On 24 March 2026 the UN Committee of Experts on International Cooperation in Tax Matters discussed the workplan for updating the Manual on the Negotiation of Bilateral Tax Treaties. The relevant subcommittee presented its planned workstreams for comment and approval. The Manual is in need of amendments to update the guidance as a result of the 2025 changes to the UN Model.
The first workstream would aim to align the guidance in the Manual with the latest version of the UN Model. This would include guidance in relation to the new articles 5A, 12C and 12AA and guidance on the subject-to-tax rule in Article 1. The updated Manual would also take account of changes to the Article 12 definition of royalties; and the additions to articles 8 and on article 25 (mutual agreement procedure).
The Manual would also be amended to include guidance on practical negotiation by specific entities, such as collective investment vehicles (CIVs), pension funds and real estate investment trusts (REITS).
The second workstream would prepare guidance in a new section of the Manual, to cover the issue of negotiation of specific provisions in a combined manner. This section would give advice on how treaty negotiators could discuss related articles together in the negotiations. The section would highlight where articles are linked – for example, Article 6 on immovable property could be linked with the article on capital gains in the negotiations.
Guidance would also be produced on integrating digital and hybrid negotiation practices, giving advice on practical tools for use in the negotiation procedure. There is already guidance on videoconferencing, and guidance could be extended to further digital and hybrid negotiation practices. Guidance would also cover measures for exploratory talks preceding full negotiations.
There would also be guidance on drafting most favoured nation (MFN) clauses. An MFN clause is often used in tax treaties when no agreement can be reached on the tax rate on certain income. There can be an agreement to apply the most favourable rate granted to another country in a treaty, for example in relation to dividends or royalties. Comments contributed at the meeting noted that examples of the text of MFN clauses could be included in the Manual.
Contributors noted that there can be a detrimental effect for developing countries from including MFN clauses in a treaty. Problems have arisen for some African and Asian countries as a result of these clauses, as they were negatively impacted by the way in which they drafted their MFN clauses. Developing countries should therefore consider if MFN clauses should be included at all in their treaties.
More guidance would be included on bulk negotiations with multiple parties. Also, guidance on renegotiation would be included to help countries that are updating their treaties for changes in the UN Model. The subcommittee would look at developing country experience in formulating the updates and prioritise issues with the most impact for developing countries.
