Opinion: OECD tax policymakers should welcome UN competition

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Opinion: OECD tax policymakers should welcome UN competition

Bonn, North Rhine-Westphalia, Germany - May 14, 2019: Flag of the United Nations on the UN Campus Bonn, Germany

The UN aims to take a much bigger role in global tax policymaking and developing countries are likely to welcome that.

UN competition could help make the OECD’s two-pillar solution viable in the developing world, where many governments are much more dependent on corporate tax revenue.

The OECD proposals for the digital economy are part of a global plan, but it has to fit different circumstances and conditions around the world. A one-size-fits-all approach may not be workable, especially for countries with very different economic interests.

Tax policymakers at the OECD are pushing ahead with the mission to complete pillar one by the summer. The two-day OECD conference this week will present the findings of a new impact study on pillar one and pillar two.

This is a crucial time when the success of pillar one will be determined, and it may also be the last time that the OECD can play such a role in international tax with very little competition.

It’s almost four months since the UN General Assembly unanimously agreed, on November 23, a resolution granting the organisation a mandate to begin intergovernmental talks on tax.

Not only did this momentous resolution suggest a much greater role for the UN in global tax, it also made the case for a UN convention on tax and the creation of new global tax institutions and cooperation frameworks.

It’s no wonder that this was proposed by the African Group, the bloc representing the 54-member state African Union. A UN convention to tackle tax avoidance and evasion could help developing countries better respond to challenges posed by the digitalisation of the global economy.

The UN resolution poses a historic challenge to OECD dominance of international tax standards and could set up a potential clash between the UN and the OECD, which has dominated the global tax landscape for 60 years.

In the worst outcome, this division could derail the two-pillar solution and set back global tax reform. A much more hopeful view is that the UN and the OECD will be able to reach a synthesis; it doesn’t have to be an either/or.

Alternative power centres

The UN is a much more open forum for emerging economies, as the OECD has just 38 member states. Many of the OECD’s critics from the developing world see the organisation as a “club for rich countries”.

Of course, the OECD is not just made up of economies like the US and its European partners. Non-European members include Australia, Chile, Japan, Israel, Mexico, South Korea and Turkey.

Even still, all but three of these countries are developed. Chile, Mexico and Turkey are outliers at the OECD, while important regional powers such as Brazil, China and India are still left out. But this could change.

The OECD has engaged more with developing countries on the two-pillar solution through the Inclusive Framework. This is how it managed to secure the support of 137 countries for pillar one and pillar two.

The Brazilian government could continue to pursue OECD membership if it reforms its tax system. And, if Brazil gains OECD membership, the Paris-based organisation may start to be seen differently by critics because it would include a leading Latin American country.

Meanwhile, India has increasingly turned to the UN Tax Committee as an alternative forum to the OECD for tax policymaking. Many African, Asian and Latin American countries support this turn to the UN. But this is not the only option for such countries.

Colombia may be set to host the first Latin American global tax summit in July. This conference could be an opportunity for the region to make its own demands heard in the international community. Otherwise, countries like Colombia could be drowned out.

At the same time, China has been developing its own influence on tax policy through the Belt and Road Initiative (BRI). One example of this is Chinese support for BRI signatory states to create special economic zones along the trade routes.

All of this suggests that the future of tax will be more contested than it has been in the past. One way for the OECD to stay relevant is to continue its work with countries and blocs outside of its membership and deepen those ties.

OECD policymakers made history with the two-pillar solution, but there is still a lot of work to do before the project is complete. The final details of pillar one will have to account for the differences between developing and developed economies.

This is where the UN may be able to play a key role in ensuring African, Asia-Pacific and Latin American countries adopt pillar one, though it may have to be on their terms. A UN tax convention could be an opportunity for the OECD to ensure its digital tax project is truly global.

more across site & shared bottom lb ros

More from across our site

The UK’s Labour government has an unpopular prime minister, an unpopular chancellor and not a lot of good options as it prepares to deliver its autumn Budget
Awards
The firms picked up five major awards between them at a gala ceremony held at New York’s prestigious Metropolitan Club
The streaming company’s operating income was $400m below expectations following the dispute; in other news, the OECD has released updates for 25 TP country profiles
Software company Oracle has won the right to have its A$250m dispute with the ATO stayed, paving the way for a mutual agreement procedure
If the US doesn't participate in pillar two then global consensus on the project can’t be a reality, tax academic René Matteotti also suggests
If it gets pillar two right, India may be the ideal country that finds a balance between its global commitments and its national interests, Sameer Sharma argues
As World Tax unveils its much-anticipated rankings for 2026, we focus on EMEA’s top performers in the first of three regional analyses
Firms are spending serious money to expand their tax advisory practices internationally – this proves that the tax practice is no mere sideshow
The controversial deal would ‘preserve the gains achieved under pillar two’, the OECD said; in other news, HMRC outlined its approach to dealing with ‘harmful’ tax advisers
Former EY and Deloitte tax specialists will staff the new operation, which provides the firm with new offices in Tokyo and Osaka
Gift this article