Globalization, international tax policy and the OECD

Abstract

The chapter addresses the central role of the OECD in the globalization of tax policymaking. The OECD has developed international tax standards since the mid-20th century. It designed and promoted to both members and non-OECD member countries, a model for bilateral tax treaties and provided resources to continuously improve and adapt it to new issues. Since then, a network of over 3000 bilateral treaties has become the basis of today's international tax system. However, these treaties do not address the problem of tax competition among governments seeking ways to attract capital and investment. The international tax regime has proven very robust over the past 40 years despite increasing failures to deal with tax evasion or avoidance, the financialization of the economy and the exponential growth of digital economy. It was not until the 2010s, after the financial crisis, that the OECD initiated a more ambitious Base Erosion and Profit Shifting (BEPS) project. The BEPS project culminated in 2019 with proposals for a global minimum tax and the allocation of taxing rights to market jurisdictions. Latulippe points out that the OECD’s tax policy analysis and recommendations remain embedded within the economic liberalization discourse and comprise intrinsic limits for the participation of all stakeholders. Furthermore, even if implemented, these recent proposals will be limited to solve some issues related to the taxation of multinationals and leave other issues also requiring international coordination, such as wealth taxation and environmental taxation, untouched.