OECD struggles with tax co-operation

OECD struggles with tax co-operation

The EU is not the only organisation to struggle with the reality that today's business world long ago stopped respecting national boundaries and the wildly varying tax systems contained within them.

Jeffrey Owens, head of the OECD centre for tax policy and administration, wrestles with the issue in an article recently published on the international organisation’s website.

He struggles with questions such as: ‘Can a fair system of taxation of capital persist side by side with liberalised financial markets and in a world increasingly characterised by skilled professionals who are highly mobile?

How can fair tax competition flourish between nations, but unfair competition be eliminated? What is the role of tax administrations in this new world?

He says governments have three alternatives. They can retreat behind their frontiers and become more isolationist, press for a global tax code administered by a global tax authority, or intensify their cooperation.

He dismisses the first two, on the grounds that isolation is impossible in today’s world and a global code is not feasible at the moment.

Intensifying cooperation, he claims, is the only way forward. ‘This is the only appropriate response to the pressures of globalisation. National governments maintain their power to design their tax systems, but accept that these decisions will be influenced by international considerations, It also means they must carefully consider how their decisions will affect the ability of other countries to enforce their own tax laws.

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