Nick Shaxson ■ OECD invites developing countries to join anti-tax avoidance plan, but only after the rules have been written


From the Financial Transparency Coalition, of which TJN is a member.

OECD invites developing countries to join anti-tax avoidance plan, but only after the rules have been written

The OECD’s plan to open the BEPS system to developing countries after it has already been designed highlights the need for a truly universal tax body

Ahead of this week’s G20 Finance Ministers meeting, the Organization for Economic Cooperation and Development announced plans to invite non-member countries to join in its anti-tax avoidance system. The Base Erosion and Profit Shifting (BEPS) project aims to tackle the problem of corporate tax dodging. Although the invitation for inclusion comes as the global discussion about tax dodging reaches new heights, the bones of the plan have been in place for years, leaving no room for substantive input.

“Inclusion after the fact is a poor substitute for a voice in how the standards are designed,” said Oriana Suárez of the Latin American Network on Debt, Development, and Rights. “Developing countries now being invited into the BEPS system did not have a say while the rules were being set.”

“The OECD is certainly one part of the global fight against tax evasion and tax avoidance, but it’s not well-positioned to be the sole standard bearer for the globe,” added Porter McConnell of the Financial Transparency Coalition. “Having its members speak on behalf of the rest of the world’s countries is patronizing and it’s ultimately ineffective.”

“Again, we’re seeing an attempt by the OECD to get global buy-in for a system that was designed by the few,” said Alvin Mosioma of the Tax Justice Network – Africa. “G77, a group of 134 developing countries, have for years been demanding a stronger voice and a true seat at the table, but the latest OECD proposal fails to respond to this demand.”

“The frustrating reality is that we’ve already seen proposals to create an inclusive intergovernmental UN body for setting global standards, but it has repeatedly been blocked by the same OECD countries that are asking others to join their system,” added Pooja Rangaprasad of the Financial Transparency Coalition. “Despite the latest announcement by the OECD, a UN body continues to be the most effective and inclusive global solution.”

For some relevant background, also see our 2012 document The Creeping Futility of the Global Forum’s Peer Reviews. As we noted:

“Any failure to conform to OECD’s interests on the part of the Global Forum Plenary, as well as the Global Forum’s secretariat, risks withdrawal of the mandate. This casts a veil of anticipatory obedience over GF-secretariat staff and plenary members and serves to bias the secretariat’s decisions in favour of OECD-countries’ views. Effectively, this provision gives OECD member states a veto power over any activity undertaken within the Global Forum. At best this is a very restricted type of independence, more akin to house arrest than genuine freedom of thought and action.”

Separately, from Christian Aid:


Commenting on the OECD’s announcement today that new countries can join its project to catch up with tax-dodging multinationals, Toby Quantrill of Christian Aid said:

“In principle we welcome the OECD’s plan to allow all countries to participate on an equal footing in its project to catch up with multinational tax dodgers. Until now, only larger and richer countries have been allowed to take part, with most developing countries only able to participate on a limited basis even though they are hardest hit by multinationals’ tax avoidance and evasion.

“We need to see further details of the OECD proposal, which will be considered by G20 Finance Ministers in Shanghai later this week.

“However, it appears that under the OECD plan, developing countries will only be allowed to participate in the implementation of an agenda and work programme already decided by richer countries. Poor countries have their own priorities and problems, and so far these have been badly served by the OECD’s responses to multinational tax dodging.

“So in addition to this expanded technical body we still need an inclusive, global agenda-setting body to respond to the priority concerns of all countries. It must also help the poorest states to identify problems and solutions that are appropriate to their situations and their capacity to enforce tax law.”

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