Organization for Economic Co-operation and Development (OECD)

Organization for Economic Co-operation and Development (OECD) is an international organisation that works to build better policies for better lives. Its goal aims at promoting significant sustainable economic growth and poverty reduction by spreading OECD principles and values around the world, as well as commitment to democracy, market economy and open, regulated, non-discriminatory trade and financial management.

The OECD Tax Policy and Administration Center is an undisputed leader in development of international tax standards, such as a Convention Model for Avoidance of Double Taxation and the Transfer Pricing Guidelines. Center is regularly involved in addressing politically “sensitive” issues concerning the non-OECD states, such as development of the E-commerce tax infrastructure and project on harmful tax competition.

The OECD also monitors tax policies of its member states, which allows making macroeconomic analysis and forecasts. In the context of economic research, the OECD has conducted a detailed analysis of tax systems of many states around the world. As a result of such an in-depth analysis, national authorities receive information on the possibility of reforming tax systems and, consequently, increasing efficiency, transparency and capacity.

With regard to the OECD’s practical work in taxation, it should be noted that significant work is being done by the Committee on Fiscal Affairs (CFA), which is one of the recognized leaders in developing standards and guidelines for promoting cooperation in international taxation. Committee was established in 1971 to enable tax policy professionals to work on international and national tax issues. Committee includes the best tax experts from all 30 OECD states, working in working groups on the main areas of activity of tax administrations. Committee’s task is to eliminate tax measures that hinder trade and investment flows, prevent double taxation, combat tax evasion and avoidance, as well as promote good practices in tax policy and administration.

The OECD’s activity in taxation focuses on the following areas:

1) Development of instructions for negotiations and application of bilateral tax agreements. The main focus in this area is on studying provisions of tax agreements and issues related to their application, as well as the use of developed methodology that will allow states to expand their networks of tax agreements and improve negotiation techniques.

2) Development of transfer pricing instructions.

3) Exchange of experience in information exchange and banking secrecy, identification of problem areas and ways to solve them, ensuring protection of the taxpayers’ rights to the confidentiality of their information. As a result of this study, analytical documents on the best ways to exchange information and the OECD report “Improving access to banking information for tax purposes” are being prepared.

4) Study of tax incentives methods in the personal income tax and corporate income tax on the example of member states and non-members of the OECD.

5) Study of problems of international tax evasion and tax evasion, identification of universal schemes and structures involved in tax fraud, preparation of relevant recommendations.

6) Identification of legal and practical challenges that states face auditing multinational enterprises. Outline a range of administrative procedures, information requirements and verification procedures required to conduct an effective audit.

7) Survey on the value added tax administration, study of process of drafting the VAT legislation and functioning of tax at the international level. Particular attention is paid to the impact of VAT on international trade, determining place of supply of goods and services, as well as such specific issues as the use of new vehicles, E-commerce, financial services sector and telecommunications.

8) Identification of ways to modernize tax systems in order to adapt to new global financial and capital markets, in particular with regard to taxation of innovative financial instruments and financial institutions.

The OECD cooperation program with non-OECD countries, including Ukraine in taxation, began in 1992.

As of today, such activities are carried out at the level of OECD Multilateral Tax Centers, bilateral projects with individual states, projects with international and regional organizations, as well as through active consultations with business representatives.

The OECD, in conjunction with the World Bank, has established an organization called the International Tax Dialogue (ITD) to promote cooperation on tax issues between governments and international organizations. Today, the ITD works to study and disseminate the most effective developments in tax administrations, coordinates technical assistance and helps to avoid duplication of activities in various cooperation projects.

There are the OECD Multilateral Tax Centers in Austria (Vienna), Hungary (Budapest), Turkey (Ankara) and Korea, which regularly organize training seminars for taxpayers from different states on the most popular issues of common interest. Austrian and Hungarian Centers accept representatives from Central and Eastern Europe and the Baltic States. The largest institution is the Multilateral Tax Center in Ankara (Turkey), which since its inception in 1993 has recruited more than 27 thousand tax officials from the Balkans, Central Asia, the CIS, including Ukraine and Mongolia. Korean Multilateral Tax Center serves Asian countries, including Central and Southeast Asia.

Within the framework of an action plan to deepen cooperation between Ukraine and the Organization for Economic Co-operation and Development (OECD) for 2013-2016, Ukraine became a member of the OECD Global Forum on Transparency and Information Exchange for Tax Purposes.

Global Forum on Transparency and Information Exchange for Tax Purposes

Global Forum on Transparency and Information Exchange for Tax Purposes is an international body established by a decision of the Council of the Organization for Economic Cooperation and Development o. September 17, 2009. It includes all G20 states, the OECD member states, major international financial centers and many other developing states (126 in total).

Participation in the Global Forum will allow Ukraine to: 

- intensify and facilitate process of concluding agreements on the information exchange with other states, in particular international financial centers;

- receive information on the legislative and regulatory framework of countries in tax transparency;

- become more attractive to foreign investors given the implementation of international standards on transparency and information exchange;

- to expand the exchange of tax information with the participating states.

Global forum will help combating tax evasion and, consequently, increase budget revenues.

Activities of the Global Forum are related to important intergovernmental initiatives, among which the counteraction against illegal financial flows has a special place, within which the Global Forum promotes counteraction against corruption and money laundering. In addition, the Global Forum provides technical assistance in the implementation of transparency and information exchange standards, which greatly simplifies multilateral negotiations when concluding information exchange agreements.

Complete information from national and international sources will allow tax authorities to improve the effectiveness of taxpayers’ compliance with national tax laws and focus on tax evasion. Accordingly, Ukraine’s participation in the Global Forum is extremely important for national security.

In addition, participation in the Global Forum will significantly improve Ukraine’s image in the international arena and help increase its position in the World Bank’s Doing Business rating.