The OECDs governance of international corporate taxation: initiatives, instruments, and legitimacy

The OECD has played a central role in the politics and governance of international taxation in the post-war period. The primacy of the OECD in the international tax regime is a product of both politics and path dependency. From the 1960s the OECD, with its membership of wealthy industrial countries and a consensus-based approach to decision making, provided an appropriate institutional setting to promote international tax cooperation consistent with the interests of western powers. Having established this mandate and developed significant technical expertise in tax policy the OECD, in close collaboration with key member states, dominated the international tax arena until the end of the 20th century. This chapter focuses specifically on corporate taxation and surveys the more recent developments and challenges facing the OECD in an increasingly contested and dynamic corporate tax arena. We argue that while the OECD was formerly well-placed to protect and promote the interests of its key members, it has since been forced to engage more broadly and to include a greater number of non-member states in its tax agenda and decision making to bolster the legitimacy of its work. Also, the OECD has struggled to manage growing tensions between the US and the EU on international tax matters and come under heightened scrutiny from NGOs advocating for tax justice. Despite its significant influence over both the form of the international tax regime and the processes through which it has been developed, as the tax arena has become more contested, the OECD has struggled to manage mounting political tensions. It remains to be seen to whether the OECD can adapt sufficiently to maintain its dominance of the international tax policy space.