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In May 2007 the OECD responded favourably to requests from Chile, Estonia, Israel, Russia, and Slovenia to begin a process aimed at eventual membership in the OECD by these countries.
The subsequent enlargement negotiations are expected to be formally initiated in mid 2008 with each country, once the country in question has provided an initial statement of its positions on OECD legal instruments. Each country will be on a separate timescale and it is expected that these negotiations will take between 2 and 5 years to complete depending on the issues arising and the progress of negotiations in each of the countries concerned.
Experience with previous accession negotiations shows that tax will be a key factor in this process. In addition to the legal instruments specifically relating to the Committee on Fiscal Affairs, the Committee has agreed that all accession countries will be expected to conform to the following core principles:
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eliminating international double taxation on income and capital through complying with the key substantive conditions underlying the OECD Model Tax Convention;
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eliminating double taxation through ensuring the primacy of the arm’s length principle, as set forth in the OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, for the determination of transfer pricing between associated enterprises;
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engaging in effective exchange of information according to the 2005 version of Article 26 of the OECD Model Convention;
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combating harmful tax practices in accordance with the 1998 Council Recommendation and related reports;
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eliminating double and unintentional non-taxation through the development and implementation of International VAT/GST Guidelines designed to encourage greater coherence and clarity when applying consumption taxes to international transactions.
The Committee has agreed that input should be sought from business and NGOs in the process of assessing how far the applicant countries meet the core principles set out above and, in particular, in their application. Information received through this process may inform the OECD discussions with the countries concerned but no information relevant to the submitter’s identity will be passed on.
The Business & Industry Advisory Committee and Trade Union Advisory Committee have already been asked to provide input and the Secretariat will be pleased to receive any other input in respect of the adherence of the potential accession countries to any of these principles, preferably by 30 June 2008. These should be emailed to Katherine.Perkins@oecd.org and marked CFA Enlargement Reviews: [Name of Country].
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