OECD

The Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD’s core mission is to promote policies that improve economic and social well-being worldwide.

In the context of taxation, the OECD plays a pivotal role in shaping international tax standards, primarily through its OECD Model Tax Convention and the Transfer Pricing Guidelines. The OECD Model Tax Convention serves as a framework for negotiating bilateral tax treaties, aiming to eliminate double taxation and prevent tax evasion. The Transfer Pricing Guidelines set principles for multinational enterprises (MNEs) and tax administrations to ensure transactions between related entities are conducted at arm’s length.

The OECD has also been instrumental in addressing base erosion and profit shifting (BEPS), which refers to tax planning strategies used by multinational companies to exploit gaps in tax rules and shift profits to low-tax jurisdictions. The BEPS Project, initiated in 2013, resulted in 15 Actions aimed at modernising the international tax framework to ensure fair and transparent taxation.

The OECD’s work is highly influential, impacting national tax laws and the policies of various global institutions, including the G20. The OECD’s initiatives, such as the Inclusive Framework on BEPS and the Global Anti-Base Erosion (GloBE) Rules under Pillar Two of the BEPS 2.0 project, are reshaping the international tax landscape. These frameworks ensure countries adopt minimum standards for tax governance and discourage harmful tax practices.

The OECD’s policies and reports often serve as benchmarks, with nations tailoring domestic tax laws based on its recommendations. Despite its significant influence, the OECD is not without controversy. Some critics argue that the OECD’s initiatives disproportionately favour developed countries, neglecting the tax policy needs of developing economies. Nevertheless, the OECD remains a crucial entity in international tax governance, fostering dialogue and promoting cohesive policies.

OECD Website