Global tax capacity cooperation amongst nations remains on the horizon. That was one of the messages coming from the OECD International Tax Conference in Washington in early June. New OECD global initiatives have as their focus the achievement of higher sustainable economic growth for all nations by creating a more coherent, stable and predictable global business environment. They also have as their focus the expansion of the global tax capacity by adopting more global tax rules, administrative practices and information sharing.
Since developing nations have significant potential for contributing to global economic and revenue growth for other nations, the OECD has special initiatives for developing nations. Developed nations will provide developing nations with instruction and information. The objective of this is to help developing nations overcome their numerous challenges and contribute more effectively to sustainable global economic and revenue growth. The hope is that developing nations will implement transparent and credible tax systems that are based on global tax rules and administrative practices.
What are those challenges that developing nations must overcome? The elimination of a dependency on foreign aid and resource royalties and the development of a domestic tax base capable of funding government expenditures is a high priority for developing nations and the OECD. Corruption, lack of government credibility and the size of their underground economies also present major challenges. However, the final goal of achieving sustainable government revenues through the implementation of a transparent and credible tax system may prove to be elusive.
The OECD initiatives are designed to enhance global taxation capacity by encouraging the adoption of the best global tax practices - transparent tax systems, tax information sharing and tax rules and administrative practices consistent with global norms. Global businesses must keep current with these OECD initiatives so that they will be able to protect themselves from unreasoned and unreasonable compliance burdens. History has shown that governments can sometimes be shameless in respect of the level of compliance burdens they are prepared to transfer to businesses.