A study of the democratic legitimacy of Action 13 of the OECD's base erosion and profit shifting (BEPS) Action 13.

Gordon, Martyn

Abstract

This thesis presents a mixed methods case study examining the democratic legitimacy of Action 13 of the Organisation for Economic Cooperation and Development's (OECD) Base Erosion and Profit Shifting (BEPS) Action Plan. Taking a critically orientated philosophical position, the thesis draws data from a stakeholder consultation conducted by the OECD which is coded to allow statistical analysis. The thesis then goes on to collect data from interviews with tax practitioners with privileged insight into the manifestation in practice of Action 13. Action 13 attempts to provide transparency over Multi-National Enterprises' (MNE) transfer pricing (TP) practices, which are criticised as enabling corporate tax avoidance. However, the legitimacy and efficacy of this intervention are questioned by diverse stakeholders; notably, MNE's required to comply, professional tax advisors and tax justice campaigners. The thesis explores the institutional framework within which the OECD operates, highlighting the tensions which make regulating for TP at a supra-national level particularly challenging. Cognisant of this context, the thesis frames its findings around Scharpf's (1996, 1999) theory of Democratic Legitimacy in a deliberative policy making process. The thesis utilises a mixed methods case study approach, to overcome the relative paucity of data available to tax researchers. The philosophical orientation of the research is critique, driven by the need for findings to be routed in a wider understanding of the policy context and power dimensions at play within the policy creation process and the manifestation of Action 13 in practice. The first empirical chapter utilises content analysis and statistics to examine the input and throughput legitimacy of the OECD's consultation process on Action 13's creation. This chapter adds to previous studies in noting that the consultation lacked input legitimacy, being dominated by respondents from a few powerful OECD countries. However, in terms of throughput legitimacy the analysis challenges the established notion that the consultation was entirely dominated by corporate interests. Instead, it is argued that civil society activists had success in influencing the OECD where they drew on strong conceptual argumentation, suggesting aspects of effective throughput legitimacy. The second empirical chapter explores output legitimacy by examining the manifestation of Action 13 in practice through interviews with tax professionals. The chapter presents a complex view of output legitimacy, concluding that two of the three objectives of Action 13 are ostensibly achievable in practice but are viewed as being constrained by lack of capacity within tax authorities. The third objective of Action 13, centred on TP audit is noted as being under achieved and hence constraining the legitimacy of Action 13 overall. The thesis contributes to knowledge by comprehensively analysing Action 13 using democratic legitimacy as a framework and by providing new empirical evidence about the efficacy of Action 13 in practice in the UK. The thesis concludes that although Action 13 is not strongly opposed by those required to comply, it is viewed as expensive and perhaps underutilised by tax authorities. It is also true that, as part of a wider continuum shift, Action 13 may have helped align the attitudes of those in the tax profession more closely with progressive ideas emerging from civil society in the form of tax justice campaigners.

Citation

GORDON, M. 2024. A study of the democratic legitimacy of Action 13 of the OECD's base erosion and profit shifting (BEPS) Action 13. Robert Gordon University, PhD thesis. Hosted on OpenAIR [online]. Available from: https://doi.org/10.48526/rgu-wt-2565272

• Thesis Type: Thesis
• Deposit Date: Nov 1, 2024
• Publicly Available Date: Nov 1, 2024
• DOI: https://doi.org/10.48526/rgu-wt-2565272
• Keywords: Corporate tax; Tax avoidance; Multi-national enterprises; Democratic legitimacy; Tax justice
• Public URL: https://rgu-repository.worktribe.com/output/2565272
• Award Date: May 31, 2024