Executive summary

On 20 July 2026, the United Nations (UN) released the Draft Protocol on the Taxation of Income from Cross-Border Services and the Draft Protocol on the Prevention and Resolution of Tax Disputes as part of the UN Framework Convention on International Tax Cooperation negotiations. These are the first complete draft texts for the two early protocols being developed simultaneously with the Framework Convention. Subsequently, on 21 July 2026, the UN released the Co-Leads' Draft Framework Convention.

The draft texts will be discussed during the fifth substantive session of the Intergovernmental Negotiating Committee, scheduled to take place in New York from 3 to 13 August 2026. Subsequent revisions to the drafts are expected as negotiations continue toward the target of finalizing the Framework Convention and the two early protocols in 2027.

The Co-Leads' Draft Framework Convention reflects further development of the legal, institutional and implementation framework and provides additional detail on how State Parties would operationalize commitments under the Convention. It includes draft provisions on data collection and analysis, implementation and review mechanisms, and the interaction between the Convention, domestic law and existing tax agreements.

The draft protocol on cross-border services would establish a comprehensive framework for allocating taxing rights over income derived from cross-border services. It covers fees for services, automated digital services and insurance premiums, and it generally introduces a shared taxing right that would allow source or market jurisdictions to tax such income with certain limitations.

The draft protocol on dispute prevention and resolution combines a broad range of dispute-prevention mechanisms with procedures for resolving cross-border tax disputes. The draft includes provisions on bilateral and multilateral advance pricing arrangements (APAs), advance rulings, cooperative compliance arrangements, simultaneous and joint audits, mutual agreement procedures (MAPs), mediation, conciliation and arbitration.

Detailed discussion

Background

In December 2022, the UN General Assembly adopted Resolution 77/244, launching discussions on strengthening the inclusiveness and effectiveness of international tax cooperation, including the possible development of an international tax cooperation framework. This work culminated in December 2023 with the adoption of Resolution 78/230, which established an ad hoc committee to draft Terms of Reference (ToR) for a UN Framework Convention on International Tax Cooperation. (See EY Global Tax Alert, The Latest on BEPS and Beyond — January 2024, dated 17 January 2024.)

In June 2024, the ad hoc committee released a "zero draft" of the ToR for public consultation and received more than 100 submissions. Following further discussions, the committee approved a revised ToR on 16 August 2024 for submission to the UN General Assembly. (See EY Global Tax Alerts, The Latest on BEPS and Beyond — July 2024, dated 17 July 2024, and UN Ad Hoc Committee advances Terms of Reference for a Framework Convention on International Tax Cooperation, dated 22 August 2024.)

In December 2024, the UN General Assembly adopted Resolution 79/235, formally approving the ToR and establishing an Intergovernmental Negotiating Committee to develop the Framework Convention and two early protocols. One protocol was specified as addressing the taxation of cross-border services, while the topic for the second protocol was to be determined by the Intergovernmental Negotiating Committee. (See EY Global Tax Alert, UN General Assembly approves Terms of Reference for Framework Convention on International Tax Cooperation, dated 2 January 2025.)

At its organizational session in February 2025, the Intergovernmental Negotiating Committee selected its Bureau, agreed on decision-making procedures and chose the prevention and resolution of tax disputes as the subject of the second early protocol. In April 2025, it released a roadmap and guidelines for developing the Convention and protocols through 2027. (See EY Global Tax Alerts, UN intergovernmental negotiating committee on Tax Framework Convention on Tax Cooperation holds organizational session, dated 17 February 2025, and UN negotiating committee of Framework Convention on International Tax Cooperation releases roadmap and guidelines, dated 15 April 2025.

In June 2025, the Intergovernmental Negotiating Committee issued draft issues notes for its three workstreams and sought stakeholder and member-country input. (See EY Global Tax Alert, UN releases draft issues notes on the Framework Convention on International Tax Cooperation, dated 17 July 2025.) The Committee subsequently held its first two substantive sessions in August 2025 and later released a Draft Framework Convention Template and additional workstream documents for consultation (See EY Global Tax Alerts, The Latest on BEPS and Beyond — September 2025, dated 19 September 2025, and The Latest on BEPS and Beyond — November 2025, dated 19 November 2025). More than 120 submissions were received in late 2025 and a further 130 submissions were received in early 2026 following the release of updated drafts and options papers. These consultations were part of the transition from the scoping phase to more focused technical drafting and solution development across the three workstreams in 2026. (See EY Global Tax Alerts, The Latest on BEPS and Beyond — December 2025, dated 17 December 2025, The Latest on BEPS and Beyond — February 2026, dated 18 February 2026, and The Latest on BEPS and Beyond — March 2026, dated 19 March 2026.)

Draft Framework Convention and early protocols

The Draft Protocol on the Taxation of Income from Cross-Border Services and Draft Protocol on the Prevention and Resolution of Tax Disputes, released on 20 July 2026 as part of the UN Framework Convention negotiations, are intended to serve as the two early protocols to the Framework Convention. Together with the Co-Leads' Draft Framework Convention, released one day later, these three documents constitute the first complete draft texts for the Framework Convention and the two early protocols to be discussed during the fifth session of the Intergovernmental Negotiating Committee in August 2026.

Framework Convention

The Co-Leads' Draft Framework Convention represents the core legal instrument that will be the basis for international tax cooperation. Building on the Draft Framework Convention Template, the draft is organized into 28 articles and contains provisions addressing the Convention's objectives and guiding principles, commitments, capacity building, institutional arrangements and mechanics of the Convention.

The draft reflects further development of the Convention's commitments on sustainable development, fair allocation of taxing rights, high-net-worth individuals, tax-related illicit financial flows harmful tax practices, prevention and resolution of tax disputes and mutual administrative assistance. While most of this was included in earlier drafts, the wording and scope have been refined in the latest draft.

The draft also contains provisions addressing the relationship between the Framework Convention and existing tax agreements and domestic law. In this regard, State Parties would be required to undertake legislative, administrative and other measures necessary to implement their obligations under the Convention. Rights and obligations of any party under existing agreements are not affected, but State Parties would be expected to take progressive steps toward aligning their existing international tax agreements with the Convention's objectives, principles and commitments. The draft provides that where a State Party to the Convention requests the renegotiation, amendment or modification of an existing agreement to achieve alignment, the other State Party shall enter into negotiations in good faith and without undue delay.

With respect to governance, the draft would establish a Conference of the States Parties and a subsidiary body to oversee the operation of the Convention and its protocols. The Conference of the States Parties would be responsible for promoting and reviewing implementation of the Convention, facilitating information exchange, considering technical assistance needs and adopting future protocols.

The draft includes provisions on financial resources, amendments, signature, ratification and entry into force.

Although the draft is substantially more complete than earlier versions, it remains subject to negotiation and is expected to be further refined during future sessions of the Intergovernmental Negotiating Committee.

Early protocol on taxation of services

The Co-Leads' Draft Protocol on the Taxation of Income from Cross-Border Services represents the first early protocol being developed under the UN Framework Convention on International Tax Cooperation. The draft seeks to establish a comprehensive framework for allocating taxing rights over income from cross-border services. The draft protocol would apply to residents of one or more State Parties and applies broadly to taxes on income from services, including digital services taxes, equalization taxes and other taxes with a similar economic effect, while expressly excluding VAT, GST and other generally applicable consumption taxes.

The draft protocol establishes specific rules for the allocation of taxing rights for three categories of income: fees for services, automated digital services and insurance premiums. In each case, the draft generally allocates taxing rights to both the residence and source jurisdictions, with source-country taxation limited by maximum rates that have not yet been established.

For fees for services, the draft applies broadly to payments made in consideration of services, excluding employment income. The source jurisdiction would generally be permitted to tax these payments, with sourcing rules based on factors including where services are physically performed, the residence of the consumer of the services and the residence of the payer.

For automated digital services, the draft defines the term as services provided through the internet or another electronic network with minimal human involvement by the service provider. The draft includes a non-exhaustive list of such services, including online advertising, social media platforms, online intermediation platforms, search engines, cloud computing, digital content services and online gaming. Special sourcing rules would apply, focusing on factors such as the location of consumers, end users and user-generated data.

For insurance premiums paid to nonresident insurers, the draft contains specific rules governing the taxation of premiums and reinsurance payments. Annuity contracts and insurance products with substantial investment components are excluded from the definition of insurance premiums.

The draft also includes a separate article addressing situations in which services are provided through employees or agents physically present in another jurisdiction. In such cases, the source jurisdiction would be permitted to tax profits attributable to those activities on a net basis. In addition, in situations without physical presence, taxpayers may elect to be taxed on a net basis under this provision; in such a case, profits would be determined through "a reasonable allocation of its profits from the relevant business activities," taking into account the gross revenues generated in that State compared to total gross revenues.

The draft protocol does not permit reservations by Parties. The entry into force provisions in the draft are not yet incomplete, including the number of ratifications that will be required and the manner in which the protocol will interact with existing tax treaties once it becomes effective.

Several other important aspects of the protocol are still to be addressed. In particular, the applicable withholding tax rates have not yet been determined, discussions continue regarding the treatment of international shipping and air transport income, and various institutional and implementation provisions are subject to further negotiation.

Early protocol dispute prevention and resolution

The Co-Leads' Draft Protocol on the Prevention and Resolution of Tax Disputes contains a broad range of dispute-prevention tools and mechanisms for resolving disputes. On dispute prevention, the draft includes provisions on bilateral and multilateral advance pricing arrangements, advance rulings, cooperative compliance programs, simultaneous tax audits and joint audits. It also contemplates capacity-building support to assist jurisdictions in implementing these mechanisms.

On dispute resolution, the draft builds on the mutual agreement procedure (MAP) as the central mechanism and includes provisions on mediation, conciliation and arbitration. The draft provides some flexibility for State Parties to the protocol, including through possible reservations to certain mechanisms and alternative approaches regarding the interaction between the protocol and existing treaty-based procedures. The draft also proposes a facilitative role for the United Nations, including maintaining rosters of mediators, conciliators and arbitrators and supporting implementation of the dispute resolution framework.

Next steps

The Intergovernmental Negotiating Committee will discuss the draft Framework Convention and the drafts of the two early protocols during its fifth substantive session, scheduled to take place in New York from 3 to 13 August 2026.

Following the discussions in New York, it is expected that revised draft texts will be released in advance of the sixth substantive session, scheduled to take place in Nairobi from 30 November to 11 December 2026.

The Intergovernmental Negotiating Committee is scheduled to hold three further sessions in 2027 and is expected to complete its mandate by submitting the final text of the Framework Convention and the two early protocols to the UN General Assembly for consideration during the first quarter of its eighty-second session in September 2027.

Implications

The ongoing discussions and developments in the Intergovernmental Negotiating Committee regarding the UN Framework Convention on International Tax Cooperation and its associated protocols involve important aspects of the international tax landscape. As the work progresses with key milestones set for 2026 and 2027, the draft documents will continue to be refined.

Companies should monitor these developments and evaluate the potential implications for their tax profile. Engaging with policymakers in relevant jurisdictions would provide the opportunity for businesses to share their insights and perspectives on these important matters.

Companies also may want to consider participating in multi-stakeholder consultations that will be organized ahead of the Intergovernmental Negotiating Committee sessions to provide feedback on the draft texts and contribute to shaping the legal instruments being developed.