As SOEs operate at the intersection of the state and markets, governments face the challenge of balancing public policy objectives with the need to ensure a level playing field. This chapter examines the regulatory and tax treatment of SOEs, as well as state support and financing arrangements, and how these affect competitive neutrality. It also considers how public service obligations and dividend policies apply to SOEs and shape the relationship between SOEs and the state in its capacity as shareholder.
Ownership and Governance of State‑Owned Enterprises 2026
Abstract
SOEs play a significant and growing role in the global marketplace, operating in competitive markets alongside private companies, making the conditions under which they compete an important determinant of market outcomes and fair competition. While governments legitimately provide SOEs with specific mandates, support or legal arrangements to pursue public policy objectives, these measures can also influence competitive conditions if they are not well designed. This chapter seeks to examine how jurisdictions balance commercial and non-commercial objectives by analysing the regulatory, financial and governance frameworks that shape the market environment in which SOEs operate. In this context, several cross-country trends can be observed:
Regulatory and tax advantages for SOEs remain in some jurisdictions. Only 57% of respondents report that SOEs are subject to the same regulatory and other legal requirements as private firms, compared to 71% reporting the same tax treatment. Exemptions concern areas such as bankruptcy, public procurement, competition and regulatory rules, and they are typically linked to sector-specific mandates or the fulfilment of public service obligations. Insolvency frameworks are an exception, with some providing tailored arrangements or additional protections to safeguard the continuity of essential services.
Commercial SOEs rely extensively on market-based financing, while government subsidies and other forms of state support may also be provided. Commercial SOEs are predominantly financed through retained earnings, commercial lending and capital market instruments, while many jurisdictions also provide targeted forms of support, including capital injections and government subsidies, often linked to public policy mandates. Although broad disclosure frameworks exist in many jurisdictions, they do not always provide clear information on the more detailed or indirect forms of state support, which can make it difficult to identify the volume of support and mechanisms in place, and to help maintain a level playing field.
Public service obligations (PSOs) are supported by a range of mandates and compensation arrangements, though implementation remains uneven. Approximately half of respondents calculate compensation on the basis of incurred costs, helping to improve transparency and reduce the risk of distortive cross-subsidisation. However, compensation arrangements are not always governed by formal or clearly defined mechanisms, with some continuing to rely on indirect forms of support or other approaches to financing PSOs.
Dividend policies, capital structures and rate‑of-return targets vary in their design and application across jurisdictions, which may affect SOE level playing field considerations. Most jurisdictions have established dividend policies, while 32% apply minimum payout requirements. A smaller group (16%) explicitly links dividend decisions to capital structure considerations, balancing returns to the state with SOEs’ investment needs and long-term financial sustainability. Nearly half of jurisdictions report that SOEs are not subject to rate‑of-return targets, though where they apply, they are more often set by the state (36%) or approved by it (18%), rather than being determined by SOE boards.
3.1.1. Regulatory treatment of SOEs
A central element of competitive neutrality is ensuring that SOEs operate under regulatory conditions comparable to those faced by private firms. Survey results indicate that many participating jurisdictions aim to achieve this in practice. However, only 57% report that SOEs are generally not granted exemptions from competition law, including antitrust rules and merger control, as well as insolvency law, procurement, bankruptcy procedures, or related regulatory frameworks (Table 3.1). Where exemptions exist, they most often relate to the specific roles or functions performed by SOEs. In particular, they cluster around sector-specific responsibilities and may be designed to be ownership-neutral. For example, in Austria, India, Indonesia, Morocco and Spain, regulatory exemptions are associated with the provision of universal service obligations or other sector-specific mandates, but these apply in markets where SOEs play a dominant role.
A slightly different pattern emerges in the area of insolvency and bankruptcy, where exemptions are linked to national security considerations or broader strategic interests that underpin state ownership. This is particularly evident in jurisdictions where SOEs operate in defence, critical infrastructure, energy, or transport sectors, including Croatia, Israel and Poland. In Israel, for example, certain SOEs providing essential or security-sensitive services may be subject to restrictions on liquidation or restructuring, with state approval required to safeguard national interests. Similarly, in Poland, entities carrying out statutory public tasks or operating in strategic sectors may benefit from modified insolvency arrangements under sector-specific legislation.
Comparable considerations apply where SOEs provide critical or essential services, for which the application of standard bankruptcy rules could risk service continuity. In some cases, this results in explicit legal exclusions from bankruptcy frameworks. For example, Brazilian bankruptcy law excludes SOEs from bankruptcy proceedings. When an SOE becomes commercially unviable, the courses of action available to the state may include, among others: (i) providing budgetary transfers, which may result in the SOE being treated as dependent on the National Treasury; (ii) winding up and liquidating the entity; or (iii) proceeding with privatisation. These alternatives are not prescribed by the bankruptcy law itself. Selected examples of exemptions across different areas of law are summarised in Table 3.2.
More broadly, these exemptions can often be linked to the pursuit of specific public policy obligations assigned to SOEs (further discussed in Section 3.3). In such contexts, differentiated or tailored regulatory treatment may be necessary. For example:
When SOEs deliver essential public services or maintain critical infrastructure, applying insolvency or bankruptcy procedures could cause abrupt service interruptions and threaten continuity of supply, even when such services may not be commercially viable.
When SOEs operate under statutory obligations, such as universal service or guaranteed access mandates (ensuring universal access to key utilities, postal and telecommunications services), they may require legal provisions different from those governing private firms.
While exemptions may be justified in defined circumstances, they also involve well-known risks. Exemptions from insolvency or bankruptcy can weaken hard budget constraints. They may reduce managerial discipline and create expectations of state support. These effects can distort markets and may create fiscal risks for the state. Transparent and well-designed arrangements are essential to maintain competitive neutrality.
Note: The sample comprises 58 jurisdictions. Multiple responses were allowed. In some cases (e.g. Switzerland), responses may span otherwise mutually exclusive categories, reflecting differences in the treatment of specific SOEs. The categories distinguish between different areas in which SOEs may be exempted from rules or receive differential treatment: antitrust law and merger control refers specifically to exemptions from rules governing anti-competitive conduct (e.g. cartels, abuse of dominance or market sharing) and the review of mergers, acquisitions and joint ventures; competition law captures broader exemptions from the general competition framework that are not specifically covered by antitrust or merger control; the regulatory environment concerns exemptions or preferential treatment under other general or sector-specific rules governing firms’ market activities, rather than competition law itself; bankruptcy and insolvency laws concern differential treatment when an SOE experiences financial distress, including exemptions from ordinary insolvency procedures or protection through soft budget constraints; public procurement concerns differential treatment specifically in the rules and procedures governing participation in, and the award of, public contracts; and other favourable treatment captures advantages not falling within any of the preceding legal or regulatory categories, such as preferential or subsidised access to energy, water, land or other inputs.
KEY
■ A Antitrust law and merger control
■ B Competition law (other than antitrust and merger control)
■ C Regulatory treatment
■ D Bankruptcy and insolvency
■ E Public procurement
■ F Other
■ G No exemptions
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Among the jurisdictions that do grant exemptions, whether linked to the provision of a specific PSO or for other reasons, a substantial share adopt these exemptions through both legislative processes and administrative decisions (44% overall) (Figure 3.1). Establishing exemptions through a clear legal basis, coupled with sufficient public accessibility, helps ensure that they are subject to appropriate scrutiny and are transparent and accountable to other market participants. It can also limit administrative discretion and reduce the risk that exemptions are granted on an ad hoc basis, thereby supporting greater predictability and a more level playing field. In Morocco, for example, exemptions are subject to review by independent oversight bodies to ensure compatibility with competition law principles. By contrast, Saudi Arabia relies exclusively on administrative decisions to implement such exemptions.
Note: The sample comprises 57 jurisdictions (Chile not included). Percentages may differ slightly due to rounding.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
3.1.2. SOE tax exemptions
Similar to regulatory exemptions, explicit tax exemptions for SOEs are relatively uncommon. Survey results indicate that most SOEs are subject to the general corporate income tax regime (Figure 3.2). Ownership-based exemptions are rare, but advantages may still arise through other channels. As the survey responses show, these can be grouped into three main categories: (i) sector- or activity-based tax provisions, (ii) compensation for PSOs, and (iii) institutional or legal-form-related treatment.
Note: The sample comprises 58 jurisdictions. Those reporting tax advantages for SOEs may be represented in more than one category.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
SOEs may benefit from sector-specific provisions that provide tax relief in sectors such as energy, transport and utilities. These measures are typically embedded in sector legislation and their design varies across jurisdictions. For example, in the energy sector, relief may include excise or VAT exemptions on inputs used for electricity generation, district heating or strategic reserves. In transport, common measures include reduced VAT rates for passenger services, duty-free treatment of fuel for international aviation and shipping, and exemptions from registration or stamp duties for essential services. In utilities, measures may include property tax abatements for network assets, accelerated depreciation for safety or environmental investments, and exemptions from local levies for universal service infrastructure.
Sector-specific provisions are generally available to all operators in the sector and are neutral in design. However, where SOEs dominate specific markets, they may capture a disproportionate share of the benefits. Exemptions may be justified in cases of overriding public policy objectives, especially where there may be market failures or other public interest objectives (e.g. energy access or social goals) (OECD, 2025[2]). This is observed, for example, in Thailand, where renewable energy projects are eligible for a range of incentives, including corporate income tax exemptions. Given the prominent role of state‑owned companies such as the national electricity producer Electricity Generating Authority of Thailand and its subsidiaries in the power sector, they may benefit alongside private developers from these measures.
Differences in tax treatment may also reflect the institutional characteristics or legal form of SOEs. In some jurisdictions, certain SOEs operate outside the corporate income tax system due to their legal status. For example, in the United Kingdom, corporation tax generally applies to government-owned entities that are legally separate from the Crown, while bodies that form part of the Crown may fall outside its scope. In Australia, many SOEs are similarly exempt due to their close link to government. To address potential distortions, Australia has introduced a National Tax Equivalent Regime (NTER), which applies a tax-equivalent framework to ensure that commercial SOEs operate on a comparable basis with private firms (Box 3.1).
Overview
Australia’s NTER is a framework applied to state and territory SOEs to ensure they face tax obligations comparable to those of private sector firms. While participating SOEs do not pay federal income tax directly to the Australian Taxation Office, they calculate a tax-equivalent liability under federal income tax rules and pay the equivalent amount to the relevant state or territory government. The primary objective of the NTER is to promote competitive neutrality by ensuring a broadly uniform application of income tax laws between SOEs and their privately held counterparts.
Legal and administrative framework
The NTER is based on two core components:
federal income tax laws, which provide the baseline rules
targeted modifications, set out in the NTER Manual, to reflect the specific characteristics of public sector entities (e.g. government ownership, historical tax treatment and unique activities).
These modifications ensure that the regime is both consistent with national tax principles and adaptable to the public sector context.
Compliance requirements
SOEs must comply with the NTER Manual under relevant state or territory legislation or instruments. They are required to calculate taxable income using tax law principles rather than accounting profit models.
Source: Australian Taxation Office (2025[3]), Manual for the National Tax Equivalent Regime, https://www.ato.gov.au/law/view/pdf/rmp/nter0001.pdf.
Despite such indirect differences in tax treatment, there is greater alignment among jurisdictions in terms of how tax regulations apply (Figure 3.3). Since 2021, more respondents have removed tax advantages for SOEs, while improving consistent application of tax law to both SOEs and private companies. In part, this shift may be explained through responding jurisdictions allowing fewer exceptions and waivers to be made on an ad hoc basis, and by exceptions being more commonly codified in the above‑mentioned sectoral policy or legal frameworks related to the fulfilment of specific service obligations.
Note: The sample comprises 58 jurisdictions in 2026, 55 in 2024 and 53 in 2021. Differences in category classifications may partly reflect changes in the response options across survey editions. Although jurisdictions could select multiple options in the 2026 sample (Figure 3.2), the results are presented here as mutually exclusive categories.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance; OECD (2024[4]), Ownership and Governance of State-Owned Enterprises 2024, https://doi.org/10.1787/395c9956-en.
3.2.1. SOE financing
The pursuit of state‑defined mandates by SOEs can lead to market distortions where financing of such mandates or related state support is provided in a disproportionate or non-transparent manner. Survey results indicate that state ownership continues to influence the financial conditions under which SOEs operate, although the extent and nature of this influence vary significantly across jurisdictions. The findings suggest that SOEs draw on a broad mix of market-based financing and other sources, and that disclosure practices related to state support are uneven. These patterns highlight ongoing efforts in many jurisdictions to strengthen transparency and align SOE financial arrangements with market-based principles, while also underscoring areas where practices remain fragmented or where further clarification of expectations may be required.
SOEs draw on a broad range of financing sources (Table 3.3). Almost all respondents encourage SOEs to rely on their balance sheet earnings and internal cash flows. Market-based financing mechanisms are also widely used, including issuing debt on bond markets and obtaining commercial bank loans. In jurisdictions with well-developed capital markets, commercial and larger SOEs may also be listed on stock exchanges to facilitate access to equity capital and broaden the investor base.
However, state ownership can also provide access to financing channels that are not available to private companies. Among the surveyed jurisdictions, approximately two‑thirds provide SOEs with government subsidies (or other forms of state support), typically to support PSOs and in line with domestic regulations and legislation. While state support measures, such as subsidies, may be granted to both SOEs and private companies alike, SOEs benefit from the stability associated with the state as a long-term owner, which may result in both implicit and explicit advantages. Implicit or explicit state backing can materially affect SOEs’ funding costs (e.g. through lower interest rates) and risk‑taking by creating expectations of state guarantees, especially for systemically important enterprises. Moreover, state support, notably recapitalisations and government guarantees on loans, may soften hard‑budget constraints and distort competition if not provided on market-consistent terms.
Note: The sample comprises 57 jurisdictions (France not included). Multiple responses were allowed.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
In the European Union (EU), member states must comply with EU state aid rules, which prohibit preferential support to SOEs that could distort competition in the internal market. Capital injections or other forms of support are permitted only when they qualify as compensation for services of general economic interest (SGEI) and are assessed on a case‑by-case basis. For example, the Spanish public broadcaster RTVE receives annual public funding that is evaluated under the state aid framework as compensation for delivering public broadcasting services.
3.2.2. Disclosure of state support
Disclosure of state support remains uneven across jurisdictions, although a general trend towards more systematic reporting is emerging. Among the respondents (Figure 3.4), approximately two‑thirds report that both the state and the SOE provide such disclosure. In a further 22% of jurisdictions, state support is disclosed exclusively in SOE financial statements.
Where disclosure is made at the SOE level, the applicable requirements often depend on the accounting standards used by the enterprise. SOEs may report under the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) or a national accounting standard that closely aligns with IFRS. In particular, IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance) provides guidance on the recognition, measurement and presentation of government grants, including subsidies, forgivable loans, and grants related to income or assets. Where SOEs apply IFRS or an aligned national accounting standard, such assistance is disclosed in line with these standards.
Note: The sample comprises 58 jurisdictions.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
OECD data indicate that state support, including indirect forms such as below-market borrowings, relative to firm revenue tends to increase with the extent of state ownership, with SOEs generally receiving more support than their private competitors (OECD, 2024[5]). A few respondents indicate that the government discloses grants or other financial transfers to SOEs as part of fiscal budget reporting. Disclosure of state support is typically made as part of a budget annex, a public asset register or an annual aggregate report on the SOE portfolio. However, some forms of support may be more challenging to measure and may remain unreported, particularly indirect support channelled to or via SOEs (e.g. where SOEs benefit from or provide below-market financing, guarantees or other below-cost inputs to other SOEs or firms).
Because PSOs reflect the policy rationales underpinning state ownership, they can influence how SOEs operate and are treated in the marketplace. PSOs represent essential services that may be delivered by SOEs, but also by other service providers such as government agencies, the private sector or specialised entities (Figure 3.5). Since PSOs are generally not sufficiently supplied by the market, their fulfilment (whether by SOEs, government agencies, or other service providers) requires appropriate compensation.
Source: OECD (2024[6]), OECD Guidelines on Corporate Governance of State-Owned Enterprises, https://doi.org/10.1787/18a24f43-en.
Jurisdictions communicate PSOs to SOEs through a range of mechanisms. The most common channels include government decrees, regulations or administrative orders; formal contracts or performance agreements between the state and the SOE; and provisions contained in the SOE’s founding legislation or bylaws. A smaller share of respondents set expectations on their PPOs and PSOs through high-level national strategic or development plans. Among those respondents who choose an “Other” channel to communicate objectives and obligations, a number use letters of expectations. Letters of expectations are sometimes disclosed on SOE webpages, as is the case for Romania, while in other jurisdictions they are not always publicly accessible. Such letters are also frequently used to communicate more specific key performance indicators (KPIs) (OECD, 2026[7]). A per-country breakdown of information can be found in Table 3.4.
Note: The sample comprises 57 jurisdictions (Hungary not included). Multiple responses were allowed.
KEY
■ A By SOE bylaws, articles of association or founding legislation
■ B Through a government decree, regulation, or administrative order
■ C Through a formal contract or performance agreement between the state and the SOE
■ D Through strategic plans adopted by the government
■ E Informally communicated without a written record
■ F Other
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
3.3.1. PSO compensation
Overall, accounting separation for public service obligations (PSOs) is common but not universal. The largest group indicates that SOEs maintain fully separate accounts for their commercial and non-commercial activities, while the remainder report no accounting separation. Compensation arrangements are more varied. Roughly half of respondents report having a direct compensation mechanism between the state and SOEs delivering PSOs. In such cases, compensation is determined using clear and formal costing methodologies, generally based on SOE financial reports and the net costs incurred in fulfilling the PSO. By contrast, 9% rely on indirect or informal arrangements, such as tax rebates, reduced dividend payments or cross-subsidisation from profit-making to loss-making activities (Table 3.5 and Figure 3.6).
Note: The sample comprises 58 jurisdictions. Multiple responses were allowed.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Several jurisdictions continue to face difficulties in applying accounting separation systematically across the SOE sector. This remains a challenge even in EU member states, where government support to SOEs must comply with EU state aid rules and be assessed against its potential impact on the single market. Without separate accounts, determining and monitoring the actual cost of PSOs becomes more difficult, increasing the risk of inaccurate compensation and cross-subsidisation between commercial and non-commercial activities (OECD, 2026[7]). In particular, the absence of accounting separation may lead to compensation being based on estimated, rather than the actual costs of delivering PSOs, resulting in over- or under-compensation and potentially distorting the level playing field.
Note: Canada is not included. In some jurisdictions, compensation arrangements vary across SOEs, sectors or types (e.g. in Switzerland and Thailand), and more than one compensation type may be applicable. Not applicable applies where, based on the reported practices, no requirements exist to compensate SOEs for fulfilling PSOs. Other applies where such requirements exist but the compensation arrangements do not fit the specified response categories.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Dividends represent an important source of fiscal revenue for governments, especially against the background of constrained public finances. However, given the volatility of corporate profits and different long-term enterprise investment needs, dividend policies should carefully balance the financing and investment needs of SOEs with adequate returns to the state budget. Jurisdictions commonly fall into three main models: (i) explicit minimum payout ratios, (ii) broad but non‑binding guidelines, and (iii) frameworks linked to optimal capital structure (OECD, 2024[8]).
Most jurisdictions have dividend policies for SOEs, though their scope varies. These policies are typically limited to broad guidance (49%), with 16% linking dividends to optimal capital structure. Thirty-two per cent of jurisdictions implement minimum dividend payout levels, whereby the state mandates SOEs to distribute a fixed percentage of net profit irrespective of the company’s capital requirements or investment pipeline. Table 3.6 offers a detailed breakdown of dividend policies per country, and Table 3.7 covers specific examples of each category. Most respondents (60%) report that the state, as owner, discloses dividend policies, while 37% indicate that SOEs also disclose them. In other jurisdictions, dividend policies are either unavailable or not applicable.
Note: The sample comprises 57 jurisdictions (Hungary not included). Multiple responses were allowed. This table categorises jurisdictions according to their main dividend policy approach, though specific rules may vary in their design and implementation, including the use of minimum payout thresholds, forecasting requirements, exceptions, and other legal safeguards.
KEY
■ A Broad guidelines
■ B Explicit minimum share of net profit
■ C Linked to optimal capital structure
■ D No guidelines or targets
■ E Other
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
Rate‑of-return (RoR) targets, while relatively uncommon in practice, can serve as an important instrument for instilling capital discipline in SOEs. By establishing minimum expectations for financial performance, government owners can encourage more efficient and financially sustainable operations. In turn, this helps ensure that investment decisions are grounded in economic viability and not purely based on policy considerations. Regarding RoR targets for SOEs, 36% report that these targets are set directly by the ownership entity or the government (Figure 3.7). This may indicate an effort to align financial expectations with PSOs, which often require careful calibration alongside compensation mechanisms.
Note: The sample comprises 55 jurisdictions (Chile, France and Hungary not included). Multiple responses were allowed.
Source: OECD (2026[1]), OECD Survey on State Ownership and Corporate Governance.
In some jurisdictions, such as Norway and South Africa, the state communicates an expected minimum or required RoR. Others, such as Lithuania, adopt a more flexible approach by setting target ranges based on historical performance and sectoral benchmarks. Only 9% of jurisdictions report that RoR targets are determined by SOE boards without requiring further approval from the state owner. In jurisdictions such as Sweden and the United Kingdom, the state plays a more indirect role, with RoR targets emerging through ongoing dialogue between SOE boards and shareholders. In some cases, such as Ireland, the mechanisms for setting RoR targets may differ depending on the regulatory and/or governance arrangements applicable to each SOE.
References
[3] Australian Taxation Office (2025), Manual for the National Tax Equivalent Regime, https://www.ato.gov.au/law/view/pdf/rmp/nter0001.pdf.
[1] OECD (2026), “OECD Survey on State Ownership and Corporate Governance”.
[7] OECD (2026), “Public policy objectives of state-owned enterprises”, OECD Business and Finance Policy Papers, No. 103, https://doi.org/10.1787/d85445e4-en.
[2] OECD (2025), State‑Owned Enterprises and Sustainability: Leading by Example, OECD Publishing, https://doi.org/10.1787/c99c7ef0-en.
[8] OECD (2024), Dividend payments by state-owned enterprises: Policies and practices, OECD Publishing, https://doi.org/10.1787/975b5e78-en.
[6] OECD (2024), OECD Guidelines on Corporate Governance of State-Owned Enterprises, OECD Publishing, Paris, https://doi.org/10.1787/395c9956-en.
[4] OECD (2024), Ownership and Governance of State-Owned Enterprises 2024, OECD Publishing, https://doi.org/10.1787/395c9956-en.
[5] OECD (2024), Quantifying the role of state enterprises in industrial subsidies, OECD Trade Policy Paper No. 282, https://doi.org/10.1787/49f39be1-en.