Tax in a Borderless World: The Role of the OECD

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Tax in a Borderless World The Role of the OECD
IRS/George Washington University 20th Annual
International Tax Conference Washington December
13 14, 2007 By Jeffrey Owens, Director Centre
for Tax Policy and Administration OECD www.oecd.or
g/ctp
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The OECD

• Membership 3 NAFTA, 4 Asian-Pacific countries
  and 23 European countries
• Setter of soft and occasionally hard rules
• A forum for discussing the economic and social
  challenges of interdependence and globalisation
• A provider of comparative data, analysis and
  forecasts to underpin multilateral co-operation

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The Committee on Fiscal Affairs
What are we?
A forum for senior policy makers and
administrators
What do we cover?
All international and related domestic tax issues

• Biannual meeting
• Eight subsidiary bodies
• Centre for Tax Policy and Administration

How are we organised?
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The Committee on Fiscal Affairs
Subsidiary Body Area of responsibility
Working Party N1 Tax Conventions and Related Questions
Working Party N2 Tax Policy Analysis and Tax Statistics
Working Party N6 Taxation of Multinational Enterprises
Working Party N8 Tax Avoidance and Evasion
Working Party N9 Consumption Taxes
Forum on Harmful Tax Practices Addresses anti-competitive tax practices and is working with tax havens to improve transparency and to establish effective exchange of information
Forum on Tax Administration Focuses on taxpayer service and compliance
Board for Co-operation with Non-OECD Economies Has the responsibility of supervising the alignment between the co-operation programmes with NOEs and the core interests and expertise of the CFA
Working Parties N 3, 4, 5, 7 were abolished
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The Centre for Tax Policy Administration

• Forty plus professionals grouped into 5
  divisions
• Treaties/Transfer Pricing
• International Co-operation Tax Policy
• Tax Administration Outreach

What are we?

• First Draft of reports for the CFA
• Advise other parts of OECD on tax related
  issues (e.g R D)
• Assist governments in their tax reforms
• Co-ordinate with other international
• organisations

What do we do?
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Major outputs of the CFA

• Model Tax Convention
• Transfer Pricing Guidelines
• Standards on Exchange of Information
• Best Practices Guidelines in Tax Administration
• International VAT/GST Guidelines
• Comparative Analysis and Statistics on Tax Levels
  and Structures
• Anti-Bribery Convention

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How governments participate in the OECDs work

• Country ambassadors form Council of Ministers who
  set overall policy
• Senior tax policy-makers and administrators are
  delegates to CFA
• Technical experts (e.g. from Treasury and IRS)
  are delegates to subsidiary bodies
• Joint secretariat / government experts seminars
  with non-Member countries

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How do issues get onto the OECDs tax agenda?

• Politicians (Secretary-General meets Ministers,
  annual ministerial, sector ministerials) e.g. tax
  and growth
• CFA delegates e.g. attribution of income to
  permanent establishment, business restructuring
• Business (BIAC, associations, individual
  companies) e.g. arbitration, CIV/REITS

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Business participation in OECDs tax work

• Business and Industry Advisory Committee to the
  OECD (BIAC)
• United States Council for International Business
  (USCIB)
• TAGs, BAGs, etc.
• Discussion drafts
• Public consultations

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Limited Membership, Global Reach

• Global guidelines need global acceptance
• To assist in the development of their tax
  systems

Why involve NOEs ?

• Observers
• Developing partnerships
• Multilateral, regional and in-country
  programmes
• Over 600 events with NOEs including around
  14,000 officials

How ?

• Twenty-five NOEs set out position on Model.
  Many NOEs basing transfer pricing legislation
  on 1995 Guidelines
• A more coherent global tax environment
• for MNEs

Outcomes
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Enlarging the OECD

• Current 30 Member countries account for
• 60 plus of worlds GDP
• 70 plus of inward and outward investment

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The Next Wave

• The five applicants Estonia, Slovenia, Israel,
  Chile and Russia
• A 2-5 year process
• And at the same time enhancing our involvement
  with the BIICS (Brazil, India, Indonesia, China,
  South Africa) with a view to possible accession
• Continued deepening of partnerships with many
  other NOEs

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Candidate countries should committo the
following core tax principles

• Eliminating international double taxation through
  complying with the key substantive conditions
  underlying the OECD Model Tax Convention
• Eliminating double taxation through ensuring the
  primacy of the arms length principle, as set
  forth in the OECDs Transfer Pricing Guidelines

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Candidate countries should commit to the
following core tax principles (2)

• Engaging in effective exchange of information
• Combating harmful tax practices
• Eliminating double taxation through the
  development and implementation of International
  VAT/GST Guidelines.
• Overall accession process provides opportunity to
  achieve greater convergence with OECD core
  principles

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The OECD in 2020

• All major economies
• Represented on all continents
• Accounting for 80 of worlds GDP/Foreign Direct
  Investment

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How can we respond to these pressures?

• (i) Providing rules on whats acceptable /
  unacceptable tax practices to attract activities
• (ii) Achieving a deeper understanding by
  governments of new business models and by
  business of the concerns of governments
• (iii) Intensifying co-operation between
  governments to improve international tax
  compliance and enhancing the relationship between
  taxpayers and revenue bodies

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How can we respond to these pressures (2)?

• (iv) Achieving greater consistency in
  implementation of guidelines, models, etc.
• (v) Identifying best practices in tax
  administration
• (vi) Developing an OECD set of guidelines on VAT
• (vii) Providing more comparative analytical
  material to inform the political debate on tax
  reform