In February 2026 the intergovernmental negotiating committee (INC) continued discussions on the UN Framework Convention on International Tax Cooperation, looking at the early Protocol on tax dispute resolution.
Dispute resolution mechanisms
The INC is considering a list of mechanisms for the prevention and resolution of tax disputes. The dispute prevention mechanisms under consideration include bilateral or multilateral advance pricing arrangements (APAs); advance rulings not related to transfer pricing; cooperative compliance arrangements; simultaneous audits; and joint audits. The dispute resolution mechanisms being considered include mutual agreement procedures (MAP); conciliation; mediation and arbitration.
Discussions looked at whether some of these mechanisms could be considered as core mechanisms that would be available to all signatories to the Protocol, while others would remain optional. Discussions within the committee have indicated that none of the mechanisms under the protocol, whether core or optional, would automatically supersede provisions of tax treaties or other instruments.
If a bilateral or multilateral tax treaty between particular countries does not include a core mechanism, the protocol could make that core mechanism available between the parties. Where a tax treaty or other agreement does contain a core mechanism, but does not have one or more of the optional mechanisms, the countries could continue to use the core mechanism available under their treaty, but could also agree to use the protocol’s optional mechanisms.
Countries could agree to use the protocol’s dispute resolution mechanisms instead of the procedures in their treaty, but this should be done through clear amending provisions and not by automatic treaty override.
The concept note provided by the co-leads did not define a cross-border tax dispute for the purposes of the Protocol. However, such a dispute would generally arise between countries rather than between a tax admin istration and a taxpayer; and there would generally be a common legal framework such as a tax treaty underlying the dispute.
Disputes where there is no treaty
The protocol could include a narrowly scoped, stand-alone provision for a situation where countries have not concluded a tax treaty. This provision could, on an optional basis, allow tax administrations to consult on cross-border tax issues arising, provided that their domestic laws are sufficiently aligned.
Dispute prevention
As a dispute-prevention mechanism under the Framework Convention, the protocol could provide a legal basis under which countries may conclude bilateral or multilateral APAs, advance ruling regimes, cooperative compliance, simultaneous audits or joint audits. The protocol could include a provision on capacity-building as a key element to facilitate implementation.
Mutual agreement procedure
The concept note prepared by the co-leads notes that discussions have confirmed that the mutual agreement procedure (MAP) remains the principal inter-government mechanism for resolving disputes arising under tax treaties; but there are concerns regarding its effectiveness, timeliness and accessibility, and the large volume of unresolved cases.
Some countries favour mandatory arbitration, but others including countries of the Africa group have strong reservations owing to constitutional constraints, negative experiences with investor–State arbitration, concerns over sovereignty, power asymmetries and high costs.
The co-leads’ concept note proposed the inclusion of a MAP provision in the Protocol and the development of recommended best practices. Possibilities would include more realistic timeframes to completion; enhanced transparency; improved information-sharing practices; and capacity-building measures. The note also proposed that the protocol could provide arbitration and other mechanisms, such as mediation or conciliation, as optional tools for dispute resolution.
Conciliation could be used to support competent authorities on a voluntary basis, where the parties agree to it. Mediation could be used by competent authorities to overcome deadlocks. Arbitration could have a role as an optional, last-resort mechanism, where the parties agree to it. The UN could provide technical assistance and capacity-building in relation to the design and use of those mechanisms.
Some participants consider that design features such as the composition of panels, clear procedural rules and appropriate transparency could help to deal with concerns over arbitration and allow it to be a useful tool.
Databases
Tax administrations need access to adequate information, particularly in the area of transfer pricing. Information asymmetries place administrations at a disadvantage during audits, negotiations or litigation. Many countries lack access to appropriate comparable data for use in transfer pricing cases. Commercial databases are expensive, often with limited regional coverage, and raise concerns about data quality. Access to transfer pricing databases is viewed as a key method of supporting tax administrations, especially for countries with limited resources or experience in transfer pricing.
There has been previous discussion of a possible UN-managed transfer pricing database, although there would be issues around provided funding, equal access and confidentiality. More practical actions might include pooled purchasing of database subscriptions; or coordinated arrangements to improve access to commercial databases. A dedicated task force is to further explore and identify practical options for improving access to transfer pricing information. The task force would look at the information needed by countries; any gaps in information provided by current databases; the usefulness of current commercial tools for different countries; and approaches to improving access to the information by expanding the information available or developing further tools.
