© 2023 Tax Analysts. All rights reserved.
Tax Analysts does not claim copyright in any public domain or third party content.
Setting the Record Straight
On International Tax Cooperation Initiatives
To the Editor:
Regarding Robert Goulder’s latest piece in Tax
Notes International, about the OECD-U.N. turf war
— which, like all of his articles, is highly readable,
clear, and thoughtful — I would like to provide a
1
couple of comments and clarifications.
First, I was struck by the following passage in
the article:
Recall that the G-20 specifically instructed
the OECD to coordinate the [base erosion
and profit-shifting] project. Why didn’t the
G-20 delegate the task to the U.N. in the
first place? We know the answer: The G-20
could anticipate how that would have
worked out and wanted nothing to do
with it.
It is very unlikely that the G-20 would have
thought about what the U.N. might do at the time
when BEPS began to be mentioned in G-20
documents as an area of concern, because the U.N.
has always had minimal resources in the tax
policy area and has always limited its focus to the
interests of developing countries. As noted in
Goulder’s article, the U.N. Committee of Tax
Experts is not structured in a way that allows it to
do the kind of in-depth, substantive tax policy
work that the OECD Centre for Tax Policy and
Administration is able to do. It was not until the
Addis Ababa meeting in July 2015 on
development financing that people started talking
about the possibility of building a U.N. tax policy
shop as an alternative to the OECD.
Interestingly, despite assertions of a G-20
mandate in OECD documents and in statements
by OECD officials, the evidence indicates that the
1
Robert Goulder, “Everybody Wants to Rule the Tax World,” Tax
Notes Int’l, Sept. 4, 2023, p. 1309.
TAX NOTES INTERNATIONAL, VOLUME 111, SEPTEMBER 11, 2023
For more Tax Notes® International content, please visit www.taxnotes.com.
LETTER TO THE EDITOR
tax notes international®
G-20 never affirmatively instructed the OECD to
work on BEPS until after the OECD had started
the ball rolling. The OECD initiated the BEPS
work on its own and shared its thinking with the
G-20, which approved of the initiative and then
essentially followed the OECD’s lead.
The OECD, however, seems to have wanted to
create the impression that its early work on BEPS
was done in response to a request from the G-20.
In the OECD’s February 2013 report on BEPS,2
which proposed the creation of a multilateral
BEPS action plan, there is a suggestion that the
G-20 had requested the report in 2012. Looking
back at the G-20 communiques issued in 2012, the
G-20 made plenty of explicit requests for reports
from various organizations on different topics, but
regarding BEPS, the G-20 said only that it would
follow the OECD’s work on BEPS with interest.
Enlisting the support of the G-20 has given the
OECD tax policy center and its work on BEPS an
appearance of greater importance than it would
otherwise have had. It also provides the
possibility of avoiding blame should the BEPS
project or its progeny, the two-pillar plan, lose
political support (“we were just following
orders”), as well as an answer to any critics who
might question the project’s rationale (“we have
no choice but to deliver this product to our
masters, the G-20”).
On another issue, Goulder states that the
proposal for a multilateral convention on pillar 1
has only “relatively modest ambitions” in that the
convention “merely seeks to accomplish three
things: (1) enable the implementation of amount
A; (2) establish the rollback and standstill
obligations for digital services taxes; and (3)
enable the implementation of amount B.” With all
due respect to Goulder, the word “merely” is not
2
OECD, “Addressing Base Erosion and Profit Shifting” (Feb. 2013).
1453
LETTER TO THE EDITOR
appropriate here. The amount A allocation rules
are a radical departure from long-standing
principles of corporate income taxation, namely,
separate-entity taxation and the arm’s-length
standard. And the rollback and standstill
obligations regarding digital services taxes are
already being resisted by many countries as an
unacceptable restriction of their sovereign taxing
rights. For governments and multinational
business taxpayers alike, the implementation of
pillar 1 would involve changes that cannot be
fairly described as modest.
Goulder gets it right when he says, in
reference to the U.N. report’s second option:
Why is there a treaty-based international
organization for trade, but not for
taxation? For the same reason that the
European Union has a common trade
policy but no common income tax policy.
VAT notwithstanding, direct taxation is too
sensitive for collective endeavors — even
among close neighbors with a continental
alliance. To imagine this option is going
1454
For more Tax Notes® International content, please visit www.taxnotes.com.
© 2023 Tax Analysts. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.
anywhere is wishful thinking. [Emphasis
added.]
With this in mind, we should not be surprised
that the inclusive framework has not been able to
agree on all of the terms of a pillar 1 deal. Nor is it
surprising that there are continued rumblings of
dissatisfaction with pillar 2 in various quarters.
The fact is that the two-pillar “solution”
resulted from intense political pressure by the
Biden administration and other G-7 governments
at a time when the geopolitical winds were
blowing a certain way, and now the winds have
changed. Everyone concerned would benefit from
a reconsideration of what, if anything, can
realistically be done to address cross-border tax
issues in a sensible and sustainable way. 
Jefferson VanderWolk
Senior Partner, Squire Patton Boggs (US) LLP
Washington
Sept. 5, 2023
The views expressed are personal to the author and
do not necessarily reflect those of his firm or any other
person or organization.
TAX NOTES INTERNATIONAL, VOLUME 111, SEPTEMBER 11, 2023