Date of this Version

September 2002

Document Type

Conference Paper

Publication Details

Bentley, Duncan (2002) International constraints on national tax policy: reflecting the international tax order. Seminar presentation at the Faculty of Law, University of Bergen, Norway, Friday 13 September 2002 on “Key international issues affecting the implementation of national tax policy”.

This paper was delivered in an earlier form at the Tax Research Network Conference, University of Cambridge, 5-6 September 2002.

Copyright © Duncan Bentley 2002. All Rights Reserved.


[Extract] The WTO has emerged as a forum for trade dialogue. It is relatively democratic, representative, and provides a framework of agreements that allow for formal binding arbitration between members. The more successful it becomes in all its facets, the more influential it is in the trade environment. Where the trade and tax policy debate has been carefully separated until now, the advent of electronic commerce has shown how artificial the separation is. It is inevitable that the WTO will participate increasingly in the tax debate. However, the level of its intervention will depend on the satisfactory development of an international tax policy that integrates successfully with the trade policy.

Currently, the IMF and World Bank, with the imprimatur of the UN, are responsible for shaping much of the tax policy of countries outside the OECD, particularly those that are developing or in transition. It is probably accurate to describe them as the repositories of the greatest knowledge of developing country tax systems. However, their active intervention in national tax policy has been criticised. Their activities are not fully transparent. They are not widely representative and they are heavily influenced by the major economic powers. Nonetheless, although they often intervene using unpopular measures, it is at the request of the countries that they help. The IMF and World Bank do constrain national tax policy. However, their approach is based on existing policy.

In contrast, the OECD is concerned with developing new tax policies designed to meet the challenges to effective and efficient international taxation. But the OECD is also unrepresentative of the broader international community. Until recently, this has not mattered. It has taken forward its views through influence and persuasion. The economic power of its members has ensured that the Model Tax Convention has been adopted as the international model. Within the OECD, it has influenced its members to take a pragmatic and co-operative approach to issues such as transfer pricing, mutual assistance and information exchange. Through these methods, it has effectively constrained national tax policy.

Given the growing importance of the WTO, the OECD has recognised the dangers of excluding the views of non-member countries. Otherwise, it is possible that it could be marginalised. In its new policy development, it has sought to include non-member countries in its dialogue. It has also broadened its consultation to include non-governmental parties with recognised interests in the policy debate. This approach has enabled it to obtain widespread consensus on policies dealing with the taxation of electronic commerce.



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.