This submission addresses the urgent need to reform the taxation of cross-border services in a globalized and digitalized economy. ICRICT calls for abandoning outdated rules—such as physical presence requirements and the arm’s length principle—and adopting a new framework based on unitary taxation and formulary apportionment. The Commission also recommends establishing a nexus rule based on Significant Economic Presence (SEP), coordinating interim measures like Digital Services Taxes, and simplifying rules to reduce reliance on costly capacity-building. The protocol presents a critical opportunity to ensure fair allocation of taxing rights and strengthen domestic resource mobilization, especially for developing countries.
