Discurso do Representante Permanente, Embaixador Sérgio França Danese, na Segunda Sessão do Comitê Intergovernamental de Negociação (CNI) sobre a Convenção-Quadro das Nações Unidas para a Cooperação Tributária Internacional 4. Protocolo 1 sobre Tributação da renda proveniente da prestação de serviços transfronteiriços em uma economia cada vez mais digitalizada e globalizada e Protocolo 2 sobre Prevenção e resolução de litígios tributários - 11 de agosto de 2025 (texto em inglês)

Statement by the Permanent Representative of Brazil to the United Nations, Ambassador Sérgio França Danese, at the Second Session of the Intergovernmental Negotiating Committee (INC) on the United Nations Framework Convention on International Tax Cooperation
4. Protocol 1 on Taxation of income derived from the provision of cross-border services in an increasingly digitalized and globalized economy and Protocol 2 on Prevention and resolution of tax disputes
August 11th, 2025

Mr. Chair,

Excellencies,

Distinguished delegates,

Brazil is pleased to participate in this second session of the Intergovernmental Negotiating Committee on the UN Framework Convention on International Tax Cooperation. We will engage constructively in the development of the first Protocol.

The taxation of cross-border services is one of the most pressing challenges in international tax cooperation, in the context of an increasingly digital and service-based economy. It is essential to ensure that income from services can be taxed in the market of consumption or utilization, even if the provider is not physically present. Current standards disproportionately favor residence jurisdictions, thus undermining the fiscal capacity of developing countries.

Therefore, the principle of taxation at source is crucial to ensuring a fair and sustainable international tax system. It upholds a nation's inherent right to tax economic value within its borders, regardless of physical presence. It also reflects the importance of leveling the playing field for fair and effective domestic resource mobilization (DRM).

While acknowledging the diversity of national approaches, Brazil emphasizes that gross-basis taxation remains the most viable solution to ensure that source jurisdictions can tax services consumed or used within their territory. Gross-basis withholding offers a simple, efficient, predictable and administrable approach, suitable for countries with limited fiscal and enforcement capacity, thus avoiding the complexities of determining net income across borders.

We should design tax rules that are normatively sound, enforceable and tailored to the realities of countries with limited resources. Capacity-building and technical assistance will be essential for successful implementation, as will the inclusion of model normative language. We should consider the adoption of the United Nations Model, which recognizes source taxation rights on fees for technical services.

Finally, international tax cooperation should be based on minimal standards for countries to retain the ability to adopt broader rules in line with their development strategies. Likewise, fairness in the allocation of taxing rights, progressivity, and support for developing countries’ fiscal capacities must guide this process.

We look forward to working with all delegations to craft a Protocol that is balanced, operational, and responsive to the structural challenges faced by developing countries.

Thank you.