Executive summary

From 3 to 13 August 2026, the International Negotiating Committee held its fifth substantive session in New York to continue negotiations on the United Nations (UN) Framework Convention on International Tax Cooperation and its two early protocols covering the taxation of income from cross-border services and the prevention and resolution of tax disputes. The session marked a shift from conceptual discussions toward more detailed negotiations on the legal design, implementation and operation of the three instruments.

Discussion focus areas included the relationship between the proposed instruments and existing international tax agreements, the allocation of taxing rights, the scope of the future institutional arrangements and the extent to which the new framework should establish binding obligations. Differing views remained on these issues.

The outcomes of the fifth session and written contributions submitted following the session will inform further work ahead of the sixth substantive session, which is scheduled to take place in Nairobi from 30 November to 10 December 2026.

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. Following the General Assembly's approval of the Terms of Reference (ToR) in December 2024, an Intergovernmental Negotiating Committee was established to develop the Framework Convention together with two early protocols. (See EY Global Tax Alert, UN General Assembly approves Terms of Reference for Framework Convention on International Tax Cooperation, dated 2 January 2025.) One protocol addresses the taxation of income derived from cross-border services in an increasingly digitalized and globalized economy, and the second focuses on the prevention and resolution of tax disputes.

The Intergovernmental Negotiating Committee has been conducting negotiations through a series of substantive sessions and intersessional workstreams. In July 2026, the UN released the first complete draft texts of the Framework Convention and the two early protocols, to serve as the basis for negotiations during the fifth substantive session. (See EY Global Tax Alert, UN releases draft Framework Convention on International Tax Cooperation and two early protocols, dated 27 July 2026.)

Framework Convention

Negotiations on the Framework Convention focused on several core elements of the draft text, including the objectives and principles of the Convention, the allocation of taxing rights, cooperation measures, institutional arrangements and the Convention's relationship with existing international tax agreements.

On the relationship between the Framework Convention and existing international tax agreements and mechanisms, delegates expressed differing views on whether the Convention should primarily complement existing arrangements or establish new standards that could require adjustments to existing agreements. Related discussions addressed provisions on the alignment of existing tax agreements with the Convention's principles and the circumstances under which renegotiation of existing agreements may be appropriate. These issues were not resolved.

Delegates also continued discussions on the fair allocation of taxing rights, particularly in the context of modern business models and digitalized activities. Differing views remain regarding the appropriate nexus rules and the balance between source and residence-based taxation.

Additional discussions focused on provisions relating to high-net-worth individuals, harmful tax practices, exchange of information and mutual administrative assistance. Delegates debated the strength of the commitments and the level of detail that should be included in the Convention, as well as the extent to which the provisions should build upon existing international mechanisms and standards or establish new mechanisms and standards.

Discussions also covered governance and implementation issues, including the role and powers of the proposed Conference of the States Parties. Delegates expressed differing views regarding the scope of the Conference's authority, its decision-making procedures and its role in the future development of the Convention and additional protocols.

Protocol 1: Taxation of income from cross-border services

Discussions on the draft Protocol on the Taxation of Income from Cross-Border Services focused on the allocation of taxing rights over fees for services, automated digital services and insurance premiums.

A central issue is the nexus rules that would permit source jurisdictions to tax covered income. Delegates debated whether taxing rights should be based on factors such as the location of the payer or consumer and whether physical presence should continue to play a role in determining taxing jurisdiction.

The degree of flexibility available to participating jurisdictions was also discussed. Delegates considered issues relating to reservations, elective provisions and whether parties should be permitted to apply some provisions of the protocol without applying others. Questions were raised regarding the interaction of the protocol with existing bilateral tax treaties and domestic law, including the operation of the subject-to-tax rule and the hierarchy of potentially applicable rules.

A further area of discussion was the methodology for taxing cross-border services income. Differences remain regarding the relative roles of gross-basis and net-basis taxation.

Protocol 2: Prevention and resolution of tax disputes

Negotiations on the draft Protocol on the Prevention and Resolution of Tax Disputes revealed both areas of agreement and continuing differences on key aspects of the proposed framework.

A principal topic of discussion was the relationship between the proposed protocol and existing dispute-prevention and dispute-resolution mechanisms contained in bilateral and multilateral tax agreements. Delegates expressed differing views regarding whether the protocol should complement and preserve existing arrangements or supersede them.

There was broad support for maintaining the mutual agreement procedure (MAP) as a central element of the dispute-resolution framework. Delegates proposed refinements and clarifications regarding the MAP provision, including its relationship with arbitration.

Arbitration continued to be one of the most debated aspects of the draft protocol. Discussions focused on whether arbitration should be included in the protocol, whether arbitration should be compulsory or optional, sovereignty considerations, and the interaction between arbitration and other dispute-resolution mechanisms.

Next steps

Before the fifth substantive session, International Negotiating Committee members and stakeholders were invited to submit written comments on the draft texts that were discussed during the session. The deadlines for submissions were 24 August 2026 for the draft Protocol on the Prevention and Resolution of Tax Disputes, 26 August 2026 for the draft Protocol on the Taxation of Income from Cross-Border Services and 28 August 2026 for the draft Framework Convention. The outcomes of the discussions during the fifth session and the written comments subsequently submitted will inform the next phase of work and the preparation of revised draft texts.

The sixth substantive session of the Intergovernmental Negotiating Committee is planned for Nairobi from 30 November to 10 December 2026. A draft work program has been released, and the session is expected to focus primarily on the Framework Convention and the draft Protocol on the Prevention and Resolution of Tax Disputes. Revised draft texts for these instruments are expected to be circulated in advance of the session.

Implications

The fifth substantive session represents another step in the development of the UN Framework Convention on International Tax Cooperation and its two early protocols. As the negotiations continue, significant technical and policy issues remain unresolved. These include the relationship between the proposed instruments and existing international tax agreements, the allocation of taxing rights, the mandate and decision-making procedures of the Conference of the States Parties, the nexus and taxation rules for cross-border services, and the relationship between the dispute-resolution protocol and existing mechanisms.

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 are expected to be organized ahead of the Intergovernmental Negotiating Committee's sixth session to provide feedback on the draft texts and contribute to shaping the legal instruments being developed.