(15th meeting) - Fifth Session of the Intergovernmental Negotiating Committee on the UN Framework Convention on International Tax Cooperation (INC Tax) - 3 to 13 August 2026

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Today we are starting the discussions of Workstream three, which is dispute prevention and resolution, co leaded by Marlene and Michael.
I'm going to hand over the floor for Marlene and Michael to give the presentation to pay you about what's in this document, which already you received and hopefully everyone went through it.
So they will start with the presentation, then take you through the discussions.
Michael and Marlene, over to you.
Thank you very much, Rami.
Thank you and good morning, colleagues.
I want to thank you for your participation over the past week and a half, and also want to congratulate our fellow colleagues, Danielle and Lisa Lott for the work that they have done.
Today, we will present for the first time to the plenary, the Coles draft protocol on the prevention and resolution of tax disputes.
In that regard, I really want to say thanks to Eduardo, to Tricia, to Chetan, Ray, Haiti, Maria, because it's a team effort, and to my dear colleague, Michael, for your brilliant insights for keeping us on our toes, for your technical expertise, and just the collegial way in which we have worked.
I will firstly briefly explain how we arrived at this draft, the objectives for this session, and the overall architecture of the protocol.
We will then move into the substantive discussion of the provisions.
Step two.
Let me begin by briefly recalling how we arrived at the text before us today.
Since the third session in Nairubi, the workstream has progressively moved from identifying possible solutions to developing their substantive and operational elements.
The fourth session was particularly important because we moved beyond identifying mechanisms in the abstract and began examining how these mechanisms might actually look like.
In February, we discussed the main elements and features of each mechanism and the whole architecture of the protocol that gave us the basic building blocks for for the drafting exercise that followed.
This means that the draft protocol does not begin from a blank page.
Its architecture and the principal elements of the mechanisms contained in it were built directly on the criteria and approaches that have been progressively discussed in this workstream.
The draft before you is therefore the natural progression in the process.
It translates those technical discussions into language.
I want to emphasize that this is the first draft and bringing ideas into the text inevitably raises questions that are much easier to see once we actually have the draft in front of us.
And that is precisely why this session is important.
Before turning to the objections of the session, it may be useful to briefly recall the broader value added that this protocol is intended to provide.
The protocol is not intended simply to replicate mechanisms that already exist.
Its value lies in extending their availability, broadening the range of options, and providing a common operational framework for their effective use.
One, it creates options where no dispute prevention or resolution framework currently exists.
For parties that do not have a bilateral tax treaty, several mechanisms may operate on the basis of an existing tax information exchange relationship.
It expands the range of mechanisms available under the existing treaty relationships, even where parties already have a tax treaty.
The protocol can make available additional tools that may not currently exist between them.
Three, it provides procedural rules designed to make mechanisms workable in practice once they are available and triggered.
This detail is intended to provide sufficient procedural clarity for effective implementation rather than leaving key operational questions unresolved.
Four, it enables coordinated treatment of multi jurisdictional cases.
The protocol allows mechanisms to be conducted through coordinated multilateral procedures rather than through a series of separate bilateral processes.
Five, it establishes a common set of procedural rules that promote greater consistency and reduce the need for countries to negotiate or develop mechanisms separately from each bilateral relationship.
Six, it links implementation with capacity building and UN support, recognizing that access to a mechanism alone may not be sufficient if countries need practical assistance to use it effectively.
And seven, it enhances existing mechanisms by providing greater procedural certainty and predictability.
For mechanisms such as map, the protocol builds on existing approaches by setting out clearer procedural rules, timelines, and steps for their operation, helping to make their use more structured and effective.
Against this background, let me turn to what we hope to achieve during this session.
So the objectives This is the first opportunity for the plenary to consider the draft protocol as a whole and importantly, as negotiating text.
Guidance from you will help us shape the next iteration of the text.
I just want to pause here and to thank all persons who participated, all the delegates who have participated in Workstream three and the guidance that you provided therein.
The purpose of this discussion is therefore different from earlier stages of our work.
We are no longer only asking, for example, whether a particular mechanism should be considered or what its broad features might be.
We now have draft provisions before us, and we would strongly encourage delegations to engage directly with those provisions.
In particular, we would welcome views on whether the text actually reflects the discussions and directions emerging from the previous sessions and from the intersectional work.
We'd also ask delegations to identify gaps, ambiguities, inconsistencies, or provisions that require further refinement or redrafting.
If a provision does not work, it would be particularly helpful to understand why and wherever possible and what alternative approach or formulations delegations would suggest.
The same applies to the alternatives and bracketed elements that remain in the draft.
Those are areas where guidance from the plenary will be essential for the next iteration.
So as much as possible, we would encourage interventions during this session to move from general observations to concrete guidance on the text, what should remain, what should change, what is missing, and how particular provisions might be improved.
Slide four.
How is the draft protocol structured? Chapters one to three.
Before turning to the individual provisions, let me briefly explain the structure of the draft.
The protocol is organized into six chapters.
Chapter one covers the general provisions, and at this stage, contains the definitions needed for the operation of the instrument.
Chapter two deals with dispute prevention.
Its first section contains the individual prevention mechanisms that have emerged from our earlier discussions.
APAs, advance rulings, coordinated unilateral APAs, cooperative compliance arrangements, simultaneous audits, and joint audits.
The second section then contains provisions that cuts across all of those mechanisms, including their relationship with other mechanisms and domestic procedures, as well as procedural rules and capacity building elements relevant to their implementation.
Chapter three deals with dispute resolution.
It contains the principal resolution mechanisms that have been discussed by the workstreams mutual agreement procedure, mediation, conciliation, and arbitration.
As with prevention mechanisms, this chapter also includes a set of common provisions, rules governing mediators, arbitrators, fees and expenses, remuneration, and possible United Nations support.
Slide five, photograph is structured from Chapters four to six.
Chapter four addresses consultations in the absence of an applicable tax instrument.
The chapter deals with the consultation process itself, rules regarding information exchange and confidentiality, as well as the legal nature and effects of those consultations.
Chapter five is particularly important because it addresses reservations and the relationship between the protocol and other instruments.
The draft contains provisions dealing with reservations, specific mechanisms and with how the protocol would operate where substantial similar mechanisms already exist under another applicable instrument.
There are two alternatives in this respect and we will come back to those in detail when we discuss Chapter five.
Finally, Chapter six contains other provisions that operate across the protocol, particularly those concerning exchange of information, confidentiality, and the use of information.
Slide six, cross cutting features of the draft.
Before we move to the articles themselves, I'd like to highlight three features of the draft that may help explain some of the drafting choices you will see throughout the text.
The first is the level of operational detail.
The draft intentionally goes beyond simply stating that a particular mechanism is available.
It seeks to include enough of the procedural architecture needed for that mechanism to function once it becomes applicable between the relevant parties.
There is an important practical reason for this approach.
Experience shows that the mere existence of a general enabling provision at a treaty level does not necessarily mean that a mechanism can be readily used in practice.
Some countries and this can be particularly relevant for developing countries with more limited experience in certain mechanisms may have an international legal basis that permits competent authorities to read certain arrangements agreements, but may not have domestic procedures that allow them to apply such mechanisms in practice.
The approach taken in this draft is therefore that the protocol itself can provide a sufficiently complete procedural pathway so that once a mechanism becomes applicable, an administration has a framework that can actually be used from the outset rather than its operation depending on the prior development of detailed domestic implementing rules.
That is also why many mechanisms follow a common operational sequence, which is a second feature in this slide.
The draft generally tries to answer the practical questions that arise at each stage, how the mechanism is initiated, what conditions must be satisfied, how the process is conducted, and what happens when it concludes.
The precise sequence varies according to the structure and nature of each mechanism, but the objective is the same.
To make the provisions sufficiently clear and operational for competent authorities that have to use them in practice.
However, it is very important to note that the appropriate level of detail is itself a question for this committee.
This is a first draft and we very much want to hear whether delegations consider what particular procedural elements belong in the protocol itself, whether some would be better addressed through bilateral agreements or subsequent guidance and how the protocol should interact with existing domestic procedures.
This is particularly relevant for countries that already have well developed domestic frameworks.
The draft generally seeks to allow those domestic procedures to continue to operate provided that their application is consistent with the requirements of the protocol.
But that relationship may require further refinement and we would welcome concrete views on it.
The third feature is optionality.
This has been an important element of the workstreams discussions from the beginning.
Parties to the protocol may reserve the right not to apply specified mechanisms under the protocol.
In this respect, it is important to recall that in previous sessions, the approach that received broad support was to first develop the mechanisms in sufficient detail so that delegations could understand their actual scope and operation and only then consider which mechanisms should constitute the core of the protocol.
That is, which mechanisms should not be capable of being excluded through a reservation.
A related but distinct question is what happens when parties already have a substantially similar mechanism under another instrument.
Chapter five presents two alternatives addressing that interaction, which we will discuss when we get to that chapter.
Finally, you may recall, and this is slide seven, and you may recall that we had a discussion on the setting up of a task force on improving access to transfer pricing information.
As you may recall, during the fourth session, the co leads informed the plenary about their intention to establish this task force as a dedicated space for member states to explore and identify practical options for improving access to transfer pricing information.
The establishment of such a task force received broad support.
During the intersectional period, They are happy to announce that the co is appointed, miss Angel Kandewal of India and Admir Vander Melen of the Netherlands as co facilitators of the task force.
And we expect that the work of the task force starts will start during the following intersectional period.
With those considerations in mind, let us now turn to the discussion of the articles.
Beginning with the next slide, we will take the protocol in groups of provisions.
For each group, we will give a very short mark of the provisions concerned and then put forward a number of questions for your consideration.
I want to stress that those questions are only intended as a guide.
Delegations should not confined by them.
If there's an issue in an article that is not captured by one of our questions, please raise it.
Likewise, delegations are entirely free to suggest changes to any provision within the group under consideration.
What will be most helpful is that we use the limited time available to focus on issues that materially affect the drafting of the protocol.
So that discussion will give us a clearer direction as possible for the next version of the text.
I now give the floor to my colleague, Michael, to start the discussions of the protocol.
Colleagues, friends, good morning, everyone.
Hello everybody.
It is now my turn to extend my gratitude to first the Secretariat and the chair for their support during the last couple of weeks and months, to the membership and the delegations for their insights and all the contributions that we received in the international work and also to you, Marlene, for the excellent, interesting, and in times also fun cooperation that we have been having in the preparations of today's session.
I Thanks also for the introduction for reminding us where we are coming from, how we arrived here, and let's now discuss our next steps and the future of our journey.
We have a very comprehensive and a very dense text.
We trust that every one of you has either a hard copy in front of you or has it on on your screen.
We are going to share the draft protocol, if I'm not mistaken on one of the screens.
That is the issue.
We have two screens here, but apparently it is for technical reasons, it's not possible to have the draft protocol on one screen and have the slides on the other one.
That is why we have to alter.
We will switch between the text and the presentation.
There is a technical limitation that we have learned about only yesterday, unfortunately.
But In any case, as a fallback, we have the text also here on the large screen.
I was saying we have a comprehensive text.
We have a very dense text, we have only two days for our discussions and instead of going through the text article by article, we're doing it chapter by chapter.
We are trying to follow a specific schedule for this.
As we have heard from Marlene and her introductions, we have in total, we have six chapters.
Today, in the morning, we try to tackle Chapter one and Chapter two.
This afternoon, we will focus on Chapter three and Chapter four.
And tomorrow then in the morning, we take Chapter five and Chapter six.
And what is going to happen tomorrow in the afternoon? Well, you can imagine, provided that we stick to the schedule.
But otherwise, we have some time on reserve.
I Very good.
Our discussion now will be on Chapter one and Chapter two and we have prepared some questions.
Those are supposed to be guiding questions.
It is just to prompt the discussion.
If there's anything else you would like to share with us, feel free to do so.
For Chapter one, something that would interest and Chapter one is on the definitions, whether the current definitions provide enough clarity for the functioning of the mechanisms.
And whether there are any additional terms that need to be defined to ensure operation of the protocol.
Something that we have to keep in mind when considering the definition is, I think it's a matter of course, but the protocol is not going to be a self standing instrument, but everyone every member state signing the protocol will also be required to sign the Framework convention.
The Framework Convention would apply and the Framework Convention would also contain some definitions.
To what extent is not entirely known yet.
But we have to some extent, the current draft of this protocol anticipates that the framework convention itself will already contain some definitions.
But still, it might be worthwhile for you pointing out that this or that term would be helpful to have a definition and we will take it from there and see, is it something that rather fit in the framework convention or here the second protocol.
What do I flip the slides? Because we want to discuss both chapters, Chapter one and Chapter two, therefore kindly ask to show us the next slide, please.
Thank you.
In Chapter two, if I'm not mistaken, we have three sections.
We can distinguish that.
The first one is about dispute prevention mechanisms that are initiated by taxpayers in contrast to the second chapter.
Which is on simultaneous tax audits and joint audits, which are initiated by the tax administration.
So that's going to be the next slide.
But here, having first a look on the taxpayer initiated mechanisms, those are bilateral and multilateral transfer pricing agreements and transfer pricing cases.
I was just corrected as advanced pricing arrangements, which is entirely correct.
I just fetched my protocol to avoid any mistakes.
Bilateral and multilateral advanced pricing arrangements.
Article 2 0.2 bilateral and multilateral advanced pricing bilateral and multilateral advance rulings not related to transfer pricing, Article 2 0.3, coordinated unilateral advance pricing arrangements, which lack applicable tax instruments or are supposed to apply under those circumstances.
Article 2 0.4 corporative compliance arrangements.
And you see the questions on the screen, whether the scope and the eligibility conditions of each mechanism is clear enough.
We were wondering whether the outcomes provide for dispute prevention and effective tax dispute prevention.
Are the functioning and procedure of each mechanism workable in practice for both tax administrations and taxpayers.
Are the provisions sufficiently detailed to allow the mechanisms to operate where no detailed procedures are available under the domestic law or administrative practice of the parties.
So in that context can also be, of course, answer whether the provisions are deemed to be too detailed.
So Malene made the point in her introduction that we did it intentionally, like the level of detail in the protocol is meant to allow for an a uniform application to provide tax certainty for taxpayers and tax administration.
But of course, it is eventually about striking the balance.
Whether you have any suggestions for the bracketed timelines, that is one of the other questions.
In some of the provisions, we have timelines and square brackets indicating an indicative timeline by when, for example, the request is supposed to be answered or, how long within which time frame the mechanisms are supposed to be finished.
Final question, are there additional elements that should be addressed or existing elements that should be addressed in bilateral arrangements or MOUs that goes to the point that I made earlier.
Of course, we could consider picking out some details of the Now, let me start again.
Already now in the current draft, there are some parts or there are some provisions that encourage the member states or require the member states to agree on some details in, for example, memorandum of understanding.
But in addition to that, and that is linked to the discussion about the level of granularity or the detail, we could, of course, consider taking out some of the current provisions or parts of them and outsource them to competent authority agreements, for example, or MOUs.
Next slide, please.
That is the slide pertaining the dispute prevention mechanisms that are initiated by the tax authority simultaneous tax audit and joint tax audit.
Are the procedures sufficiently clear and operationally workable for tax administration? Are there any suggestions for the bracketed timelines here as well? Are there any other elements that should be addressed or existing element that should be addressed in bilateral arrangements or MOUs? Do the outcome provide for tax dispute prevention? There's only one more slide and then I promise you we start the discussion.
Next slide, please.
Next slide, Chapter two, prevention of tax disputes.
We have some common provisions that apply to all preventive mechanisms on the relationship with other mechanisms and domestic procedures.
Here it is not the relationship with other instruments.
That is something that is dealt with in Chapter five, legal instruments that are already out there.
But here, it's the relationship of the mechanisms in that protocol with other mechanisms in the protocol.
Another common provision is on common rules for taxpayer initiated mechanisms, common rules for audit mechanisms, and one provision on capacity building.
Here the questions are, are those rules regarding the interaction of the protocol with the domestic requirements for submitting the request sufficiently clear? Are the grounds for declining a request sufficiently clear? Are there any overlaps with the provisions governing each mechanism? Is the 24 months best efforts period for taxpayer initiated mechanisms appropriate? Are there any other elements that should be addressed or existing elements that should be addressed in bilateral arrangements or MOUs? Some of the questions are a little bit repetitive, that cannot be a surprise because the mechanism follow a common structure.
But of course, to some extent, they differ and um can deserve a different treatment.
Well, very good.
With that, I would like to open the floor.
I see already some green lights up.
Thank you very much for your patience.
Switzerland is going to break the ice today, Switzerland, please.
Thank you, Mr.
Cold.
Hello to everybody today.
Thank you very much for all the work put in from you and the Secretariat to prepare these documents.
My first point is coffee breaks.
No, I'm sorry.
Now what I wanted to just before we dig into deep details, I wanted to stress the general principles as we're thinking about the different texts.
It seems to me optionality is a very important aspect of this workstream.
It influences also the way we're going to draft.
If we know that there's certain aspects, procedures or let's say arbitration is one possible example that you can't sign up to, but it's optional and you're not going to have to, then it might influence the drafting you can accept drafting you don't agree with in the sense that you know you're not going to sign up to it.
And I just wanted to stress that point as we start.
Since we were diving into Workstream three after Workstream two, I mean, it's an interesting comparison because in the first protocol, we don't have optionality right now.
The second we do, and in a certain way in Protocol one, when it's all or nothing, if we transcribe that here, that would mean, okay, you need to accept everything including arbitration, and you have no option to opt out of it.
And it's clear that if we said that for Protocol two, many countries could simply not sign the protocol.
I think we're right now in the same situation regarding Protocol one if it would stay as it is drafted today.
That was just a little general remark comparing the two workstreams before we dig into the details.
Thank you very much, P.
What I take from your intervention is that you appreciate the concept of optionality in Protocol two.
Thank you very much.
Next is Brazil, please.
Thank you.
Good morning, everyone.
First, I would like to congratulate the work of this document.
But I have just a small comment on Chapter one for the general provisions.
In the letter c1c, We have some doubts about the use of the term of allocation of taxing rights, if it's really precise about what we want to achieve here, because it's not clear for us if it's really just includes what we want that I imagine that's a the double taxation agreement.
Maybe if we can add something to have it more precise about what means about this instrument for allocation of taxing rights.
Thank you.
Thank you, Brazil.
I'm very sure we don't mind making it more precise, every drafting suggestion is welcome.
What was meant so far is the reference to rules for the allocation of taxing rights, we're referring to Article 6 following in a DTA is not limited to that, but that is to reflect the discussions that we have been having since Nairoubi where the INC took the view that For an cross border tax dispute to be resolved, we require substantive legal basis.
So it does not suffice to have any intergovernmental agreement, which can also be an exchange of information instrument, but you have to have something that allows for the dispute to be resolved.
And where we are originally coming from is resolving disputes in order to avoid double taxation, and in order to do so you have normally the distributive rules in DTAs, but again, not limited to that, the definition here is somewhat broader.
But as I said at the beginning, we very much welcome any drafting suggestions that help make that clearer.
Thank you.
Next is Mauritius, please.
Mike, Your mic is not open yet.
Mike to Maura please.
Thank you.
Thank you, Chair.
Good morning, everybody.
I wish to congratulate the team for this excellent draft and robust work that solid work went behind and congratulate the entire team and under the stewardship of the chair, Marlene.
Michael, thank you very much for giving me the floor this morning.
Um, I guess this is an extremely useful draft to start discussing the issues we got to do over the next two days.
And I think we can, well, move at a certain speed with the high level of extremely detailed document we have.
As explained by the chair this morning, this is important for the operation of this document for countries that probably still need to be up to speed when it comes to procedures in such matters such as mediation, arbitration, conciliation, which are all called ADRs alternative dispute resolution.
Now, broadly and generally speaking, I think the issue is about whether we go into so much of detail in the text itself, or we do it high level and leave it somewhere else in some other text.
Now, as a lawyer, myself, having done investment arbitration, as well as other types of arbitration, and a tax lawyer for the last 30 years, I can tell you that this document, besides being a political document, is first and foremost, for me, a legal document.
So it's extremely important that whenever we have legal documents, extremely important to know what is the travel preparato behind the document.
Because at the end of the day, If we're talking of disputes, judges are going to try to understand what was the intention of the parties or those sitting to come to a final product.
And of course, not only relying on what submissions counsel standing on their feet would tell them, but there must be some form of explanatory document that comes in the form of travel purati to explain a number of issues, probably when it comes to external aid to interpretation as we call those.
Now, when it comes to the text, well, Yesterday, we completed the discussions on the first protocol, but the first protocol is also connected to this one.
Unfortunately, yesterday, we don't reach Chapter five of the first protocol, which refers to settlement of disputes arising under that protocol.
It just says that parties that are party to this protocol, of course, will have to refer to this.
Also when parties are not party to the prevention and resolution of tax disputes protocol, there is something there.
Of course, it raises, well, definitional issues, especially when it comes to definition.
Now, one of the questions I saw in one of the slides there, it's about the definition.
Now, I've come across a number of terminology of words used, sometimes probably loosely, but then we know what it means, what they mean.
For example, the word mutual agreement is used a number of times to describe probably what is called, I would say, an amicable process or solution.
But then there is a jargon which is used in dispute resolution, which is called a mutual agreement procedure, the MAP procedure, which we all know here in the room, what MAP procedure means.
So I think that if we're going to use the term, for example, in prevention mechanism where parties endeavor to conclude by mutual agreement, then what I would understand is some sort of an amicable solution there.
It would then beg the question whether we need to define what a mutual agreement procedure means so that there is no confusion for anyone looking at this document in the first place.
That would be one of the issues I'd like to raise when it comes to the definition, whether we should have a definition for mutual agreement procedure.
One of the interesting things that probably this is one of the first documents I've come across, which also provides for, um, prevention mechanisms.
Now, when it comes to bilateral advanced pricing arrangements or multilateral advanced pricing arrangements, it's essentially something that would involve a taxpayer and the central authority there, and therefore, one of the issues is the timelines and which was one of the slides up there is what do we suggest, probably then for para two, which is left XX days of receiving a request, I mean, whether the timeline would have to be two years, 24 months, extremely important that it has to be a reasonable time so that such processes do not keep on lingering because one of the important things for investors is certainty and we keep saying.
I think that is also something important when it comes to timelines which got to be reasonable at the end of the day.
Well, I think when we come to the issue of APAs, well, what lingers on behind is the issue of transfer pricing, which we have had a lot of discussion and a number of meetings, and the issue of capacity building and comparables, comparability adjustment, and so on.
I do not know whether we have to rerun this argument here, but I think it is extremely important to, if it is not here in some explanatory document to explain what these will involve in terms of the obligation of party states who use them here for coming to bilateral APAs or multilateral APAs.
So thank you very much, Chef.
I think I've almost used my time this morning.
Thank you.
Well, that is fine.
Thank you.
I mean in terms of time, thank you so much for all the input in terms of time, we will see how the discussion here unfolds.
Currently, we are good in time.
Otherwise, we will let you know.
As for the explanatory document, that I'd say is a cross cutting ask or an ask that is cross cutting in nature, and we have heard it also in the context of the other workstreams and it needs to be addressed across the workstreams going forward.
With that, I give the floor now to Germany, Germany, please.
Thank you very much, Mr.
Chair.
Good morning, colleagues.
I would also like to start with expressing our appreciation for the work undertaken by the Secretariat and the co leads in preparing the draft protocol.
We recognize the effort that has gone into creating a text that seeks to be both ambitious and inclusive and welcome the ongoing effort to create a comprehensive framework.
On Chapter one, Germany appreciates the approach to refer to tax information exchange instruments instead of incorporating additional specific provisions on the exchange of information into the protocol.
We support the current draft of the definition as such instruments, which takes into account various possible EOI mechanisms that may exist between state parties.
On Chapter two, Germany supports the prevention focus and the wide range of mechanisms that reflect international best practice.
We welcome that Chapter two is designed as a flexible toolbox of prevention mechanisms rather than a set of mandatory procedures.
This respects different legal frameworks and administrative capacities while still encouraging broad participation.
I have two comments in particular.
We understand the reference to supporting analysis in Articles 2.1 to 2.3 as central to the effectiveness of the mechanisms.
From our perspective, it would be helpful to clarify that this analysis should at a minimum, cover a functional and risk analysis that clearly sets out the factual profile of the transactions, together with a comparability analysis that demonstrates the arm's length nature of the proposed method and outcome.
And Article 2 0.8 already foresees a general 24 month best efforts time frame, which Germany welcomes, but experience with APAs and complex examinations shows that timelines alone are often not enough to ensure timely completion.
So we would support language encouraging competent authorities and taxpayers to agree where appropriate on a project plan for prevention mechanisms, including key milestones.
I thank you.
Thank you, Germany.
Malaysia is next.
Malaysia, please.
Thank you, Chair, and I join the floor in appreciating the work done by the Secretariat and co lead in preparing the draft protocol.
Malaysia welcomes a draft protocol on the prevention and resolution of tax disputes and supports its objective of enhancing tax certainty, preventing international tax disputes, and strengthening cooperation among tax administrations.
We seek clarification on how this specific protocol interacts with existing international tax certainty and dispute resolution mechanisms to avoid potential duplication of procedures, pursue similar objectives, and incorporate conceptually similar mechanisms.
Matia welcomes a more detailed explanation on how to align existing agreements currently in force with the convention and the protocol.
Under Chapter two, paragraph five of Article 2 0.3 mentioned that if a party that took part in the coordinated procedure decides not to enter into the unilateral APA, the provision only requires notification of that decision.
However, no details are provided regarding whether the other parties may pursue or terminate the effort entirely.
The provision appears to require only notification, not termination of the process of the other party.
Other than that, Masia would appreciate if further drafts included a definition of tax dispute in order to provide clarity on the scope of the protocol, as well as to minimize further possible inconsistencies in the application of the convention.
Lastly, as this might be my only opportunity to take the floor today, allow me to touch very briefly on Chapter five on reservation.
Malasia would like to seek confirmation on the scope of reservations that a state can make on whether certain mechanisms are mandatory for adoption.
That would be all for me.
Thank you, Cole.
Also, we will provide these in written submission as well.
Thank you.
Thank you very much, Malasia.
First of all, you are very welcome to take the floor again.
Then the question on the interaction with other already existing mechanisms.
It is very understandable because in Chapter one, the definitions part, we have a definition of applicable tax instruments.
But I'd suggest that according to our schedule that we try to address together that question when we come to discuss Chapter five, which I uh, should be at the latest tomorrow.
As for the definition of tax disputes, well noted.
Thank you for that, but a quick reminder at this stage to all of you.
This is something that we discussed earlier in the session in the plenary.
The outcome of that discussion was that for the time being, we operate on some assumptions, what constitutes a cross border tax dispute.
I'll come to that in a second.
We didn't entirely rule out going forward that we come to define formally cross border tax disputes, but we didn't So the sentiment was like, let us not have a formal definition now that might make it more difficult for us to do the rest of the drafting.
Eventually it is up to you to all of us, but for the time being so it's still on the table.
And what were the base assumptions that constitute a cross border tax disputes? First we are talking about disputes between tax administration, so it is not the taxpayer tax administration scenario.
Although, of course, the taxpayer is the one who is and remains involved, but it is two tax administrations or more in a multilateral setting facing each other.
And for the cross border element, the assumption was that it requires a substantive legal basis, which brings me back to the point that we discussed earlier.
So reservations.
You mentioned reservations.
Likewise, I suggest that we take it under Chapter five and thanks for reminding us of written submissions.
All of you are very welcome, and we appreciate all your written submissions.
So all the points that you either can make today or cannot make today, please submit it in writing, but also any drafting suggestions that you have because, of course, our time here is limited and also A.
At least my cognitive capacities are limited, and I cannot keep track necessarily precisely of all concrete drafting suggestions.
The United Arab Emirates is next.
Thank you coles.
I'd just like to echo the sentiments from the earlier delegates and interventions about this draft.
I think it's a very good draft.
I think it's a solid basis for discussion.
Once again, thank you for all the effort that's gone gone into producing this draft.
Just on the Chapter one dispute prevention, specifically on transfer pricing bilateral and multilateral APAs, we noted the draft does mention that it can be pursued for specified taxable periods.
We see value in potentially spelling out the possibility of a rollback for open years.
This is largely because we think if we do allow for that explicitly, then it provides essentially certainty to taxpayers and we We also think dispute prevention is always better than dispute resolution, however much certainty we can provide is only helpful.
We also think that the information that is outlined is good, but we would stress in the protocol to say that it is not exhaustive.
Also, we think it would be helpful to have mention or reference to the arm's length principle.
In this article.
Just a general point on this article and the other articles regarding APAs not to do as transfer pricing or the coordinated unilateral APAs, we note that it says the competent authorities if they do not agree to take on an APA, then they will inform the taxpayer and the other competent authority of the reasons why.
Um Maybe not for the protocol itself, but we think it's helpful to have maybe a list of reasons why it could be rejected.
I think that will give transparency to not only the other states, but I think also to taxpayers and help them better tailor their applications.
Thank you.
Thank you, United Arab Emiates.
Concerning the rollback, So I think it is in the text, but it is very subtle.
So Paragraph three, letter C, it says, the prior taxable periods in respect of which application of the rulings is requested.
So in a very early draft, we even had the term rollback, but then there was like what is actually a rollback? So it's a term that otherwise would need to be defined.
And then as for the reasons why a request can be rejected, my back offices right now is looking it up, but we have the section with the common rules, and there we have a provision that speaks to that point.
Where we have possible reasons for the rejection of any of the mechanisms.
Very good.
United Kingdom, please.
Thank you, Mr.
Collid.
Good morning, colleagues.
As it's my first time taking the floor at this session, I would just like to echo the thanks to the colleagues, secretaria, and fellow Workstream participants for all the hard work taken to develop the zero draft to this point, as well as to many external stakeholders for helpful input that they have provided.
The UK supports the current direction of this protocol, and we're pleased to see that it draws from existing, well functioning and well understood measures while also exploring new ideas to help take effective dispute resolution and prevention forward.
I have one fairly minor technical point to raise, which I'm also happy to provide as a written input.
Take, for instance, paragraph two of Article 21.
That states that all such competent authorities must agree to a request to enter into a mechanism.
We imagine the situation of a multilateral APA.
If two out of three of the competent authority agree and the third refuses, a narrow reading of that wording would suggest that the mechanism isn't available, and it doesn't seem to automatically revert to a bilateral APA.
Um, we note that Article 227 does allow for compten authorities to consider whether the matter can be addressed under another mechanism or another applicable instrument.
So that probably does help, but we think it probably could be made clearer.
More generally, looking across this Chapter two, we note that it's almost half and half.
Articles two, one, 22 and 24 all require unanimous agreement, while two, three, 25 and 26 envision that a subset can agree.
And we don't immediately see any real reason to have this distinction in that way.
So as I said, we're happy to provide some written input on this, but we would also be happy to hear what others think.
Thank you very much.
Thank you, United Kingdom.
Um I was listening, but at the same time, I looked it up and I found and I would like to come back on the previous point.
We have a provision in Article 2 0.8, paragraph five, which states the reasons based on which a request can be rejected.
It says in determining whether to accept the request under Articles 2.1 to 2.4.
Those are the preventive mechanisms triggered by the taxpayer.
A competent authority may take into account any circumstances relevant to that determination, including the scope and specificity specificity of the request, the availability and sufficiency of the information needed to examine the request or conduct the mechanism and whether the relevant facts and circumstances can reasonably be expected to be established with sufficient certainty, the practical feasibility of examining the request or conducting the mechanisms and the administrative resources available to the competent authority.
It's a pretty wide bouquet.
Um, I don't mean to say that it can be rejected for every reason, but what the provisions and the mechanism says is that please indicate the reason, the specific reason in the individual case.
And then on your point, concerning all competent authorities needing to accept the request.
So that is a design decision that is being taken until now based on the input that we have received in the intersessional period.
There were some delegation that um, specifically to allow a joint audit and a simultaneous tax audit also to be conducted with not all authorities that were requested accept such a request, but it's just simply that we haven't received any similar requests on the other mechanisms.
One could say, it is not necessarily entirely consistent, but I think there are also arguments in favor of as to why all competent authorities why it wouldn't make sense to have all competent authorities accepted the request because it would then allow for a more effective prevention of a tax dispute in that case.
The next is India India has the floor now.
Thank you.
Thank you, Colete.
At the outset, India would like to congratulate the coletes and the INC Secretary for placing such a comprehensive document before the INC session for discussion.
As you, the chair co lead has rightly mentioned, we also believe that the document is necessarily dense, particularly as it seeks to make the provisions relating to the various mechanisms explicit with a view to ensuring simplification and administrative convenience.
While these details are useful for the purposes of our present discussion, India would like to flag one important consideration.
In our view, it is important to ensure that in seeking to provide detailed guidance on the functioning of the various mechanisms, we do not lose sight of the legal character of the instrument, and we agree with the views presented by Mauricus.
In particular, the obligatory aspects applicable to the member states need to be clearly identified and distinguished from explanatory or operational guidance.
I would therefore suggest that the protocol should be structured primarily as a legally sound and self contained legal instrument, setting out the rights and obligation of member states and the essential elements of each mechanism.
Where further elaboration or practical guidance is considered necessary, this could appropriately be provided through an cure or an explanatory statement or a guidance document.
For the purpose of present discussion, we find the detailed provisions in the draft useful in understanding the proposed architecture.
However, as we move towards the final legal text, it would be important to clearly distinguish between legally binding provisions and explanatory guidance.
Considering the limited time available for discussion, kindly allow us to make intervention on certain overarching issues as well.
On the issue of optionality, India understands the rationale for providing flexibility to member states in choosing the mechanisms that they are in a position to adopt.
India has itself sought such flexibility, particularly given our reservations regarding alternative dispute resolution mechanisms such as arbitration, mediation, conciliation.
India has consistently articulated these reservations in the negotiations and we understand that a number of other member states have also expressed similar concerns.
However, the present framework appears to make all the mechanisms under dispute prevention and resolution optional with states being able to place reservations on individual mechanisms.
This could potentially result in a situation where one state has adopted a particular mechanism while the other state involved in a bilateral tax dispute has not adopted that mechanism, and such an outcome could significantly limit the practical effectiveness of the protocol.
India therefore considers that flexibility should be retained, but there should be some minimum commonality in the dispute prevention and resolution framework, particularly in relation to the mechanisms that would form part of the core of the protocol and would be adapted by all states upon becoming parties to the protocol so that the protocol remains effective and functional.
In this context, we consider MAP to be the most appropriate mechanism, given that it already has a substantial basis in existing treaties and well established for resolving cross border tax disputes.
On the nature of MAP, India supports retaining the competent authority to competent authority character of the MAP.
We understand that any mutually agreed upon resolution should ultimately be subject to acceptance by the taxpayer.
This is more relevant in cases where the taxpayer may have parallel domestic proceedings or remedies available under the domestic law.
But where the taxpayer does not communicate acceptance of the agreement within a reasonable period, the competent authority should be able to close the MAP case without implementing the agreed outcome, such that it preserves the CA to CA nature and finality of the MAP process.
We would also suggest that in Section two of Chapter three on the common provisions applicable to dispute resolution mechanisms, there does not appear to be a corresponding set of common rules specially applicable to MAP, and it may be useful to include such provisions in this section as well.
On the dispute prevention mechanisms, again, we would repeat that as part of a balanced framework, there should be a core mechanism addressing the prevention of tax dispute alongside the core mechanism of their resolution.
In this regard, India considers that the APA would be well suited to form the core of the dispute prevention framework, given its established role in providing certainty and preventing transfer pricing disputes.
As an initial step, We understand that the implementation of bilateral APAs may require institutional capacity and experience.
India would be open to considering unilateral APAs for a limited initial period.
This would provide tax jurisdiction with the necessary experience and institutional preparedness before moving towards di wider adoption.
India would support a framework which retains flexibility for member states while ensuring a minimal commonality of core mechanisms.
Thank you, Chair.
Thank you very much, India.
Just, um I just want to address the issue of optionality and your observation that it appears that all the mechanisms are optional.
We had indicated that we are still working on identifying what the core mechanisms for the protocol will be.
You may recall in earlier versions of the protocol.
We had identified, I think it was APs as the core mechanism for prevention and MAP for resolution.
However, arising out of those discussions, I think it might have been in the fourth session or yeah, probably, I think in the fourth session, I stand guided on that.
Persons were divided on whether or not those should be the core mechanisms.
So the whole intent as it relates to optionality, is that there will be core mechanisms from which you cannot opt out of.
So we are still in that process, and we're hoping to get some guidance, some steer from the membership here today.
As to what direction we should be going in identifying what those core mechanisms are supposed to be.
Thank you, Malene.
I would like to add to that.
Thank you so much, India, for the comments, also the technical comments on the question of core mechanisms.
The concept still stands, so we haven't given up on it and it is very subtle, but it has proof in Article 5 0.1, Paragraph one where you have a number of articles in square brackets.
But when you observe it closely, you see Article 2 provisions in square brackets and two from the section on dispute resolution that leaves room for one core mechanism on dispute resolution and one core mechanism on dispute prevention.
As Marlene was just saying, so currently we park the discussion or we park the decision on what should be those core mechanisms.
But thanks for reminding us that this is still on the table.
The next is Ghana.
Good morning, and to all since the first time taking the floor.
Let me also join colleagues for congratulating the colleagues and the Secretariat for developing this draft protocol with a lot of meat in there.
I speak for and on behalf of the 54 Africa Group.
Chair, I think from the onset, you've made the point that we are looking at it chapter by chapter.
So we'll be giving a general first comments and then after that, we move into chapter by chapter.
Let me say this that Africa Group appreciates the efforts of the Coltes as I've already said and the Secretariat for preparing this draft protocol on cross border tax dispute prevention and resolution.
The AG strongly supports the objective of establishing a comprehensive multilateral framework for the prevention and resolution of cross border tax disputes under the UN Framework Convention.
A draft protocol represents an important effort to improve tax certainty, reduce imbalances of double taxation, and encourage cooperation among tax administration.
But chair, The AG, however, said that looking at the current draft of the articles, it's excessively detailed and does not reflect a framework legal instrument, as has been said by other colleagues in India and other member states.
And the more detailed procedural provisions should be moved in the per the AGs expected to annexes or guidance or note for conferences of parties for implementation note.
Chair, from the AFA group perspective, the protocol must reflect differing administrative capacities among member states and allow for phased implementation of the protocol.
Additionally, the AG recommends that the protocol should only apply to cross border tax disputes, and of course, that would then lead to the issue of the general um, definitions.
And of course, I think you've made a point that that whether or not to define cross border attack disputes is still on the table.
So possibly, um, the point is that AG want to ensure that this instrument is purely for the purpose of cross border tax disputes, not any other disputes whatsoever.
Chair, on the general definitions and the general provisions, the AG welcomes the approach of using harmonized definitions across the convention and the protocol as it promotes consistency, interpretation and application.
However, given the multilateral character, it may be useful to ensure that the terms are framed broadly enough to accommodate different legal traditions and administrative structures and treating networks.
As I said, a couple of things that we want to see that have been defined here, that is that what constitutes cross border tax dispute has to also come into play.
Also the point is that are we looking at deferring some of the terms that have been used here that exist in other instruments to be guided by those instruments? And we think that where the specific terms that have been provided like cross border tax disputes, those items has to be defined properly within the framework.
And so, let me further go on to the issue of prevention of tax dispute.
The provisions relating to bilateral and multilateral APAs, and advanced ruling seeks to provide taxpayers with greater certainty, of course, regarding future tax treatment.
While this objective is objective or legitimate, the AG is concerned that these mechanisms may place considerable pressure on already constrained tax administrations.
In practice, APAs require highly specialized transfer pricing expertise and extensive economic analysis and dedicated resources, all of which remain limited in many developing member states, including African traditions.
So according to the AG, we believe that the protocol must impose rigid processing timelines on competent authorities without considerable differences in capacity and capabilities.
What may be achievable for W Resource administration is within a short period of time, would take a relatively longer period of time to achieve by lower capacity decisions, including Africa and member states.
So what we are proposing is that rigid timelines within the protocol may not be useful and as such, has to be made as an indicative timelines and leaving the detail out into nexus or as guidance notes to the protocol.
They should be indicated only, as I said, and details contained in explanenty guidance notes as well.
And with respect to advance rulings, Chair, additional clarity is required regarding the treatment of anti abuse provisions.
The protocol must be clear on whether advanced rulings may address anti abuse rules and under what circumstances while ensuring that such mechanisms are not used to undermine legitimate anti avoidance measures adopted by source regs.
Sir, on the issues of optionality, as we are on here on prevention mechanism, DG Gonzale has pushed that mechanisms for preventing dispute are largely domestic matters.
Of course, what we proposes that we don't have any restrictions or we don't make this as a core.
And I think during the international meetings, we have made this point clear that dispute prevention should be optional for members to choose from which of the mechanisms.
And of course, of course, subject to domestic law rules, and applications.
So that is what we want to put across for our chair.
So I pause here And maybe my final comment would be that on the issues of optionality, again, the AG is of a strong opinion that MAP become the core mechanism and not subject to any form of reservations whatsoever within the text.
Thank you, Chair.
Thank you very much, Gano.
As it relates to the concerns about dispute prevention mechanisms and the complexities that may be involved in negotiating of APAs.
Well, first of all, the way the protocol is drafted for the dispute prevention mechanisms, we have divided them into two groups.
The advance rulings, advanced pricing arrangements, and, um, What's the next one and the coordinated unilateral APAs.
Those are all taxpayer initiated.
It is a taxpayer who would approach the tax authority and initiate that process.
The other two, which are the simultaneous and joint audits, those are the tax authority initiated.
Now, when we began this work, we looked across the international tax landscape at what was working in jurisdictions, what developing countries in particular were concerned about in terms of, preventing and resolving their disputes.
But we also listened to the voices of business of taxpayers and the feedback that we got was that they felt that the greater level of certainty would be provided by dispute prevention mechanisms.
And we also took into consideration the capacities and, um And and, you know, just just expertise that would be available.
There I I shared recently about a meeting I attended and there was a discussion about capacity building, and one of the needs that was expressed was for there to be capacity building of judges.
Because some jurisdictions do not have at that level judges who are able to understand the complexity or who are accustomed to dealing with the complexity of tax authorities.
That is a rail on the ground reality.
And so in terms of certainly we take the comments of the African group on board, but it's just by way of an explanation that by so much emphasis has been placed on dispute prevention mechanism because once it gets into a resolution, then the process becomes even more complex and countries have complained about not having the expertise there as well.
And those are our comments on that.
I would like to add another comment.
Thank you, Ghana.
I understood you spoke on behalf of the African group.
Thanks for the many observations and comments.
Too many if it will be possible for me to respond to all of them immediately.
But I picked out two.
First concerning the time frames, particularly when it comes to the time frames, the question have repeatedly been raised about whether it is a good idea to have time frames fixed in the protocol because then they are quite rigid and it is hard to like to change them, so we lose a little bit flexibility.
We tried to strike a balance when you have a look on Article 2 0.8 and there paragraph seven, it's the last sentence.
It says that competent authorities.
It is the paragraph where it is expressed that normally like the indicative time frame is 24 months for the taxpayer initiated procedures, but it says competent authorities may agree on a longer indicative time frame, taking into account the complexity the information required and the resources needed for the mechanism.
But of course, we take note of your comment and going forward, altogether, we have to reflect, is it necessary? Is it helpful to have those time frames more or less set cast in stone? Then you had another question or rather a request to clarify the relationship with anti abuse provisions further.
There I'd like to draw your attention to Article 2 0.8, paragraph five, where it says that the competent authority may decline a request under Article 2 0.2 and those are that's the mechanism, the advance rulings are concerning other cases than transfer pricing cases.
The competent authority may decline a request to the extent that it requires a determination under an anti abuse provision of the applicable tax instrument.
But of course, if you deem more clarification necessary, you're very welcome to make any suggestions.
With that, I'd like to give the floor now to the Kingdom of the Netherlands.
Hello, good morning everybody and also from our side, thanks to the co leads and the Secretariat for the draft and the work done so far, including the presentation of this morning.
In a general sense, the Netherlands is, of course, in favor of tax certainty and to update and improve dispute prevention and resolution process.
And in that regard, also welcome to work in this protocol.
We do have a number of questions which are more technical of nature that maybe serve better with written comments and textual suggestions.
But on that point, we do have some questions, remarks on Chapter one and Chapter two.
To start with, I think, Chapter one, on the definitions, As Michael already mentioned, it's still pending on discussions in the Framework Convention, what definitions will and will not be included.
But for this protocol, the term competent authority is, of course, very relevant in the sense that we have different competent authorities for different processes, and also a number of articles in this protocol, especially in Chapter two are related to work that is normally being done by tax administration.
If you look, for example, at joint audits, they are not performed by competent authorities.
The definition of a competent authority, whether it being in this protocol or in the framework convention, Should not be that rigid to avoid that in practice, it's not the competent authority performing these functions, but in fact, tax administrations.
Separately, the provision in Article 12 does not include a term of taxpayer while it's being used throughout the document very often, and generally and normally in tax conventions, it's a person and a person is not per se the taxpayer as such under your domestic law.
So it would serve, I think, clarity and also conducting the process if a term of the person or taxpayer will be included in the protocol.
Um separately, there's also a reference to tax instruments or applicable tax instruments, which is very broadly and has been already discussed beforehand, but all these resolutions and prevention process normally relate to income tax treaties.
And under this definition, you could have a wider range of tax treaties that could fall under it yes or no.
So it would be helpful if that could be clarified in some extent.
In addition, I think on Chapter two, we will also provide written comments with some textual suggestions and further questions on this, but we're generally supportive of the options, especially they introduce mechanisms that have not been foreseen or implemented internationally up to current.
But optionality is important on a number of aspects also for those countries that have already provisions in place on it and to see whether they can be aligned or should be aligned, yes or no.
But we do note that Articles one to four are generally not foreseen in any tax treaty so far.
APAs are possible under domestic bilateral tax treaties, but there are no bilateral tax treaties defining an APA program.
So with this, you would introduce it, and I think in terms of optionality and choosing, it's relevant to see how this would play out given that there is no tax treaty that should be covered or superseded for these particular aspects.
Um Lastly, for the timelines, I think it's important to note that any timeline introduced here also raises the question on enforcement.
So if you have a suggested timeline within X days or months, you should follow up on a request and you don't meet that timeline.
What is the consequence of that? Is it then automatically accepted, yes or no and much depending on your domestic law system in place.
So for the Netherlands perspective, it would be logic not to include rigid time lines here too, to avoid that there are discussions on the consequences of that.
Separately, I think also timelines on APA programs to be concluded within 24 months.
Reality in practice today is that it's hardly done within 24 months.
So it would be an ambitious goal to do and to strive for, and especially to provide for tax certainty within a short time frame.
But reality today is that they are not feasible deadlines yet.
So mindful of that it's a more broadly wording position, Um, the way it's drafted now in Article 28 also means that on an individual case, you have to agree on separate timelines and think it's more logic to strive in a more general sense that it's striving for competent authorities to find an agreement within a certain time frame, but not to make it too rigid and inflexible in this instrument.
Thank you very much.
Thank you, Netherlands for your comments, observations, and perspectives concerning the definitions.
You mentioned taxpayer taxes current.
Well, those are terms that also relevant in other contexts in other workstreams.
The question is whether there's need and appetite to define those terms for our purposes here.
We said at the beginning, so there are probably interdependencies with the Framework Convention in particular, so we have to be mindful of them.
Maybe we are just not there yet, but certainly that's something that would be worthwhile for us to keep in mind.
As for competent authority, there is a definition, whether it is fit for purpose for our purpose here, Well, it's up to you to determine, but the Framework Convention, its current draft, it contains a competent authority definition and refers more or less to the conference of the party to determine the procedure according to which a CA is then, um, um, communicated or nominated.
As for the time frames, what was one of the guiding considerations for having them in the treaty is to help managing expectations on both sides of the competent authorities involved, but also the expectations of taxpayers.
We must not forget about them.
But the question is, of course, which consequences will be then derived from those time frames and not adhering to those time frames.
Either as the international community, possibly in a future peer review procedure, but also domestically.
Yeah.
That is something that is for us also worthwhile considering.
Our next speaker is Azerbijan.
I'm so glad being able to give you the floor finally because I've been seeing your green light for ages now.
Thank you, Azerbaijan.
Thank you very much, Mr.
Cold for giving floors.
We appreciate your efforts for drafting these protocols and we support the inclusion of both bilateral and multilateral APA as an effective dispute prevention mechanisms.
However, we are thinking that protocol should establish only essential principles and minimum safeguards, detailed procedures and technical rules already existing OCDTPG and UN guidance on bilateral APA mechanism programs.
We are thinking that reproducing these rules may create duplication inconsistent standards and additional administrative burden.
Protocol should therefore build on existing guidance and focus on cooperation between competent authority, transparency of access.
Reasonable timelines and confidentiality, and also capacity building and the protection of the taxing rights of all participating jurisdiction.
We are thinking the protocol should serve make easier for the implementation of APA guidance that is now existing in the different organization.
A related, I have a brief comments related to rollback.
We are thinking that rollback should not apply automatically and should remain subject to domestic law consistence of facts and circumstances, applicable time limits and the agreements of the competent authorities.
Thank you very much.
Thank you very much.
On your last point, I think it is important to stress that eventually everything is subject to your domestic legal framework, including the rollback.
At least the current draft wouldn't force you to allow for a rollback that would be inconsistent with your domestic legal framework.
Thank you.
Well noted.
Israel next.
Thank you, chair, and thank you for the co chairs and the Secretariat for a very comprehensive protocol here.
We have some comments regarding for the protocol.
As we see it, it entails a lot of work for the states to do and we think that the timelines should be more lenient.
Some of them are named days, we think maybe weeks or months because for smaller countries, it's a little bit harder to make it.
I think that today the timelines are like Netherlands said, we will not be able to keep those timelines.
Regarding the timelines, I understand that today in MP, some of the timelines are measured the competitive 40s are measured more in the average, so it's not per case, but the average should be so and so.
And We have regarding something in Article 2 0.8, there's a phrase sufficiency in advance.
I think it's in paragraph two.
We do not know what this means, maybe to try to refrain from those kinds of phrases.
It's on the second paragraph, the first line.
We echo Swiss and other countries that said regarding the optionality as in reservations optionality inside the protocol.
We think that optionality will enable smaller countries or developing countries to sign up in phases.
This will be easier to have it in all the protocol in phases, and then it will be easier to start and instead of refraining from the whole protocol.
This is something that is important to us.
Of course, explanatory notes very important here, but I understand that you are also aware of that.
Thank you.
Thank you, Israel.
As for your question, submitted sufficiently in advance in Article 2 0.8, paragraph two, that was meant to give flexibility to each member state to provide for taking into account the capacities that are there to specify it and not to have that is a proof or an example instead of having a fixed time frame that would apply to all of us in all instances to give flexibility to the member states signing the protocol.
Okay.
Got it.
Honduras, please.
Thank you, colleagues.
At the outset, Honduras would like to congratulate the Coles, the Secretariat and all members of the workstream for their substantial work undertaken in preparing this draft.
We appreciate the effort to translate the discussions held throughout the process into a comprehensive and operational text, which provides a valuable basis for our negotiations.
Honduras would like to make three brief observations regarding Chapters one and two.
First, on optionality, Honduras recognizes that a degree of flexibility might facilitate broader participation in the protocol, particularly considering differences among domestic legal systems, administrative capacities, and levels of experience with the mechanisms under discussion.
At the same time, we believe that optionality should be clearly structured and legally predictable.
States should understand precisely which commitments they are accepting and the legal consequences of those choices.
Once a state accepts a particular mechanism, its procedural framework should be sufficiently clear to provide certainty to compensate authorities and taxpayers.
Second, regarding the dispute prevention mechanisms contained in Chapter two, Honduras considers that the discussion should focus not only on their legal design, but also on whether they can be effectively implemented by tax administrations with different levels of institutional experience.
In this case, Honduras, for example, does not currently have an established APA program.
We do have it in law, but we don't apply it.
For this reason, capacity building, technical assistance, and practical experience Experience sharing are particularly relevant for us.
We would welcome model procedures, pilot programs, and practical examples from jurisdictions with experience in applying these mechanisms.
This would allow administrations developing their capacity to understand the practical requirements before this implementations.
On the proposed 24 month best effort time frame, Honduras considers this has to be more flexible so this can work in practice.
Establishing a common time frame provides an important benchmark for competent authorities and contributes to create it predictably for taxpayers.
We believe this approach provides an appropriate balance between administrative feasibility and legal certainty.
It creates discipline and predictably without compromising the quality and the analysis required particularly complex cases.
Third, regarding the interaction with domestic procedures, Honduras believes that the protocol should establish clear minimum procedural standards while preserving sufficient space for domestic legal frameworks.
In particular, greater clarity would be useful regarding the conditions for submitting requests, the grounds upon which competent authorities may decline them and the interaction with domestic remedies.
More detailed operational matters could, where appropriate, be addressed through bilateral arrangements, MOUs or subsequent guidance.
This would preserve flexibility in implementation without weakening the common procedural standards established by the protocol.
Finally, Honduras attaches particular importance to legal certainty, predictability, and credible mechanisms for the prevention and resolution of international disputes.
Our government have been taking concrete steps to strengthen confidence in Hondur's legal and investment framework, including our recent return to the ICSID system.
From our perspective, the objective should therefore be a framework that is ambitious in its standards for realistic in its implementation, preserving state sovereignty and domestic legal frameworks while providing greater certainty, for tax administration, taxpayers, and cross border investment.
Thank you very much, colleagues.
Thank you very much, Snoras.
Kenya is next, Kenya please.
Good morning, everyone.
Thank you, colleagues for this opportunity.
I hope you can hear me.
Thank you.
I'll start with the housekeeping rules.
I think the approach taken to handle two sections at a time within 3 minutes.
It's a bit hard for some of us, so we'll be requesting for a second bite as we move.
But then I think as much as we want to conserve time and observe time, it's also good to have a substantive look at the issues that we are looking at.
Probably you might consider moving forward to be dealing with one section at a time, but that's just a proposal that I'm making.
Now, to the substantive issues, I think Sana, we want to align ourselves with the position taken by the Africa Group as outlined by our delegate from Ghana and to take a more particular position, I think I On the issue of the draft protocol, we note that the ambition to be intentional and have an operational detail gives us a lot of substance within the text of the protocol and so we feel that it can be compressed and we prescribe the use of high level language, and then the issues and the detail can be given in the guidelines as rules.
On the issue of optionality, well, we should be careful not to water down and leave everything to options.
But again, as we want to align ourselves with the members who have stated that for dispute resolution, MAP is the best option and we second the idea that it should be seen as a co mechanism.
Again, on the issue of MAP and APAs, when it comes to timelines, we believe the 24 month window is most optimal also for offering certainty to taxpayers so that they don't get dragged into these very long processes of over 24 months.
I see it has appeared in two periods in the two statements, one in the dispute prevention and the second one in the MAP, so I think that is welcome.
Now, the issue of a The issue of simultaneous tax audits and joint audits, there's need for clear and workable procedures that are very detailed because tax authorities will be assuming that the multinational is operating in different jurisdictions.
When you talk of simultaneous tax audits and joint audits, the level of information exchange and collaboration required will be quite high.
Well, as the text has proposed, we say that the competent authorities shall strive and use best efforts to conclude within 24 months.
Then I think this will be tied to the information exchange mechanism so that it is seamless to enable such a flow within 24 months, considering that some multinationals might operate in as many as their jurisdictions.
Thank you.
I think that is it for now.
But as I said earlier, we'll be seeking a second chance to buy it again so that we give a more detailed view.
Thank you.
Yeah.
Thank you very much and thanks also for your housekeeping remarks.
We try to make as efficient use of the time as possible.
So we see, don't be shying coming back again.
But I have a question I'm seeking clarification concerning the 24 months.
Are you suggesting that that is normally too long or that it is rather okay? If possible, could you help us in better understanding your position? Thank you.
Thank you.
24 months is actually the optimal one given the practice that we are dealing with different parties, the taxpayer has applied to one jurisdiction, the competent authority applies to another, and then the process starts.
I think 24 is optimal.
What I said is, well, we might need to have a very robust information exchange mechanism to facilitate such a flow within 24 months, given that multinationals might apply for those kind of arrangements.
For example, map in different jurisdictions and there are several of them at the same time.
Thank you.
Well, thanks for clarifying.
Thank you very much.
The floor goes now to Lichtenstein.
Thank you very much, colleague and also thank you very much to both of you and the Secretariat for the work done.
This is much appreciated.
As a general mark, Lichtenstein supports early dispute prevention mechanism as they provide for more legal certainty for business, we very much appreciate the proposed provisions.
Regarding optionality, we would like to echo the statement of Switzerland and others.
While we have to keep the core mechanisms for Protocol two.
If there is not a certain level of optionality, probably many countries will not be able to sign up for Protocol two.
A situation that might be quite similar is for Protocol one.
Our second remark is on the article 0N capacity building.
Maybe we misunderstood how this works, but it seems like this article is limited to Chapter two, as it says in paragraph one to support the effective implementation of the prevention mechanism under this chapter.
We were wondering whether this was intentional or whether this should also apply to Chapter three.
In Chapter 361, there's also reference to capacity building, but maybe it would be good to merge those two articles or make at least a cross reference.
Thank you very much.
Thank you very much, Lichtenstein.
Thanks also for flagging something.
We have indeed we have Article 2 0.10 on capacity building that is part of the chapter concerning dispute prevention, and we have Article 3 0.6 on the United Nations support that is pertaining to dispute resolution.
This follows from the concept note that we discussed in the fourth session.
But of course, it's a good question whether this is something like capacity building wouldn't be also necessary to um, ensure the capacity is developed and further enhanced when it comes to dispute resolution.
United Nations support necessarily does it have to be limited to dispute resolution to that stage of things? As we were saying in the beginning, what we are doing here is translating the concept note to the extent it received support by the INC.
But going forward, we can take similar remarks as the one that we have just heard from Lichtenstein on board.
I give the floor now to Peru.
Thank you, colleagues.
Peru would like to thank you for presenting this document and also for these prevention mechanisms.
At this stage, we are particularly interested in better understanding how some of these mechanisms are expected to operate in practice regarding Article 2 0.2 on bilateral and multilateral advance ruling.
Not related to transfer pricing, we will appreciate further clarifications, including through practical examples on the type of issue or transactions for which taxpayers could be expected to request such a ruling involving two or more jurisdictions.
Similarly, regarding Article 2 0.4 on cooperative compliance arrangement, we will welcome further clarification on how this mechanism expected to operate in practice, particularly on its added value as a dispute revision mechanisms.
Any example or experience from jurisdictions that have implemented similar mechanisms will be particularly useful for us to better understand their practical application.
Thank you so much.
Well, that's a very Thank you, Peru.
I'm probably are not alone in having those questions.
I tried to answer them, but it is not to me alone, but to the room to share our experiences and to make the case why the mechanisms 2.2, which is advanced, bilateral and multilateral advance rulings not related to transfer pricing and cooperative compliance arrangements help prevent tax disputes.
As for 2.2, one use case is, for example, for the tax administration to determine whether a permanent establishment is there or is not there, or you can think, for example, of cases where it is, for example, on the question, whether a taxpayer is resident in one member state or is not resident in one member states.
Those are, um, more or less like typical use cases.
As for cooperative compliance arrangements, the, the concept is to have an ongoing dialogue between the taxpayer and the tax administrations involved and to well, prevents any potential misunderstandings or misapplications of the tax law from arising in the first place that could ultimately otherwise lead to an application of the tax law not in accordance with the treaty and ultimately end up in having a double taxation situation, just to give you an example.
I know it's very general, but that is the intention behind it.
Again, member states are member states that have already made experiences with those mechanisms are invited to share also their positive experiences and to lay out to the plenary here where those instruments are particularly useful.
Thanks.
Thank you, Peru.
I was saying to Michael that I can share and you said you? I said, yes, Donika can share about an example of advanced pricing ruling that we have had to contend with and that we have a lot of experience in this area.
But examples that we have had are a large investor maybe coming in to um, who is going to be investing in the hotel sector, and they want to know upfront.
So they will come in, they will outline their business model, and they want to know upfront.
So what are going to be the various tax treatment of the activities, transactions that they are going to be carrying out.
So they make that approach to the tax authority, and the Commissioner General will make a ruling on how the various aspects of what they have outlined will be treated for the purposes of taxation in Jamaica.
So this is a domestic um this is in accordance with our domestic law.
The investment is coming from a capital exporting country.
But there usually is a double taxation agreement already, but they want to know specifically how their investment is going to be treated.
In that case, the authority assesses what has been presented and then, um, the law allows the Commissioner General to give a ruling.
That ruling is binding on the Commissioner General.
Whatever is given to the taxpayer in advance of them doing the investment regarding how the tax treatment will be implemented.
That is a binding decision.
It usually may not incorporate things such as rates because that may change over time in accordance with government policy, but it will determine whether or not certain transactions are taxable, where they are taxable, under different types of laws that would apply.
So that's the example that we have.
That's the experience that we have had.
I'm sorry, China, you have the floor.
Thank you, C.
First of all, first of all, we'd like to share our appreciation for the hard work of the secretary to come up with the current draft.
Generally, we welcome the progress made during the current time.
And we will continue to make our contribution upon this protocol.
What we want to stress as well is that we should always keep in mind the core feature of this protocol is optionality, like the comments made by my other colleagues before.
We do think optionality is very important for the broader participation of state parties.
For example, Regarding the simultaneous tax audits and joint audits, as we commented before, we still don't think that they should be classified as dispute prevention mechanisms.
However, we think we are open to further discussion on the basis that they are optional.
And as per core mechanisms, if we still need to defend them in the future, we shared comments made by Indian colleagues and we also support MAP and APA to be the dispute settlement, and prevention mechanisms respectively.
That's what we want to share about the current.
Thank you.
Thank you very much, China, and thanks for the clarity and your remarks.
The floor goes now to Ireland.
Thanks, Cole.
I'd like to thank the chair, the Secretariat, co leads, and to express our appreciation for all the work to date in preparing a revised draft of Protocol two, including presentation this morning.
As from Ireland, we just have some comments in relation to Chapter two, Article 21, minor technical comments.
In relation to paragraph one, We note that term transfer pricing issues does not appear to be defined.
That's why we would like to see clarity whether term transfer pricing issues is intended to encompass attribution of profit to a permanent establishment, similar to Article 7 of the OECD Model Tax Convention.
In paragraph three, we would like to make a suggestion regarding the information reasonably necessary to examine an APA.
We believe that it would be beneficial to specify that APA requests submitted would also satisfy the information requirements set out in relevant jurisdictions published APA guidance.
And in relation to paragraph four, we have an observation regarding the requirements set out in subpar C, as it appears that they go beyond what's typically included in an APA, while comparables and comparability adjustments may underpin the pricing contained in an APA.
And I'll end here.
Thank you.
Well, thank you, Ireland.
Thanks for the food for thought.
We take note of it.
On your first point concerning transfer pricing.
Yeah.
Well, that is up to all of us to decide whether transfer pricing requires a definition, more generally, it is that this protocol in many instances, it refers to applicable tax instrument.
That is something that we have to bear in mind.
Is it then that you derive the meaning of transfer pricing from that applicable instrument in this specific case or is it rather something that we want to define here to ensure that also profit allocations to PEs are being captured for Article 7, as well as Article 9? Well, that's for all of us to consider.
I give the floor now to Japan.
Thank you, colleague.
Thank you again for it and Secretary for providing this detailed and comprehensive draft.
We really appreciate your efforts.
Japan has comments on APA and joint audit.
First, we consider that APAs to be a valuable tool for preventing disputes and enhancing tax certainty for both taxpayers and tax administrations.
We also agree that capacity building is essential for the effective implementation of dispute prevention mechanisms.
In this regard, it is important to coordinate closely with existing capacity building initiatives provided by other international and regional organizations as well as bilateral programs in order to avoid any duplication and make effective use of limited resources.
Coming back to the draft, we know that the current draft contains a relatively detailed set of procedural rules.
While we appreciate the intention of providing clarity, some aspects appear to differ from our current practice, and we wonder whether it is necessary for the protocol itself to prescribe procedures at such a detailed level.
We will look at these provisions more carefully, and we may provide more detailed written comments later.
And we have a concern about the joint audit.
The current draft appears to be more prescriptive than those contained in the MAC.
In practice, participation by foreign officials may raise issues relating to domestic legal requirements, which could make implementation difficult in some states, at least in Japan.
We therefore believe that the provision should be similar to the MAC, for example, by stating that officials of the other participating party or parties may be permitted to be present.
Yeah.
So we also questioned the usefulness of conducting a joint audit where not all relevant jurisdictions agreed to participate.
In such cases, we believe there is a risk that the audits in jurisdictions that chose not to participate could be affected by the joint audit.
That's it for now.
Thank you.
Yeah.
Thank you very much, Japan, concerning joint audits and the presence.
So it is true that here the protocol so far it takes a different approach to that topic than the MAC.
Protocol the current graph is based on the understanding that a joint audit prerequisites, the form of presence of foreign officials in contrast to simultaneous tax audits.
I think some would even argue that a joint audit require an active presence that is not limited to being passively present and just listening in, but also participating actively in investigations like interrogating taxpayers scrutinizing records.
The protocol goes not as far as that, but it's true that at the moment it requires a tax administration to allow at least the passive presence of foreign officials.
We are aware of this fact that this is something that for, um, inter constitutional reasons is for some of the member states it is difficult or not possible.
And that situation is not new and it also was a conundrum under the mark and some member states found forms of, so to say, like hybrid corporations where they did conduct a simultaneous tax audit, so in our sense, a simultaneous audit that was punctually then enriched to some extent, occasionally by the presence of foreign officials.
Sometimes it was just one sided, so it was not necessarily mutual, taking being reflective of the fact that for some competent authorities, it was possible, but not for others.
So there are some more flexible approaches out there for the time being and for this draft, the intention is to clarify that joint audits would require the presence of foreign officials.
But eventually is everything that is up to you.
It's up to the membership to decide.
Okay.
I was just consulting with Michael on because the level of detail of the protocol has been coming up a lot and we take note of that.
I just wanted to explain the thinking behind the thinking behind having such so much detail.
We took into consideration the fact that a part of our cohort, that is a membership of this group, includes countries which do not have any existing bilateral instrument.
They have um They do have disputes.
They do have cross border disputes, and the intention is in those cases that those countries will be able to use the protocol as the instrument by which they are guided in preventing disputes, as well as resolving them.
It is a procedural document for that reason.
Now, we have heard and we will examine whether or not the document should be reduced.
But what we do not want is a situation where we reduce it to a point where it is ineffective and not helpful for countries in that situation.
So that's it is it has that level of detail for your consideration, I submit.
The floor goes now to Papua New Guinea.
Papua New Guinea, please.
Thank you, colleague.
PNG echoes the sentiments of those delegates that spoke before us to thank the chair, colleagues, and the Secretariat for the work undertaken to put together this comprehensive first draft of Protocol two.
Papua newwuinea welcomes the draft protocol and supports its overall objective of preventing and resolving international tax disputes in a manner that promotes certainty, cooperation, and effective tax administration.
We share the sentiments expressed by Ghana on behalf of the African group and emphasize that many developing countries, including Papua New Guinea, have limited practical experience with dispute prevention and dispute resolution mechanisms.
For this reason, similar to the African group, Israel and Honduras, We share that the protocol should be drafted in a manner that recognizes differing levels of capacity and allows countries to adopt mechanisms progressively as their experience and administrative resources develop.
On Chapter two concerning dispute prevention, Papua new Guinea supports the inclusion of advanced pricing arrangements, advanced rulings, and audit based mechanisms as useful tools for improving certainty and reducing disputes.
However, many of these mechanisms are technically complex and resource intensive.
Papua Guinea therefore believes participation should remain voluntary and that competent authorities should retain full discretion to accept or decline requests, taking into account the administrative capacity and available resources.
We particularly welcome the provisions allowing for flexibility and phased implementation.
Papua Guinea attaches special importance to Article 2 0.10 on capacity building, effective participation in mechanisms, such as advanced pricing arrangements, simultaneous audits and joint audits will require substantial technical assistance, training, and institutional support.
For PNG, capacity building is not a supplementary element of the protocol, but a prerequisite for its successful implementation.
Thank you, colleagues.
Thank you, PNG.
Just in case we have water here in the front, you need a sip.
I give the floor now to Ghana is asking for the floor, but Ghana, you spoke already with your indulgence, I'd rather give the floor to Algeria, Nigeria, and then Ghana you next.
Yeah.
Thank you.
Algeria, please.
Thank you, co lead.
We would like to thank the co leads and the Secretariat, as well as the members of the delegations for all the work that they've done.
We welcome the preventive approach that's been proposed and thank you also to the detailed work that's been provided, which has allowed us to better understand the mechanisms and to grasp the scope.
Before sharing our national comments, we would just say we express our support to garner statement on behalf of the African group.
As you said, we share the need for moving towards a format that reflects an international agreement and we have explanatory notes for the details and the drafting of this protocol.
More generally, we note with satisfaction that these mechanisms are still based on optionality for different mechanisms and also the respect to task sovereignty of states.
Indeed, tax administrations beyond countries, particularly developing countries could be interested in the mechanisms proposed.
But beyond the will to simply join these mechanisms, we're very quickly caught up in reality in the field.
Lack of resources, lack of expertise is a problem, and above all, a lack of access to information and this is crucial for transfer prices and agreements.
The mechanisms proposed provide states with the opportunity to take a decision on transactions to make them more safe upstream.
But for African countries, these decisions could be taken without necessarily having access to information, information perhaps might not even exist.
As you know, information isn't always available and accessible for some jurisdictions.
Here, we welcome on the one hand, the creation of the group to address databases on transfer pricing and it is also crucial to create a solid mechanism on capacity building, which would allow developing countries to have the necessary capacity and latitude to opt for one mechanism or another.
Indeed, without real support, training, exchange of tools and experiences, these mechanisms will remain, unfortunately, just theoretical.
In terms of mechanism for bilateral agreements, it is a brief comment regarding the mechanisms proposed, the coordinated bilateral mechanism which is proposed if there is no applicable tax agreement between states and that's paragraph four, Pre advanced unilateral agreements have been granted in application of domestic law and in Paragraph two, it says it indicates, and it's good to be clear on this, the main motivations for any decision of refusal.
Our interpretation for that, that could mean for states, the states in question is to justify their legislation and their tax policy.
We're obliged to justify ourselves and justify our tax policy because there's no applicable agreement between states.
We believe this procedure risks very much adding significant administrative burden to tax authorities for developing countries in order to address this new procedure.
Now, also, on Article 2 0.4, where we would want more information on these agreements, which we believe is not very clear at the moment as it stands.
We would ask for some examples to better understand the scope, bearing in mind, of course, that this mechanism for states don't have an applicable tax mechanism or agreement that links them.
We'd reiterate our support also to ensure that this protocol is not obligatory for all states parties apart from the friendly procedure.
Thank you.
Nigeria next, Nigeria, please.
Thank you so much, the colleague, and I congratulate you on behalf of Nigeria for your coordination efforts.
Thank you also for the draft that you are presented, and we are not taking your efforts for granted.
We align with the position presented by distinguished delegate or Ghana on behalf of the African group.
And we also want to make further comments.
I know that Algeria has just Kenya had spoken and some of the things that they said, I will just re emphasize the ones that are necessary and the ones that I do not need to for want of time, then I skip them.
The overly prescriptive nature of this draft has been stressed by many of the distinguished delegate who spoke ahead of us.
And Nigeria believe that we need to look at the test and I heard Malin talking about that.
So it is important that we do a redrafting so that the core principle, the write the obligations brought up clearly in the manner that the obligations are brought out and the things that are administrative and the exhaustive list that have been produced can go into a kind of AAS or if you like, the kind of guideline to support implementation.
Um, Regarding the Chapter one, which is on definition, I know a number of delegates has also expressed the need to make it robust.
The protocol itself is meant to provide for resolution of dispute and to prevent it.
And if we must do that, we must start from the definition because when things are not clear, then dispute becomes the order of the day.
For example, under one of the articles, I can remember now the number clearly, the phrase substantially similar in purpose and function was referenced.
I think that is where we have to choose between options A and B, and there is a need for clarity.
What do you mean by substantially similar in purpose and function? So we will be willing to provide further comment on areas of definitions that we think will help in the effective implementation of the protocol.
If you go to Article 2 0.1, which is on bilateral multilateral ad pricing arrangement.
I think there is a phrase here where we are saying that where a request is accepted by all competent authorities, I think I heard from the floor one of the distinguished delegates referenced that where we have a dissent, it must also be clear what happened.
If you have five competent authorities, coming to look at an issue of multilateral APA and only one company authority dissented, is that going to stop the process or we're going to continue? So that clarity is important.
The timelines have also been spoken to by some of the delegates and the point here that we want to emphasize is that we must consider differences in capacity and capabilities in setting the timelines.
I recall that the distinguished delegate from the Kingdom of Netherlands you express that even the 24 months for APA will not be sufficient.
So and Michael has come up to ask for for me, I think we need to look at more than 24 months, maybe 30 years or more would be a suggestion.
The rollback, there are also concerns that we want to express because many state jurisdictions do not have the domestic provisions for corresponding adjustment.
So in such circumstances, what happen, rest practices ruling when you apply could also creates legal uncertainty.
It could lead to double taxation where the other party is not willing to provide that corresponding adjustment.
You know, it could lead to also further dispute and which is what we are trying to solve.
Um, coordinated unilateral advanced pricing arrangement requires further clarity.
It is not clear what this mechanism will really achieve.
The cost of pursuing it, we know is not going to be cheap, it's going to be enormous.
I think we need to look at what are the intended benefit that we are likely to derive from such arrangement because it cannot be binding, we have said it's going to be unilateral.
Even after agreeing it, it cannot turn a unilateral to a bilateral arrangement or agreement.
On that is on the coordination of that unilateral arrangement.
On optionality, we support optionality for this particular protocol, and we must also be mindful that where you reference things like APA, not all jurisdictions even have the rules for transfer pricing or are able to have the domestic proficient for such rules in their respective jurisdictions.
We must take that into cognizance, cooperative compliance, joint audit, simultaneous audit appears good on paper, but that is theoretically seems very good, but we must consider judictions that do not have any experience in such aspect.
So capacity building will be very, very important.
And if you look at the article 0N capacity building Article 2 0.10, you know, all I see here is that the party shall make efforts.
The parties shall make effort in coordination with each other.
That is not also clear.
What is the obligation of party they are making effort? How do you determine if someone has really made effort or a party has made effort? I am rounding up now.
So the request for the approach that is the approach by which we are taking this is different from the approach that we adopted when we did framework confession, that is the Workstream one.
And, you know, in order to promote effective participation, I can see that you have a number of questions, and that took me back to my school days when you enter into examination hall and you have so many questions and they say attempt hall.
I'm not sure if we have been attempting all your questions.
The question that you posed for a for this session.
So my suggestion is this if these are not examination questions and leakage will not be a challenge, maybe before we leave today, if you could expose the questions for tomorrow, then delegations will be better prepared and your attempting all questions will be able to attempt it effectively.
So all submission will follow.
Thank you so much.
Thank you very much, No.
Well, also from my side, thank you very much, Njira.
I think more generally, your input is more important than our questions, but I don't mind us sharing the questions for this afternoon or also tomorrow.
I Another point, it would really be too bad if we ended up arguing or having a dispute of what is meant by the protocol, therefore, we have to provide sufficient level of clarity.
But that brings me to another point.
Like here sitting in the front, we would appreciate your suggestions and that not only goes to you, Nigeria, by far not to the whole membership.
Not only which areas you regard, not necessarily the protocol, but something that could be outsourced in other texts, Nigeria mentioned an annex, but we have also heard guidelines or competent authority agreements or MOUs, to give us a clearer indication of what are those areas, and ing your ask for clarification, what is going to happen when not all competent authorities agree or not accept the request.
Here, we can clarify, but it would be important to get input, how you would see it.
I got the impression, but it stand to be corrected that this is rather the perception that it would be too unfortunate if, for example, an APA would, couldn't be conducted at all just because one competent authority did not accept a request.
But here too, if you have any input that you can share with us, that is much appreciated and generally, we look forward to your comments and suggestions.
We give the floor.
Thank you.
Thank you so much, Colleagues.
Just for want of time and thank my colleague from Nigeria and other colleagues has said a lot, so I won't belabor the point.
But just starting off from the perspective of the Africa group again on the issue of capacity building, and as stated by Nigeria, the Africa group strongly support and recommend that we have this protocol have its detailed capacity building provisions to take care of issues that have been raised with respect to different capacities and all that.
So we wouldn't and the draft has to be done to have the states having a specific, how do you say it, their commitment, not just aspirational wishes as it is reflected.
But I just also make the point that the Africa group will provide detailed draft for consideration by the co leads.
Moving from there, back to the issue of interpretation or the general comment.
Now speaking in the capacity of Garner, we just want to clarify one thing under Article 1, the definitions.
If you take Article 1, A and B and A and D, we are looking at it.
If you take the D, what is just from the reading, it seems to suggest that this framework is going into accepting or taking into consideration definitions that are applicable in other bilateral treaties or other instruments.
Which in itself creates a lot of issues.
Of course, then we were of the view that we should limit that to the framework convention because the framework convention had a number of definitions that have been made.
For example, on information exchange instrument, the framework convention provides clearly what it is and how we want to go about it.
We should limit it in scope to apply to what has been defined within the framework convention, not to open it up entirely to what exists in other instruments, which, of course, I think Michael made a point that that even leads us to issues of interpretative issues and that will also bring issues of dispute.
And that is on that.
And then the one clarity that Garner seeks to want to clarify from the issue of applicable tax instrument.
Again, that brings us to the point as to what are the options that we have to choose option A or B.
And I think from the Africa group perspective and from Garner's point of view, we are recommending that this protocol becomes the protocol for dispute prevention resolution, prevailing over or having overriding, character instead of taking the sub aside with other instruments because that will also create another room for interpretation or dispute issues.
So basically, Chair, that is what I want to put across for both the Africa group and also on behalf of Garner.
Thank you, Chair.
Okay.
Okay.
Thank you very much, Ganna.
We have 3 minutes left and we have several speakers on the list from member states, but also stakeholders.
We will not manage to give the floor before the break, but we will save that list.
The current list, the following order, it is Singapore, which will get the floor right away.
Singapore followed by Mexico and France, the INESC next GATJ Atta, BCS, ICC, Italy, Italia, sorry, and the African Union.
We take those speakers following the break.
I regret that we are unable to take a hydration break this morning, but we did start slightly late and let us try to resume early this afternoon.
With that, I give the floor now to Singapore before we move to the lunch break, Singapore, please.
Thank you, Coley, and the Secretariat.
Thank you for the detailed draft.
We definitely appreciate it.
Just some quick comments from me.
Tax certainty plays a vital role in facilitating cross border trade and investment by giving businesses the confidence to make long term investment and commercial decisions.
So in this regard, effective dispute resolution may be even more valuable than dispute resolution.
Having said that, we believe optionality in this protocol is desirable not only to encourage broader participation, but also as a practical recognition that tax administrations operate with finite resources.
Maximize the effectiveness of the protocol, we think efforts should focus on mechanisms that are already widely used and accepted as core mechanisms for dispute prevention and resolution.
In our view, APAs and MAP are the most appropriate core mechanisms.
Among the dispute prevention mechanisms presented, APAs, in our view, most closely represent an X and day tool as they provide certainty before investment decisions are taken and before tax positions are established.
By contrast, audit based mechanisms actually, you could actually see them as sitting somewhere between dispute prevention and resolution.
While they facilitate cooperation and develop common understanding of the facts, they may not provide sufficient upfront certainty to taxpayers, and they could result, in fact, in tax adjustments that subsequently requires recourse to dispute resolution mechanisms.
Thank you.
Okay.
Thank you all.
Now we are going to the lunch break.
I would like to remind the Pro members that we are going to have a meeting in the lunch break.
So please move ahead to the meeting room, which is 151523 in the 15th floor.
Thank you all and enjoy your lunch break.
We are going to convene again at 3:00 Sb I Thank you All.