank you, Chair.

Thank you, AU. Can we have IATA, please?

Thank you, thank you, Colite. I speak on behalf of the International Air Transport Association, IATA, representing over 370 airlines and 85% of the global air traffic. We share the concerns raised by delegates from Norway, Sweden, the Netherlands and others who shared their views about the drafting of Article 5. The revised Article 5 worsens the situation. The proposed text now suggests renegotiating tax agreements deemed inconsistent with this article, positioning source-based taxation as the primary approach and viewing existing frameworks as obstacles rather than valuable international instruments. Taxing income by source is impractical for international air transport due to the industry's highly integrated and mobile nature. If each state asserts its right to tax, it not only risks double taxation, an issue already problematic due to the financial burdens and conflicts with existing aviation frameworks, but also leads to multiple taxation. This is a matter that 193 member states have committed to resolving under the guidance of the International Civil Aviation Organization, ICAO, a specialized agency by the United Nations dedicated to civil aviation. The stakes here are high. Such measures threaten global economic and social development, particularly in developing economies. Aviation connects 4 billion passengers annually, supports 87 million jobs worldwide, and facilitates 3.5 trillion in trade. It is essential for small island developing states, landlocked nations, and remote communities with limited transport options. Multiple taxation would increase operating costs, reduce route viability and potentially force service withdrawals from marginal markets disproportionately harming regions and populations that are heavily reliant on air connectivity. The taxation of International air transport is governed by a complex legal framework. This framework includes ICAO policies to prevent double taxation, bilateral air services agreements with reciprocal tax provisions, and numerous double taxation treaties. The legal instruments have been, or these legal instruments have been developed over many years of negotiations and more experts. who have sought to find the right balance to ensure that the international air transport industry can continue to fulfil its vital role. Collectively, these existing legal instruments aim to prevent any negative outcomes that Article 5 might create. Co-lead, we appeal to this committee to adopt a high-level approach that considers the broader implications for global sustainability, particularly for a strategic industry for states like air transport rather than focusing narrowly on potential revenue collection. The ongoing negotiation process offers the opportunity to reflect on these concerns and thereby prevent unintended consequences that could arise in the absence of such consideration. Thank you.

Thank you, Aeta. We now have ITAF, please.

Thank you, Chair, for giving us the floor. The African Tax Administration Forum would like to align itself with the comments expressed by the Africa group on behalf, by Zambia on behalf of the Africa group. Chair, we believe fundamentally that the major reason that we are negotiating this framework convention is to address existing imbalances in the global tax arena. We further believe that the fair allocation of taxing rights should reflect the realities experienced by developing countries. And as such, we believe further that the language proposed by Zambia on behalf of the Africa group offers a good balance between general principles as enshrined in the intention of the article as well as standards for allocation and the principles for implementation and coordination. We further believe that the language proposed by the Africa group gives the opportunity to guard the article and the framework's integrity for future proofing and adoption by as many countries as possible. Lastly, Chair, we fundamentally believe that the Africa Group has also proposed language that offers a coordination rule to alleviate the concerns raised by Korea yesterday. And as such, we encourage parties and members to relook at the text and negotiate with a broad and open mind in achieving our set objectives. Thank you.

Thank you, Atoef. We now have stakeholder eight, that's Tax Justice Network Africa.

Thank you, Chair, for the opportunity to speak. My name is Evelyn Mwendo, and I represent the Tax Justice Network Africa and the African Civil Society Working Group on the UN Tax Convention. We acknowledge that the intention of member states so far with Article 5 has been to ensure that both residents and source countries get taxing rights by acknowledging both supply and demand side factors of production. However, it needs to be clear that the purpose of this article is to outrightly address the historical imbalances of taxing rights between source and residence countries. And as net importers of capital, African countries are often source countries. International tax rules that limit taxation at source have been cemented in a vast treaty network for the past 100 years. For instance, the persistence of nexus rules based on physical presence has severely limited source taxation despite significant economic activities taking place therein. The implementation of Article 5 without a doubt requires the renegotiation of double taxation agreements. So it is very concerning that some member states have alleged that renegotiation of double taxation agreements will be a violation of international law. And as rightly put by the African Union, it will not impose any obligations on third parties. Furthermore, as civil society, we are also not comfortable with the idea of a provision on taxing a portion of income. This would go against the spirit of this article as it implies that there will be a limitation to the extent that source countries are allowed to tax. And after a whole century of source country tax limitations, it's time that we change, even if it means 3000 double taxation agreements. Thank you.

Thank you. We now have stakeholder one that is YTGN.

Thank you, Mr. Chairperson. I am here is Allan Muranja from the Youth for Tax Justice Network, speaking on behalf of the FFD constituency of the major group for children and youth and other CSOs present. We call for the development of an additional specific article on the taxation of the extractive industries with a commitment to having a clear and enforceable source-based taxing rights for jurisdictions where extractive activities take place. Most extractive production occurs in developing countries, yet these countries have historically retained only a small share of the income generated from their non-renewable natural resources. The current international tax system allows multinational mining corporations to shift profits and reduce their tax liabilities, leaving resource-rich countries with limited fiscal benefit while they carry the environmental, social, and long-term economic costs for this extraction. The additional article should correct this imbalance by explicitly recognizing resource-based taxing rights for natural resource jurisdictions. The African group has already highlighted this by proposing a dedicated commitment on extractive industry taxation. Yet this proposal is not reflected in the present text. We have seen too often that without specific rules and obligations, corporate tax planners find ways around general principles. The convention should therefore warrant that state parties shall ensure the effective taxation of income from the extraction and sale of natural resources in the jurisdictions where the extraction occurs, reflecting the unique non-renewable nature of those resources and the principles that source-rich countries have the primary taxing rights over their natural wealth. This additional article should also mandate measures like anti-tax avoidance rules, for the extractives, fair pricing of commodities, and a commitment to renegotiate any bilateral treaties that cap source taxing rights on mining or petroleum income. The taxing of extractive industries effectively at source would directly bolster countries' abilities to fund sustainable development and climate resilience. This will reduce their reliance on external aid or debt. Resource-based taxing rights are essential to ensure that natural wealth contributes to local development, environmental rehabilitation, and climate finance, rather than merely enriching distant shareholders. I thank you for your consideration.

Thank you. We now move to stakeholder three, that's the UN independent expert.

Thank you very much for the floor. I'm going to refer to Article 5, but together with Article 4. And the reason is that when one interprets articles, whether it is in domestic legislation or in an international treaty, earlier clauses often add nuances to subsequent ones. And in the context of the understanding of sustainable development, I tried to understand what would be the purpose of this particular article and I got the impression, I've seen some member states talk about a division into two spaces, but I think there's a division into three. The first being that it is about all jurisdictions and value creation. The second is about actions by member states in the sharing of revenue specifically. And for me, the third one is a clause on the treatment of past treaties, which I think has to be there no matter which way we look at it. And if we reflect on the direction the world has been taking over the past couple of years, we are seeing more bilaterals. We are also seeing more unilateral withdrawals in multiplicity of spaces. We're also seeing a lot of unilateral tariff variations. And the reason I raise this is because the argument for certainty, I think sometimes has lost its traction because while we will battle for certainty, we are living in an age of uncertainty. And I think it's important to keep it in mind on how much value we place on the language of certainty and predictability in the world in which we're in. And if I refer you secondly to my submission, I mentioned issues around location of workers, physical assets, natural resources, as well as customer revenues. And all of these could be again listed as has been mentioned by some member states. But I would also like this link to sustainable development on the issue of incompatibility of treaties to be taken into consideration. And while I appreciate that member states are having a challenge with the word renegotiation, I would like to give the example of Norway. Norway assessed treaties that it adopted in 1955. as an extension of its treaty between the United Kingdom and Norway. And it subsequently in 2024 cancelled several treaties where it stated that states that did not negotiate the treaty themselves because they were not sovereign states. would not be acceptable under their principles. And they did a very thorough assessment, which I'd like to encourage member states to look at. The treaties that they proceeded to cancel included the one with Sierra Leone, Curacao, Jamaica, Barbados, Trinidad and Tobago. And so there is an argument beyond renegotiation also about cancellation and withdrawal, which can be added to the conversation in this third clause that I think could be a good breakdown. I thank you very much for the time.

Okay. We have a request from Norway, so Norway, please go ahead.

Thank you, Mr. Kolind, for allowing me to come in.

I just want to clarify that the reason for our termination of certain treaties that are set out.

Right now is not on the basis as explained.

It was.

On the basis of completely different evaluations and had less to do with where the treaties were stemmed from.

In fact, many of those treaties were negotiated with these jurisdictions at separate states. And I think perhaps only one was a legacy treaty.

The termination was based on a consideration of.

How much it has used and the time that has passed and the general content of the treaty.

So I simply wanted to clarify that. Thank you.

Okay, that's well noted. We now have a stakeholder for Bombay Chartered Accountants Society.

Thank you, Chair, for the opportunity. There have been good discussions yesterday and today. Few alternatives of Article 5 are suggested, but this alternative text is not available with the observers, so I'm still commenting on the text which is appearing on the screen. But the comments would still be useful for the other alternatives. The word "a portion of the income generated from such activities" may be replaced by the words "the resultant income" or "income generated therefrom". I did not explain the reasons for this. I mean, this is also by some other commentators. The commitments are considered to be not to be high level. That's what the comments are coming. This appears to be too harsh by some members. And there's a lot of resistance on account of that. Now to address this concern, The word shall take such actions may be replaced by the words shall endeavor to take such actions. This is the precise words I had suggested last Nairobi session as well. Alternatively, the word renegotiation may be replaced by the word reconsideration. So that sort of dilutes the commitment. The negotiation appears to be getting stuck because of the question as to what is fair allocation. the member states want to know what are they getting into. And to address this, one may consider two approaches. Approach one, what is fair or unfair is very subjective. And it may not be fair to attempt to deal with this in this framework convention, which is supposed to be at high level. So in first approach, we don't look at this, but when the parties actually discuss when it is relevant. So when a protocol is negotiated on, let's say, on services, At that point of time, whether 10% source country tax is fair or 15% is fair, it may be discussed at that point of time because it will be more relevant there. Framework convention is only a high level. That's approach number two. There is also approach two, approach two, there is also another way of agreeing on what is fair allocation. And this may be linked to certain other aspects which we discussed yesterday. Let's say we link it to human rights. Now, importance of human rights is already discussed yesterday. Okay, people comment on it. The countries need tax revenue to protect human rights. Humans need quality housing, medical infrastructure, vaccination, education, nutrition, food, et cetera, et cetera. And the tax revenues collected by the countries will be used for this. And that means the allocation ratios can be linked, created in such a manner that the countries which need higher amount of revenue for protection of human rights will get higher share of tax. That's as simple as that because that revenue is going to protect the human rights. There could be various parameters for this allocation ratio when we also decide on the population of a country, when we decide on number of young people in the country because they are the future, the ratio will be linked to that. So the guiding principle for achieving fairness should be the country which needs more funds for human development gets more taxing rate. We may keep on further improvising on that. These are the countries which are facing more of a climate change related issues, they may get more taxing rates. Now let's take a very simple example. We may achieve fairness by taxing rates, the taxing rates may be allocated in the inverse ratio of per capita GDP of countries competing for the revenue. The allocation ratio can also take into consideration other aspects related to GDP or SGDs. A simple example could be, let's say a per capita GDP of a country A, a developed country, is USD 43,000 and country B, which is a developing country, is USD 3,000. And if the income generated is 100, then the developing country will get 94 out of this 100 because that's what the GDP ratio, inverse GDP ratio will contribute. Of course, this is very basic guidance and there's a lot of scope for further improvement on that. Another issue which is discussed is on double taxation. The issue of double taxation also needs to be seen from a different perspective. The question is, should the sovereigns be denied taxing rights for the reason that it may result in double taxation? Or would it be appropriate to expect that MNEs will change the business models if it results in double taxation? MNEs do it all the times. They keep on planning to achieve the best optimal tax outcome. And it's obvious that whenever the tax laws change or other laws in a country change or the regulations change, MNE will restructure the business model to align with the change of law. Now, having said that, it may not always be possible for all the businesses to restructure in this fashion, and, you know, we had a good example given by the representative from IATA, those cases need to be handled differently. In this situations, the countries may agree on different solution, countries may consider giving some incentives or adopting some other solutions, but otherwise, as a principle, the first principle is a sovereign has a taxing right and merely because that taxing right could result in double taxation is a non-starter. Thank you, Chair.

Thank you. We now have stakeholder two, IBFD.

Thank you, co-lead, for giving me the floor. Since this is the first time I'm coming on the floor, I would like to reemphasize our commitment towards supporting these deliberations and the journey towards reaching common ground. In response to the text we have on the screen, first of all, I would like to mention that I think it's only reasonable to recognize the concerns that has been raised by several delegates concerning the implications of the text we have currently. While I understand the need for high level language, I believe that this convention will be enriched and more impactful to reach its intended objectives if we have some minimal level of substance to the text. I have observed from the deliberations we've had from yesterday that the hesitation on accepting the current warden is due to lack of clarity on the implications and binding nature of some of these commitments. It is therefore advantageous that this process to create more clarity and understanding. We have to at some point address the issues that have been raised with having some indication of what article 15 represents. I believe this will be very helpful in moving discussions forward. Regarding the language we have on the screen, I would suggest that it should be rewarded in a way that eliminates suggestive language that could be interpreted as setting a definite allocation of rights, criteria, or a methodology on the proportion of tax that is eligible for taxation, overlapping taxing rights, and the contravention of established international law or imposes a legal obligation that undermines the decisions that were made by independent states in the exercise of their sovereignty, including the entry, maintenance or termination of treaties. Without establishing a common understanding of supportive definitions or indicators of key concepts, including what is considered fair allocation of taxing rights or on fair balance of taxing rights in treaties, It is, I feel, will keep going round and round and will not be able to move forward with the discussions. It is my understanding that within the rights of a sovereign, it's within the rights of a sovereign state to define the extent to which it wants to tax and any income that is derived or associated with its jurisdiction and establishing those taxing rights. Issues only arise where there is established international norms that do not recognize such taxing rights in a cross-border trade invest and investment situation. And so the focus of this commitment should be in relation to a global coordination of the interaction of such rights and norms and standards that we currently have. So I think that will streamline the conversation and it will make us reach the intended aims of this particular article. So thank you very much. And those are my comments.

Thank you. We now move to stakeholder seven, the Paris School of Economics.

Thank you, Chair, for the opportunity to speak. I am representing the EU Tax Observatory, which is an independent research institute within the Paris School of Economics. And our aim is to contribute to the discussion by providing evidence grounded in our scientific and empirical work. One of our recent analysis looks at the allocation of taxing rights and the formula apportionment approaches. And it shows that Article 5 actually potentially concerns a very large tax base. We're talking about global multinational profits that are in the order of seven trillions of euros. So even under our reapportionment scenario that would focus on large multinational groups, around a third of taxing rights would move to a different country compared to the current system with significant revenue potential for many countries here. Against this background, it is important to be clear about the implications of the current discussions. Several delegations have stressed the importance of avoiding double taxation while also expressing reluctance to commit to renegotiating existing tax treaties. Our analysis shows that these two positions are not neutral when taken at the same time. Without further provisions ruling out double taxation and excluding the possibility of making changes to current treaties would effectively result in unilaterally giving up taxing rights, particularly in the case of non-participating countries. This implies forgoing a significant share of revenues, for example, in a scenario in which the largest economy in the world would not be participating, roughly a third of this potential revenue would be given up. This raises a broader question about the convention in Article 5 on the choice of how to deal with non-participating jurisdictions and potentially highlighting the need for collective mechanisms to disincentivize non-participation. Such choices will have profound effect on both the reallocation of taxing rights and on the revenues the states will end up getting. Thank you very much.

Now we have ICC.

Thank you, Mr. Cole-Leed. And to begin with, I'd like to recognize your leadership in guiding this workstream and to thank you for your comments and reminders in your opening statement this morning. The global business community appreciates the effort to develop a high-level framework capable of achieving broad support across the UN membership. However, in its current form, the text raises substantive concerns that have already been raised by a number of delegates here, but that will need to be fully addressed, as I think the delegates from Ireland and Italy have intimated, to ensure that the framework functions as intended. As we've heard, it's one thing to keep revisions at a high level, but we're concerned that the proposals as drafted may lead to significant unintended consequences. Rather than fostering cooperation, the framework risks increasing disputes both with and between state parties, and unfortunately that creates barriers to trade and stifles economic growth. In more detail, first the current drafting introduces broad taxing rights and fairly ill-defined definitions, which invite multiple interpretations. Without clearer parameters and more precise language, the framework may undermine its own objectives and provoke a rise in disputes. Second, the proposals that we've heard about encouraging renegotiation of existing treaty networks could generate uncertainty for supply chains already strained by geopolitical instabilities. It's unrealistic to expect wholesale renegotiation of treaties, especially if they are not clearly defined. and stability in those GT networks is essential for continuity and predictability in cross-border activity. I think the delegate from India raised some interesting structural proposals to address such concerns in this regard. Third, the draft increases the risk of extraterritorial taxation. Framing taxing rights around undefined or unilaterally interpreted distortive effects, for example, could allow jurisdictions to tax beyond their borders, provoking retaliatory measures and further destabilizing the system. The risk of double taxation remains unaddressed. The current draft continues to allow for double or multiple taxation, given the absence of clear allocation principles, We are concerned that the economic pillar of sustainable development still does not receive the weight it merits in the current text. And specifically, we note in the draft text of Article 5 that it continues to emphasize the right to tax rather than the allocation of taxing rights between contracting parties, which is the core requirement under Principle F of the terms of reference. That principle mandates the framework convention support sustainable development by ensuring fairness in the allocation of taxing rights, not by expanding taxing rights without limit. I'd also add that references that are being discussed are sometimes nebulous and perhaps misleading. For example, data in and of itself is of little value. Generally, it's the analysis, interpretation, and exploitation of data often using the developments of technological algorithms and analysis that can create value. And market jurisdictions are usually rewarded through sales or use taxes. So precise definitions or interpretations are key. The current draft and I think the Africa proposal could be interpreted to promote all jurisdiction, to permit all jurisdictions to tax the same income. whenever business activity occurs, values created, markets are located or revenues are generated, all of which are terms that are open to different interpretations. And this would clearly open the door to double or multiple taxation. The text also offers no clarity on how these concepts should be weighted or reconciled. Key terms remain undefined and fairness remains unattainable until clear allocation rules are established. Building a little on the comments from delegates from Canada, Belgium, Switzerland and Estonia this morning, the lack of clarity or balance is further compounded by some specific inconsistencies across the UN documents, which reference three different formulations, for example, of taxing right principles. The December 23 UN resolution referred to economic activity, value creation and from where revenues are generated. current draft Article 4 refers to value creation, market location, and where revenues are generated. And the FFD4 Seville outcome document referred to economic activity and value creation. Now these inconsistencies create uncertainty and clearly risk divergent interpretations. We would propose adding language, for example, as in exercising the above right to tax, State parties should avoid double taxation of the same income, including by granting appropriate leave pursuant to their domestic law or tax treaties. This addition would directly link the principle of fair taxing rights to the equally essential principle of eliminating double taxation, and I think would complement the proposal from the delegate from Brazil to split the paragraph. If a single paragraph article is to be maintained, maybe a simpler formation could be along the lines of countries agree to commit to the fair allocation of taxing rights and to their relief from double taxation. Very happy to submit these simple suggestions in writing. So to conclude, Mr. Co-Chair, we remain committed to contributing constructively to this process. Our goal is to support the development of a framework that strengthens cooperation while safeguarding clarity, stability, and fairness. We believe that the improvements suggested today are essential to ensuring that the framework supports rather than hinders sustainable development and international economic activity. Thank you, Mr. Le Coq-Led.

Thank you. We now have ICC Mexico.

Thank you, Mr. Le Coq-Led. ICC Mexico fully supports and associates itself with the intervention delivered by ICC Global, and we appreciate the constructive efforts led by Mr. Collett in the war stream. From our regional perspective, however, we also must highlight several concerns with the current drafting that require careful reconsideration. We see a real risk of unintended consequences that could create barriers to trade and slow economic growth. Instead of providing stability, the framework in its present form may unintentionally increase disputes between state parties. First, the text grants very broad taxing rights and relies on vague definitions, which invite divergent interpretations. Without clear parameters, we could see uncoordinated implementation and disputes contrary to the framework's objectives. Second, suggestions to renegotiate existing treaty networks may generate uncertainty for supply chains across our region, especially at a moment of geopolitical volatility. Mexico's private sector depends on predictable treaty environments to maintain operational continuity. Third, the risk of double or multiple taxation persists. The current formulation does not provide sufficient safeguards or clear allocation principles and lacks complete recognition of the issue of double or even multiple taxation that derives from the current paragraph one. This gap also weakens the economic dimension of sustainable development, which should stand on equal footing with the social and environmental pillars. In relation to Article five, ICC Mexico shares ICC global concern that the provision continues to emphasize the right to tax rather than the allocation of taxing rights. as required under principle F of the TOR. I've drafted article five could be read as permitting all jurisdictions to tax the same income wherever value is created, markets are allocated, or revenues arise. Without definitions or weighting of these concepts, fairness can definitely not be achieved. To help address these issues, ICC Mexico supports the proposed clarifying language that states parties shall avoid double taxation of the same income, including by granting appropriate relief pursuant to domestic law or tax treaties. Alternatively, countries commit to the fair allocation of taxing rights and the relief from double taxation. Mr. Kocher, ICC Mexico remains committed to contributing constructively. We want a framework that strengthens cooperation while ensuring clarity, stability, and fairness. These improvements are definitely essential if the convention is to support and not hinder sustainable development and international economic activity. Thank you very much.

Thank you. Thank you, I estimate. We now have War on Want.

Thank you, co-lead. Good morning, everybody. I'm speaking on behalf of War on Want and the Global Alliance for Tax Justice. Today we've been discussing commitments under the convention. Paragraph 10A of the terms of reference is clear that these should include the equitable taxation of multinational enterprises. And yet when we look at the draft text, an article on this is nowhere to be seen. In fact, the term equitable taxation of multinational enterprises isn't even mentioned. All we get is a few scattered references to corporations. But the terms of reference is the job description for this committee set by member states. So we urgently need an additional article to address this. If we don't get this right, it will have implications for our country's national budgets. Right now, the global tax system is a smorgasbord. Companies can pick and choose where to pay tax, shifting their profits into tax havens to avoid paying their fair share and leaving governments scrambling for revenue. With over $350 billion lost every year to corporate tax dodging, we have to be honest with ourselves that the system isn't working. So, in this convention, we need an article that commits to a new system, one which treats multinational enterprises as single coherent entities, which must pay tax in the state where their economic activity is taking place. One which sets a global minimum corporate tax rate that is high enough to prevent a race to the bottom between countries. And one which allows governments to raise the revenue that they need to tackle poverty, to fund public services, and to combat the climate crisis. Lastly, let's name an elephant in the room. A few weeks ago, the OECD announced a deal. which exempts companies from the world's largest economy, including some of the richest companies in human history, from paying the supposedly global minimum corporate tax rate. Just when you think it's hit rock bottom, the OECD comes up with a set of tax rules that are even more unfair, incoherent and ineffective. So I hope that's one thing we can all agree not to duplicate. So if the OECD is throwing in the towel when it comes to taxing multinational corporations, the UN tax convention really has to step up. So please, let's find that missing article on taxing multinationals. Thank you.

Thank you. IDS, please.

Thank you for the floor. The International Center for Tax and Development, which is based at the Institute of Development Studies, and researchers associated with it have undertaken several studies into the political economy of bilateral tax treaties. Based on this, I'd like to make the following input. While it is true that signing, ratifying and not terminating tax treaties are sovereign decisions, one should not ignore that their concrete content may often be shaped by specific circumstances at the time the treaty was concluded, which can include unequal negotiation power of the states concerned or differences in capacity. Over time, preferences or conditions might change, but for the same reasons, unilateral termination or robustly demanding renegotiation might not be viable options. So if parties of the convention agree here on certain principles on the allocation of taxing rights that were not universally recognized at the time that many bilateral treaties were signed, it could make sense to inscribe in the convention that countries are generally willing to modify such treaties or at least have a conversation about modifying treaties, whether through protocol or bilaterally. Of course, whether this is best addressed here or in Article 15 is another matter. Regarding the first paragraph, it could also make sense to have a certain split. First, the more general endorsement of the idea of fair allocation of taxing rights across all types of income and have a more specific paragraph that acknowledges these new nexus principles lined out there, but specifying that this relates perhaps to business income or services income. or digital service income since these nexus principles may not be equally relevant for all categories of income such as income from immovable property or income from interest, dividends, et cetera. Thank you very much.

Thank you. We now have stakeholder six, that is Texas. Yep, Texas A&M University.

Howdy, I'm William Burns of Texas A&M University. Marketing and source countries sharing in taxing cross-border income, especially in the era of digitalized business models, is undeniably the primary driver of this framework convention. Importantly, this principle should be implemented without causing double taxation, as we've heard from ICC and many people from the floor. As it is well documented, for example, in the Secretariat's own background note of January, the double taxation suppresses foreign direct investment and cross-border business, whether implemented through a gross or a net tax. We have heard as currently phrased Article 5 may reasonably be read as endorsing an open-ended license for multiple jurisdictions to tax the same income without a balancing remediation such as a tax credit adjustment. Crucially, when new nexus and profit allocation rules emerge such as those for the digital services and distribution models as seen with the United Nations Model Tax Convention, The framework convention should obligate that residents jurisdictions provide complete double tax relief for any income taxed by a source market jurisdiction. Thus, we suggest adding to Article 5 a second paragraph in exercising the above right to the tax. States shall avoid double taxation of the same income, including by granting appropriate relief pursuant to their domestic law, tax treaties or protocols. Residents country tax credit remediation will support the goal of tax base equity from cross-border investment in business without suppressing the very underlying cross-border business and investment necessary for achieving the sustainable development goals of this convention. Thank you very kindly.

Thank you,. Okay, so we have some announcements on the ECOSOC meeting tomorrow. Then we'll take our break. I don't think we can start and finish Article 6 before lunch. So we'll take an early lunch, but it means we should be back so that we can start exactly at three. since we are going a little earlier. The other thing is that I want to say thank you to everybody. We've had a very interesting discussion on Article 5. My head is basically spinning. And I'm sure a lot of us are almost in the same vein. But then, it's good for us. It gives us food for thought. It means we're really looking at the article and the importance it has. And As we go on, I'm sure we'll make a lot of sense out of what we've said and be able to get the needed text. We've had proposals from the Africa group on terms of text, Sweden and Norway, Brazil, India, A&M, ICC Mexico proposed some text. I know A&M University also proposed some text. So there are quite a number of things that member states and both stakeholders have which we can think through. We'll see how we'll put it together. And I'm looking forward to some very interesting inter-sessional meetings after February. So let's all get ready. We have a lot more work to do with that. So are you ready?

Thank you very much, Daniel. So tomorrow we have the Ecosoc meeting, it's the first special meeting on financial integrity. You are all invited and with your passes you can enter the room. This is going to happen in the Ecosoc chamber. Please enter through the third floor because that's the one that has access for you. And the event is gonna be at 10:00 AM, is the same time as the negotiations. 00 to 1:00, 00 to 6:00 PM. You're all very welcome to that very important meeting.

Okay, thank you for that practical information about tomorrow. And with that, we will close this informal meeting and reconvene at three o'clock, thank you.