The Legitimizing Effects of the OECD's Fairness-Based Narratives

The base erosion and profit shifting (BEPS) project and the creation of the Inclusive Framework on BEPS are ambitious initiatives that could transform the Organisation for Economic Co-operation and Development (OECD) from a rich-countries club into the standard setter and a consensus facilitator on matters of global tax governance. In some areas, where the interests of many states have aligned, this transformation has already occurred. However, in highly disputed areas, such as the taxation of business profits in the digital economy or other distributive concerns, the OECD can only rely on shared values, which, if not entirely reconciling the conflicting interests of states, could at least encourage collective action. Since fairness underlies many common values, fairness-based narratives are a plausible source of soft power for the OECD and potentially a tool in facilitating tax cooperation. This article argues that this may be one possible explanation for the OECD's reliance on the concept of fairness in its BEPS documentation. Using the OECD's BEPS action 1 narrative as a case study and focusing on the social dimension of fairness, this article finds that this narrative is inconsistent with the states' narratives and is unjustified; it lacks fidelity (story integrity) and is only weakly persuasive, at least where the fairness argument is concerned. These flaws may not affect the OECD's legitimacy as a standard setter and consensus facilitator, but they may undermine the legitimacy of the OECD standards that are founded on fairness arguments, especially if those standards affect the distribution of the benefits and costs of tax cooperation.