- The UN Framework Convention on International Tax Cooperation’s negotiating committee advanced discussions on several critical articles, including general definitions, fees for services, automated digital services, taxation based on physical presence, and international transport.
- Discussions on general definitions clarified the exclusion of royalties in the Protocol, defaulting to existing bilateral tax treaties or a common definition in their absence, and applied a similar approach to international traffic.
- The committee deliberated on the appropriateness of ordering rules and “special relationship” provisions for fees for services, particularly concerning the challenges of auditing transfer pricing.
- For automated digital services, the committee considered whether to specifically address Artificial Intelligence (AI) given its growing role, noting that AI agents might fall under services with minimal human involvement.
- Regarding taxation based on physical presence and international shipping/air transport, the committee grappled with defining taxable income, varying definitions of physical presence, and the scope of including international transport income within the Protocol, with the Africa Group proposing specific inclusions.
