News & Insights

The results of the 2026 Tax Treaty Survey are presented below.

#1 Treaty Negotiations Countries

NFTC member companies responding to the survey (“respondents”) ranked several countries as a top priority for U.S. tax treaty priorities.

Switzerland was the country most frequently identified as the top priority for respondents. Withholding tax rates on Dividends were, by far, the most important tax treaty negotiation item, followed by Limitation on Benefits (“LoB”) and withholding tax rates on Interest. Business Profits, Covered Taxes, Gains, Mutual Agreement Process (“MAP”), and Permanent Establishment (“PE”) were also of concern.

Brazil was ranked as the top priority with the second-highest frequency. Withholding rates on Royalties and Dividends were the highest priorities, followed by Business Profits and Transfer Pricing. Interest, LoB, MAP, PE, and Residence were also mentioned.

The next tranche of countries listed as a top priority for respondents consisted of Canada and Taiwan, and the final tranche included Hungary, Malaysia, Saudi Arabia, and the United Kingdom. The negotiation items listed as most significant for each of these countries were:

• Canada: MAP was the most significant, followed by withholding rates on Dividends and Royalties. Business Profits, withholding rates on Interest, PE, and Transfer Pricing were also mentioned.
• Hungary: Withholding rates on Interest was the most pressing issue, with Dividends, Business Profits, LoB and PE as other important negotiation items.
• Malaysia: Transfer Pricing was the negotiation item of greatest concern, followed by Residence, Dividends, Covered Taxes, and MAP.
• Saudi Arabia: Business Profits, MAP, PE and Transfer Pricing were the most significant items. Royalties and Fiscal Transparency were also mentioned.
• Taiwan: PE and MAP were considered the highest priority items, followed by Royalties, withholding rates on Interest, and Transfer Pricing.
• United Kingdom: MAP was the most significant item, followed by LoB. Other priorities were Covered Taxes, withholding rates on Dividends, Business Profits, and Transfer Pricing.

These results remain fairly consistent with 2025 tax survey responses, in which Switzerland was also ranked the top priority. Brazil rose from third to second priority after being ranked the top priority in 2023 and 2024, while Taiwan fell from second in 2025 to third this year.

Overall Treaty Negotiations Countries

After determining the overall top priority country for respondents, we aggregated the results regardless of priority ranking. Atop the list of highest overall priority and receiving the most total mentions was Switzerland, followed by Brazil, then Singapore and Taiwan. Next followed Canada, India, and the United Kingdom, and lastly Malaysia, Saudi Arabia, United Arab Emirates, and Vietnam.

In total, respondents requested negotiations with 25 countries.

The treaty negotiation priorities for most countries are listed above. The negotiation items for countries not previously listed are:

• India: Top concerns were PE, Transfer Pricing, and MAP, followed by Dividends and Royalties, LoB, and Business Profits.
• Singapore: Royalties were the most significant concern, followed by PE, MAP, and withholding rates on Interest and Dividends. Covered Taxes and Transfer Pricing were also mentioned.
• United Arab Emirates: PE was the most consistent concern. Other priorities included Interest, MAP, Dividends, LoB, and Business Profits.
• Vietnam: Withholding tax rates on Royalties and Business Profits, as well as Covered Taxes, were the top priorities.

Compared to last year’s results, Switzerland rose to the top from fourth. Brazil fell from first to second, Singapore from second to third, and Taiwan rose to third from seventh. In the fourth tranche, India dropped from third, while the United Kingdom rose significantly from eighth, and Canada was a new addition to the list. Saudi Arabia remained in the fifth tranche, while the United Arab Emirates and Vietnam were new additions to this year’s list.

An infographic of the most requested countries can be found here.

Tax Treaty Implementation Issues

The survey also asked respondents to provide details about their tax treaty concerns. Respondents were asked to provide details about examinations, settlement problems, and procedural issues encountered in obtaining tax treaty benefits.

• In Germany, the multi-year process to receive withholding tax relief was cited as an unreasonable procedural barrier to treaty benefits. Concerns were raised regarding the application of ‘anti-abuse’ exclusions from competent authority review under § 49 of the German Tax Act (relating to non-resident tax liability).
• In Mexico, respondents reported an array of issues, primarily with aggressive tax positions and impediments to accessing competent authority review.
  • Mexico was most frequently cited as posing aggressive tax issues, specifically regarding denial of deductions for business expenses, aggressive audit positions, Value Added Taxes, and customs.
  • Deduction-related adjustment disputes were deemed ineligible for competent authority review. It was noted that aggressive enforcement tactics have forced some businesses to forgo legitimate deductions, resulting in double taxation.
  • Issues with denial of MAP access and associated competent authority review were noted, including that the deadline for requesting MAP had passed before the issue had risen to the MAP request level.
• Several countries were noted for holding aggressive tax positions taken by an examination function that is out of line with widely accepted tax principles.
  • Aggressive tax positions regarding local distributor business expense deductibility were cited in Mexico, Kazakhstan, and India.
  • Both Australia and Italy were cited as having aggressive tax positions relating to the classification of software distribution as royalties for withholding tax purposes rather than business profits.
  • Malaysia was cited as having aggressive tax positions on real property tax gains.
  • French tax authorities were cited for asserting that Foreign-Derived Intangible Income (“FDII”)^[1] is a harmful tax regime under audit. The French position on embedded royalties was cited as especially aggressive.
  • The United Kingdom has denied treaty eligibility for certain business types, in contravention of the law that permits an election to treat these entities as U.S. tax residents.
• Procedural issues that prevented the enjoyment of treaty benefits were reported by respondents in several countries.
  • In India, implementation concerns were raised relating to retroactive adjustment of standards and the accessibility of treaties. The new standard for demonstrating the economic substance of a holding company was noted as a barrier to treaty access.
  • EU treaty partners and Egypt were cited for especially burdensome treaty eligibility certification and clarification processes, which require disclosure of shareholder identity and structure documents. It was noted that the Egyptian process was especially lengthy.
• In Australia, respondents reported procedural attempts to preclude access to competent authority, thus denying access to MAP on a withholding tax matter.
• Italy was cited as precluding competent authority review over adjustments relating to licensing fees and beneficial ownership.
• Austria was cited as offering to settle more favorably at the exam level in exchange for an agreement not to seek double tax relief from a competent authority.

NFTC Requests for amendments to existing treaty provisions

The survey asked respondents for cases in which an amendment to a current tax treaty or the provision of a new tax treaty would be beneficial.

• Respondents expressed a need to further decrease withholding taxes, particularly on dividends, in Canada, Israel, and Switzerland.
• With regard to India, respondents consistently requested amendments to provisions relating to PE. Specific comments included ensuring permanent establishment rules are in line with OECD guidelines as well as eliminating withholding taxes on services performed outside the country. The need for amendments to the material outsourcing rules and additional clarity regarding treaty application to all U.S.-owned LLCs were also reported.
• With Germany, a need for certainty regarding the application of the Royalty Barrier Rule (RBR, Section 4j of the German Income Tax Act, (ITA)) resulted in increased scrutiny Ibid.on legitimate payments utilizing FDII[2].
• Respondents expressed a desire to update the treaty with Chile to reflect Treasury’s current positions on foreign tax credits under § 960(d) and broadly strengthen protections against double taxation.
• Regarding Bermuda, respondents expressed interest in an updated and comprehensive double taxation treaty.

IRS Advanced Pricing and Mutual Agreement Program

The survey asked respondents to report concerns or issues with the IRS Advanced Pricing and Mutual Agreement Program (“APMA”).

• The length of the resolution process, including significant delays, was the top concern. Once again, respondents noted the importance of speedy resolution due to how quickly the nature of business can change. Respondents observed that these delays forced businesses into a reactive position and prevented planning. There were concerns that further reductions in capacity would increase these delays.
• Relatedly, capacity was a key concern, with lack of funding and decreasing experience levels due to recent retirements and terminations cited as root issues. Respondents noted that understaffing leads to negotiation setbacks, denials of advanced pricing agreements, and contributes to troublesome delays.
• Respondents noted issues with transparency regarding negotiation progress when requesting information from APMA.
• Respondents were concerned with the failure to grant telescoping, even when telescoping to years with consistent tax rules. Administrative burdens when dealing with the IRS Audit Team were specifically noted.
• There were concerns that APMA does not consider OECD transfer pricing guidelines when these approaches are not explicitly outlined in U.S. transfer pricing regulations.

^[1] Foreign-Derived Intangible Income (“FDII”) was modified in the One Big Beautiful Bill Act of 2025 and is now called Foreign-Derived Deduction-Eligible Income (“FDDEI”). While the name and certain calculations within the tax code have changed, the arguments at the core of these concerns are expected to persist.

[2] Id.