Reports

In a global economy where multinational enterprises (MNEs) play a prominent role, governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country reflects the economic activity undertaken therein. For taxpayers, it is essential to limit the risks of economic double taxation. The OECD Transfer Pricing Guidelines provide guidance on the application of the 'arm’s length principle', which is the international consensus on the valuation of cross-border transactions between associated enterprises. This January 2022 edition includes the revised guidance on the application of the transactional profit method and the guidance for tax administrations on the application of the approach to hard-to-value intangibles agreed in 2018, as well as the new transfer pricing guidance on financial transactions approved in 2020. Finally, consistency changes have been made to the rest of the OECD Transfer Pricing Guidelines. The OECD Transfer Pricing Guidelines were approved by the OECD Council in their original version in 1995.

This policy brief on the social economy and its contribution to the circular economy was produced by the OECD and the European Commission. The brief defines concepts of both the circular and social economy and describes the potential of the social economy to support circular activities and related business models and to reinforce uptake of circularity in our economies and societies. It finally identifies policy orientations that build on the complementarity of the social and circular economies, and help the social economy support circularity and drive a green and inclusive transition.

This report assesses the enabling conditions for maximising the benefits of foreign direct investment (FDI) on SME productivity and innovation in Portugal. It looks at the quality of investment that Portugal attracts and the capacity of Portuguese SMEs to benefit from any knowledge and technology spillovers resulting from these investments. It studies the extent to which FDI-SME spillovers occur through value chain linkages, strategic partnerships, labour mobility, competition and imitation effects. The report provides an overview of Portuguese public institutions responsible for investment, SMEs, innovation and regional development policies, taking a close look at arrangements to ensure multi-level policy coordination, stakeholder consultation and evaluation of policy impacts. It then reviews the mix of government policies that are currently in place to support FDI-SME linkages and spillovers, noting areas for further policy reforms. The last chapter introduces a regional lens, focusing in particular on the regions of Norte and Alentejo. This report is part of a broader European Commission-OECD programme on strengthening FDI-SME linkages and serves as a pilot for future country assessments.

This paper aims to help policy makers understand and improve the conditions for firms to thrive in an increasingly digital economy where data has become an important resource for innovation. The paper: 1) analyses trends in the adoption of information and communication technologies and activities that enable firms to collect, store and use data, including big data analysis (BDA); 2) provides new evidence from micro-econometric analysis of firms’ BDA and innovation in products, processes, marketing and organisation, considering different types of data used for BDA; 3) examines business models of firms that successfully innovate with data; and 4) discusses policies that can help improve the conditions for all firms to go digital and tap into the potential of data for innovation.

The COVID-19 crisis has triggered a major shift towards telework and virtual interactions. This paper uses information on job postings from the online job site Indeed to analyse developments in the adoption of telework across 20 countries. It finds, first, that the incidence of advertised telework almost tripled during the pandemic, albeit with large differences both across sectors and across countries. Second, cross-country differences are to a notable extent explained by differences in the extent to which governments restricted mobility during the pandemic. However, while the tightening of restrictions substantially raises advertised telework, their easing only modestly reverses the increase. Third, digital preparedness plays an important role in mediating the response of advertised telework to changes in restrictions. The tightening of restrictions has particularly large effects in sectors that are better prepared to adopt digital business models, while their easing has almost no effect in countries with high-quality digital infrastructure. Overall, these results suggest that telework is here to stay, especially in countries with high levels of digital preparedness. Public policies will need to adapt to reap the potential benefits for productivity and worker well-being.

This study provides an in-depth assessment of Spain’s innovation system and the current state of knowledge transfer and collaboration. It identifies five priority areas for reform and long-term investment that should provide the basis of a new Roadmap. These include granting greater operational autonomy to universities and public research organisations in return for accountability on outcomes, putting in place a better integrated system of incentives that takes both individuals and organisations into account, and ensuring sustained investment in core capabilities to connect science and business. To put these reforms in motion and sustain them over time, a new type of covenant between science and society is needed in Spain today. This should be based on a ‘new deal’ between actors in the science and innovation system and society at large, committing to place the pursuit of concrete social benefits in return for more stable and predictable support.

This Review assesses Ukraine’s investment climate vis-à-vis the country’s energy sector reforms and discusses challenges and opportunities in this context. Capitalising on the OECD Policy Framework for Investment and other relevant instruments and guidance, the Review takes a broad approach to investment climate challenges facing Ukraine’s energy sector. It covers investment trends, the current policy and regulatory framework, the legal and institutional framework for investment protection, investment promotion and facilitation, public governance, energy infrastructure and policies relating to promoting and enabling responsible business conduct. The analysis and recommendations in the Review can help policy makers strengthen the enabling conditions for investment in Ukraine’s energy sector.