Taxation in the Global Context: Developing our Co-operation with Non-OECD Economies

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Challenges and Strategy

The Challenge:

The OECD, as a reformist oriented organization of 30 member countries cannot aspire to achieve a truly global perspective without direct interaction with both the large economies outside its current membership as well as developing economies themselves.

In the tax area, the increasing globalisation and inter-dependence of the world’s economies increases the importance, to both governments and business, of developing and implementing internationally accepted principles of taxation and standards for the administration of taxation systems. It means that the borders for taxation issues, and the need for dialogue and consistency of approach, reach far beyond the borders of the existing OECD membership. 

The challenge is to

• engage countries outside the OECD in a broad and meaningful dialogue,
• introduce them to our standards and guidelines,
• involve them in OECD work and
• ensure that their views and perspectives are reflected while maintaining the OECD’s focus in the tax area. 

Furthermore, there is a challenge beyond the effective operation of tax systems themselves.  There is increasing recognition that taxation itself has implications that stretch beyond the narrow sphere of revenue raising. Taxation policy and administration shapes the environment in which economic activity and investment takes place and crucially provides the central basis for the relationship between the individual and the state.  Bargaining between governments and citizens over tax can contribute to more effective and accountable states as well as to better governance. Taxation therefore can increase government responsiveness and accountability and strengthen capacity both by providing resources for infrastructural development and by reinforcing the relationship between state and population. 
 

The Strategy:

a) Enlargement and Enhanced Engagement.

In order to maintain the OECD’s relevance in a changing world, in May 2007, OECD countries agreed to invite Chile, Estonia, Israel, Russia and Slovenia to open discussions leading to membership in the OECD.  At the same time they proposed a strategy of enhanced engagement, with a view to eventual possible membership, to Brazil, China, India, Indonesia and South Africa. In addition, it was agreed to enhance engagement with countries in South East Asia. 

These developments will mean

• A larger OECD of around 40+ countries in the next decade which will reflect a broader range of perspectives adding to the vibrancy and diversity of the organisation while presenting the challenges that such diversity will bring.
•  An historic opportunity to develop close dialogue with these key economies and encourage reform where needed as the process develops. The taxation partnership programme is integral to this dialogue, as these countries become involved in a dialogue with both OECD countries and are able to share experience with each other and with developing economies.

b) The Partnership Programme in Taxation

The Opportunity

Enlargement of the organization is only part of the solution to the challenges in taxation and elsewhere.  An increase in the numbers of members, no matter how significant these countries may be, still leaves a significant proportion of the global economy potentially outside the global dialogue.  The partnership programme with non-OECD economies (NOEs) in taxation provides a mechanism for all interested countries, whether OECD or non-OECD countries, to share their experiences on common issues and develop solutions to emerging challenges in tax policy and administration.

Unique aspects of the Programme

The programme is based on direct contact between currently serving tax officials in OECD member countries and NOEs, as well as experts from the OECD Secretariat, enabling them to share practical experience and expertise. Panels consist of experts from member and NOE countries and the events enable all participating countries to contribute their own perspectives into the dialogue and to understand the tax environment faced by others

The partnership programme promotes international co-operation on all the core work areas of the Centre for Taxation Policy and Administration, including transfer pricing, exchange of information and the negotiation, application and interpretation of tax treaties and a variety of topics in domestic tax policy and administration. The programme has global reach and is an essential element of the global dialogue on taxation involving all interested countries, including those moving to a closer relationship with, or full membership of, the OECD.

Delivery

The programme is delivered through over 60 events each year. Each event includes tax officials with deep specialist knowledge and expertise who are currently facing significant policy and operational issues in taxation.  Around 40% of these events take place in the OECD Multilateral Centres located in Austria, Hungary, Korea, Mexico and Turkey. Others are focused on particular regions or countries, and are hosted in partnership with individual countries or regional tax organisations. These include bilateral events held in Russia, China, and India and multilateral events held in Malaysia, South Africa, Egypt, the Baltic countries, Singapore and Vietnam, Chile, Argentina and Brazil. 

The events are directed towards the needs of participating countries and aim to address issues of particular relevance to NOEs. Their agendas are developed collaboratively with participating countries and focus, for example, on issues, questions and illustratory case studies submitted by participants. 

In addition, the CTPA is planning to develop a series of events in conjunction with the OECD’s Development Assistance Committee on taxation and statebuilding and it is hoped these will be offered to both donor agencies and developing country officials in 2009. 

Users’ Handbook

More information about the tax partnership programme can be found in the Users’ handbook which is on the OECD website at www.oecd.org/ctp/handbook.

The Users’ Handbook is a guide for anyone who is directly or indirectly in the OECD’s programme of co-operation with NOEs and sets out practical information about the operation of the partnership programme.