2026

Global North and Global South countries clashed over whether cross-border services income should be taxed on a gross or net basis during August 10-11 negotiating sessions on a draft U.N. tax convention protocol. While developed jurisdictions and business groups warned that gross-basis taxation disregards business expenses and distorts cross-border trade, developing countries favored gross taxation for administrative ease while seeking clarity on how to operationalize optional net-basis rules without creating discrimination.

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The OECD should tweak its proposed changes to the rules on how digital platforms in the sharing and gig economy share information with tax authorities, a business group said August 12, 2026.

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The OECD spent the last decade selling its Pillar Two minimum tax on the promise it would bring in significant new revenue. Its latest figures estimate the 15% global tax raised between 79 billion and 109 billion euros ($91.2 billion to $125.8 billion) in 2024. That’s about a third of what the organization projected in 2023, a number that shrinks with every publication.

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European and allied countries pushed for optionality and reservations in a draft U.N. protocol on cross-border services income during August 10-11 negotiating sessions, expressing deep disappointment over the removal of physical presence nexus requirements and the reliance on gross-basis taxation. Meanwhile, delegates from both developed and developing jurisdictions raised concerns about potential double taxation, seeking clarity on how the protocol’s subject-to-tax rule and broader provisions will interact with existing bilateral tax treaties.

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Microsoft Corp.’s current federal tax expense fell year-over-year from $14.1 billion to $2.5 billion even as its revenue surged, offering a case study of how the artificial intelligence infrastructure boom is being financed (partly) through accelerated deductions embedded in the massive 2025 tax law.

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Countries disagreed on August 11, 2026, over the nature of digital services taxes and whether they should be included in a United Nations agreement to tax income from certain services.

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OECD and several non-OECD countries pushed to remove provisions from the draft U.N. tax framework convention requiring parties to align and potentially renegotiate existing tax agreements, citing administrative burdens and economic risks during August 7 committee discussions. Conversely, India, Mauritius, and the Africa Group argued that retaining and strengthening mandatory treaty alignment is essential to rectify global tax inequities and give the convention true legal force.

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Eleven OECD countries moved August 5 to delete the stand-alone information exchange article from the draft U.N. framework convention, arguing it is too prescriptive for a high-level instrument and duplicates the OECD Global Forum, with Austria's Stefanie Gombotz citing concerns about constitutional requirements, data protection standards, and supranational law. African Union countries, Brazil, India, Indonesia, and others defended keeping the article while offering softening amendments — India's Bhaskar Goswami said it consolidates references that were previously scattered across the text and shouldn't be seen as a threat to existing commitments, while Zambia proposed developing criteria for foreseeable relevance and moving more specific prescriptions to a future protocol.

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European delegates pressed at the August 6 U.N. tax convention session for a tightly circumscribed mandate for the Conference of the States Parties under article 13, with Germany's Michael Braun warning it should not become a mechanism for expanding substantive obligations and Italy invoking the constitutional principle of legality in tax matters. Kenya, speaking for the Africa Group, wants the COP designated the supreme organ of the convention and its protocols, and split with European countries, Japan, and South Korea over decision-making, arguing for simple majority rather than consensus.

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