The International Tax Regime Complex: Understanding Change in Global Tax Governance

Following a landmark vote in the UN General Assembly in December 2023, negotiations are taking place that will lead to a new framework convention on tax. While the UN is not new to international tax cooperation, ambitions for the convention extend beyond the remit of its current expert committee into policy areas where the OECD – in particular – already has a body of work. This creates risks of duplication, competition and incoherence that will depend on how the convention develops, how other organisations react, and how states engage with them. In this paper we draw three main insights from international relations scholarship to help understand and mitigate these risks.

First, duplication is not new in global tax governance, which is already a ‘regime complex’ comprising multiple overlapping institutions. Policy issues with global implications can be governed coherently with multiple organisations coexisting in different ways, but this is more challenging if, as in international tax, states disagree on the content of substantive underlying norms.

Second, the demand for a new institution stems from a legitimacy deficit across the whole regime complex that has input, throughput and output dimensions. As more constituencies become involved in an increasingly politicised domain, ‘input’ legitimacy no longer merely concerns which countries are at the table, but also who is represented, and thus requires a globally inclusive body at political level. In turn, this requires greater attention to throughput legitimacy – procedural fairness and transparency.

Third, given the path dependence of international tax institutions, radical and comprehensive institutional reform is unlikely to happen overnight, and change is instead likely to be incremental. Literature suggests that processes through which one set of rules is ‘displaced’ by another can happen slowly in a regime complex characterised by competition between institutions.