This submission outlines the recommendations by the Tax Justice Network for the for the Protocol on Dispute Prevention and Resolution. The submission is based on the Co-Leads’ zero draft and its discussions during the Fifth Session of negotiations.
We believe the protocol should be redrafted so that it compiles the essential provisions at treaty level and moves prescriptive operational provisions to a separate ‘Meeting of the Parties Implementation Agreement’ (MOPIA). We also think the draft protocol generally fails to implement elements of transparency across all mechanisms. The mechanisms should also be redesigned to avoid the taxpayer serving as the trigger for their application. We strongly support delegates’ wish to work on a provision that prevents or limits the application of ISDS to tax-related investment disputes.
Regarding the dispute prevention mechanisms, we consider the draft protocol’s focus on transfer pricing inappropriate and incompatible with a future-proof Convention. Given their resource intensive nature, dispute prevention mechanisms should furthermore not be characterized as ‘core’.
Regarding the dispute resolution mechanisms, we believe the Protocol’s MAP mechanism should be compulsory to settle any disputes under other Framework Convention protocols. The mechanism of mandatory binding MAP arbitration will not find any ‘takers’ as is, and should therefore be substantially re-envisioned. Binding dispute resolution in a fair and equitable way requires the setting up of a ‘UN Tax Dispute Settlement Body’, a judicial body that decides and operates in line with the transparency and impartiality standards of the judiciary.