Handbook - Developing Partnerships with Non-OECD Economies - Section 1.2

1.2 Taxation in OECD and the Wider World

1.2.1 Organisation of the OECD

The Organisation for Economic Co-operation and Development (OECD) provides the governments of 30 member countries with a setting in which to discuss and develop economic, tax and social policies. They compare experiences, seek answers to common problems and work to co-ordinate domestic and international policies that in today’s globalised world should form a web of coherent practice across nations.  Their exchanges may lead to agreements to act in a formal way – for example, by establishing codes for free flow of capital and services, agreements to crack down on bribery or to end harmful tax practices. More often their dialogue makes for better informed work within their own governments on the spectrum of public policy and clarifies the impact of national policies on the international community.

Member countries meet and exchange information in committees, bringing together representatives of member countries from national administrations. The overriding committee is the Council which meets regularly at the level of Ambassadors to the OECD.

Specialised committees meet to advance and review progress in different areas of policy – such as trade, public management and taxation.

1.2.2 The Committee on Fiscal Affairs

In taxation, the OECD’s Committee on Fiscal Affairs (CFA) functions as a forum in which policy makers can contribute to and be involved in a dialogue on key international tax issues.  The CFA is a leader in setting standards and guidelines in respect of international taxation matters.  It is responsible for work on the OECD Model Tax Convention on Income and on Capital, the OECD Transfer Pricing Guidelines and  the OECD Manual on Exchange of Information among others.

The CFA’s partnership activities are managed by the Board for Co-operation with Non-OECD Economies (BCNOE) supported by the work carried out by the Advisory Group on Co-operation with Non-OECD Economies.

1.2.2.1 Board on Co-operation with Non-OECD Economies (BCNOE)

The Board for Co-operation with Non-OECD Economies (BCNOE) is the subsidiary body of the Committee on Fiscal Affairs (CFA) that is responsible for the development of CFA’s partnership strategy.  Reporting directly to the CFA, the BCNOE has the responsibility of supervising the alignment between the co-operation programmes with NOEs and the core interests and expertise of the CFA.

1.2.2.2 Advisory Group on Co-operation with Non-OECD Economies

The main function of the Advisory Group is to oversee the management of the operation of the international network of tax partnership programmes and advise the BCNOE.  The Advisory Group provides a forum for the OECD and NOE partners to exchange views on the programmes of co-operation and helps strengthen the link between the providers and recipients of the bilateral and multilateral assistance programmes.  Specifically, the Advisory Group provides:

• An opportunity for multilateral tax centers and other representatives responsible for program delivery to provide input into the partnership program;
• A forum for representatives of NOEs to provide inputs into the partnership program and also enable them to make assessment as participants; and
• A venue for presenting the outcomes of the specialized, independent evaluation program provided by Canada and the United Kingdom.

1.2.3 The Centre for Tax Policy and Administration

In April 2001, the OECD created the Centre for Tax Policy and Administration to provide a better focus for and a better management structure of the OECD’s work on taxation that is carried out by the CFA.  The Centre for Tax Policy and Administration provides the support that the CFA needs by managing the CFA’s work and enables the OECD to meet key challenges in taxation in the years ahead.  The Centre is also referred to as the Secretariat in this handbook.  For more information about the Centre’s current work program, see www.oecd.org/taxation

1.2.4 The Partnership Programme on Taxation

The partnership programme on taxation is an integral part of the policy development agenda of the CFA as it assists in the process of developing and implementing acceptable solutions to international taxation problems.  The programme is operated out of the Centre for Tax Policy and Administration in conjunction with the OECD’s Committee for Co-operation with Non-Members (CCNM).

The CFA’s programme of co-operation with NOEs operates through a number of different venues and forms.  The programme was first developed in the early 1990s to meet the needs of the European economies in transition.  This was expanded over the years by way of regional and country programmes.  Currently, officials from over 60 NOEs participate in events in the multilateral tax centres, in programmes held in the regions, in special country programmes and in multilateral events held under the auspices of the Global Forum on Taxation. 

The association of countries outside of the OECD membership not only with the OECD standards and guidelines on taxation but also with the process of their development is of considerable mutual interest to both OECD countries and our non-OECD partners.

The aims of the partnership programme on taxation with NOEs, in general, are to:

• Bring NOEs into the global debate on international taxation issues and, through dialogue, achieve a consensus on international standards and guidelines; and
• Share experience on the implementation of measures which, in partnership economies, assist in sustainable development through a predictable tax base and enhanced ability to attract foreign direct investment.

It is hoped that this partnership programme on taxation will help countries to secure their tax bases and to promote the flow of foreign direct investment.  A country’s ability to combat poverty, provide education, health and welfare services, and improve its infrastructure depends on its ability to collect taxes in an efficient and effective manner.  At the same time foreign direct investment can be encouraged through the adoption of tax systems which are transparent, certain in application and equitable.

1.2.5 Flexible approach to partnership

The programme of co-operation with each country is flexible and focused according to the nature of the mutual interests between OECD and its partners.  In general, it is possible to identify three general categories of partnership:

1. Comprehensive partnership – with particular countries is based on a three year rolling programme of co-operation both bilaterally and multilaterally and association of partners with the work of the CFA, annual negotiations/outcome analysis and co-ordination with other international partners such as the International Monetary Fund and the World Bank through the International Tax Dialogue (see below).

2. Flexible partnership – includes a bilateral discussion of the needs and priorities of particular countries, delivered through multilateral events with opportunities for demand driven bilateral dialogues on key issues and linkages with international tax organisations.

3. Development focused partnership – aims at securing a country’s tax base and providing a clear and transparent tax system to attract foreign direct investment.  It reflects the wider development agenda and is focussed primarily on tax administration as well as tax policy.

The OECD’s flexible approach to the development of tax partnerships recognises and reflects the complex international economic relations between a state, international businesses and international organisations.  In this context, taxation partnerships with particular states are necessarily interrelated with other partnerships with international organisations and international businesses.

1.2.6 Partnerships with International Organisations

A critical component of the OECD’s tax partnership is the co-operative programmes with other tax organisations.  Partnerships with international organisations aim to co-ordinate and undertake joint technical co-operation on taxation issues and to share information to avoid duplication of effort and build on each other’s work.  The OECD has a close working relationship with:

• Asian Development Bank (ADB)
• Centre de Rencontre et d’Etudes des Dirigeants des Administrations Fiscales (CREDAF)
• Commonwealth Association of Tax Administration (CATA)
• Inter-American Centre of Tax Administration (CIAT)
• International Seminar on Taxation (ISTAX)
• Intra-European Organisation of Tax Administrations (IOTA)
• Southern African Development Community (SADC)
• Study Group on Asian Tax Administration and Research (SGATAR)

In 2001, the OECD together with a number of the organizations above set up the Committee on International Organisations on Tax Administration (CIOTA).  The objective of this committee is to exchange views on emerging issues and promote good practices in tax administration.

Co-operation also takes place with other relevant international organizations.  The International Tax Dialogue (ITD) was established as a joint initiative by the staffs of the IMF, OECD and the World Bank to facilitate increased co-operation on tax matters between governments and international organizations.  The objective of the ITD is to encourage increased dialogue between governments on tax systems, identify and share good practices in taxation, provide a clear focus for technical assistance and avoid duplication of effort in respect of assistance activities. 

The ITD operates a free, multilingual, multinational internet site to help facilitate these objectives. www.itdweb.org provides an opportunity for tax officials to share experience and knowledge on taxation issues.  A range of both administrative and policy topics are covered with over 1400 documents currently available.  The site also includes a database of technical assistance provided in the tax area, news, calendar events, links and a research guide.  Discussion groups and a database of technical assistance activities will be coming soon.  The site can currently be accessed in English, Spanish, French, Norwegian, Japanese and Russian.

To find out more visit www.itdweb.org