Grinberg Delivers Lecture On Pillar 2 And The OECD Tax Function Today At Vienna University

Itai Grinberg (Georgetown) delivers the 2024 Klaus Vogel Lecture at Vienna University today on Pillar 2 and the OECD Tax Function:

The two pillar international tax deal agreed in 2021 represented the most important international economic agreement thus far this century. At the time, that political agreement was both a diplomatic success for the Biden Administration and a success for G20-based global economic governance.

Now, however, there is much uncertainty, including with respect to the enforcement of the global minimum tax (“Pillar 2”) and as to whether the UN will supersede the OECD as a venue for discussions of international tax issues. Furthermore, the reality is that Pillar 2’s two key enforcement rules – the IIR and the UTPR – have become almost exclusively OECD Member State projects. Given that Pillar 1 is likely to fail, the OECD’s credibility as a key international tax forum turns on whether Pillar 2 succeeds. In this environment, not only the fate of Pillar 2 but the OECD’s leading role as an international tax venue likely requires reestablishing the OECD’s body for lead member state tax official dialogue — known as the “Committee on Fiscal Affairs” when it meets in its Member State only configuration — as a robust body.

Reestablishing the importance of the CFA would be consistent with the historic mission of the OECD. That mission was to promote policies that improve the economic and social welfare of people in its member states. Both Europe and the United States are likely to achieve suboptimal results with respect to Pillar 2 if the current Inclusive Framework structure is not substantially supplemented or supplanted by the return of the CFA. For instance, from both a European and a U.S. perspective — regardless of the outcome of the U.S. election — discussion of the Implementation of the UTPR and of QDMTT safe harbor issues is likely to be suboptimal if robust CFA-level members only meetings are not reinstituted. More generally, moving the tax function of the OECD closer to the OECD’s origins as a Member State organization is consistent with the broader geopolitical and geoeconomic environment that have emerged since the onset of the war in Ukraine.

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