Tax policy

Raising tax revenues with a view towards sound public finances and supporting inclusive growth is a perennial challenge and particularly difficult in an era of rising spending needs and pressure on traditional tax bases. Progress in domestic resource mobilisation is a prerequisite for sustainable development and features among the sustainable development goals (SDGs). Measuring progress in this area is essential to countries as they seek to address profound challenges, both domestic and international.

The taxation of business profits has come under rising pressure as globalisation and expanding use of intangibles have increased risks of corporate tax avoidance by multinational enterprises and increased pressure on the international tax system as a whole. The agreement on a Global Minimum Tax will mitigate adverse effects.

Going beyond general principles, customized country work is needed to support countries with tax policy reform that meets revenue mobilization, economic growth and distributional effects to the greatest possible extent given local economic and social circumstances and tax policy and tax administrative capacities.

Through country-specific tax policy, the OECD assists countries around the world in facing the impact of structural trends (ageing, automation, globalisation, rising inequality, climate change) and low- and middle-income countries in reaching the Sustainable Development Goals and to put the financing of crucial spending items (such as social protection and the education system) on a solid financial footing. Country-specific work extends to tax and informality, social protection financing, tax expenditure analysis and tax policy capacity building.

In view of recent evidence of high and rising income and wealth inequalities and of growing calls for action, the potential role of taxation – in concert with other policy levers – in addressing inequalities is a core area of the OECD’s tax policy work. This workstream assesses how different forms of personal income and assets are taxed, considers potential trade-offs between inequality-reducing objectives and other policy goals (e.g. supporting growth), and investigates the impact of structural changes including automation, artificial intelligence, ageing, and rising cross-border mobility on tax systems. Particular attention is paid to the taxation of high net worth individuals (HWNIs) and the need for international policy coordination to effectively address tax policy challenges.