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How Inclusive Is the OECD’s Inclusive Framework?

David Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: at the table, but off the menu? Nearly 140 jurisdictions have been working within the OECD inclusive framework to overhaul the global corporate tax system for the digital age. This work is supposed to come to an answer by mid-2021.

But a new study finds that lower-income countries face myriad challenges when participating in international tax policy discussions. Although there is some cause for optimism about the influence of these countries going forward. Here to talk more about this is Tax Notes chief correspondent Stephanie Soong Johnston. Stephanie, welcome back to the podcast.

Stephanie Soong Johnston: Always a pleasure to be here.

David Stewart: Before we talk about this new study, can you tell us where the OECD negotiations stand today?

Stephanie Soong Johnston: So, the political negotiations are effectively on hold for now. Countries in the inclusive framework are waiting for the Biden administration to get up and running. In the meantime, the OECD Center for Tax Policy and Administration has published more than 3,000 pages of comments in response to its latest pillar 1 and pillar 2 public consultation and plans to hold a public consultation meeting January 14-15, 2021.

And after that, I assume negotiations will continue until mid-2021 when countries are supposed to reach political agreement. There's no confirmation yet about when exactly mid-2021 is, but we do know that the Italian presidency of the G-20 is going to hold a finance ministers meeting July 9-10 so we can expect some movement there.

David Stewart: Great. Now, can you tell us about this new study and the authors behind it?

Stephanie Soong Johnston: Sure. So, this is a very interesting study published through the International Center for Tax and Development, and it's basically a development think tank. And so, what they did was the researchers had a closer look at the inclusive framework. It's sort of an inside look at the inclusive framework, which as you recall is a group of 137 countries that are responsible for the remaining standard setting of the BEPS project. So, it's very interesting.

It takes a look at the political dynamics between the lower-income countries versus the developed countries. The OECD has always said that the inclusive framework is a place where 137 countries can participate on equal footing. So, this has been challenged by civil society and by developing countries themselves saying, "We are not really on an equal footing. There are a lot of things and challenges that we have to deal with. And how are we supposed to travel to Paris every time there's a meeting? How are we supposed to understand what's going on in the meetings and in documents when they're not translated in our languages?"

So, there are a lot of challenges that these lower-income countries have to deal with that developed countries don't. So, the study takes a closer look at what these challenges are, how the inclusive framework can be improved, and what donor countries and what developing countries and the OCED secretariat can do to make things better for these countries. The report had three authors: Rasmus Corlin Christensen, he is a research consultant with the ICTD; Tovony Randriamanalina, who is an independent researcher; and Martin Hearson, research fellow at the Institute of Development Studies and International Tax program lead at the ICTD.

David Stewart: Now, I understand that you recently chatted with a pair of guests about the inclusive framework and this study. Who'd you talk to and what did they have to say?

Stephanie Soong Johnston: I talked to Martin Hearson, who gave us a quick overview of the research and the findings and his recommendations, which is very interesting. And I also talked to Emmanuel Eze, manager in the tax policy and advisory department of Nigeria's Federal Inland Revenue Service and who's also part of the Nigerian delegation to the inclusive framework. He shared with us some interesting insights as to his experience in the inclusive framework and what he hoped for the future.

David Stewart: All right. Now, before we get started, I should note that this interview took place over Zoom with guests on three continents, so please excuse any audio issues you may hear. And now let's go to that interview.

Stephanie Soong Johnston: Well, thank you so much for joining me today on our podcast, Martin and Emmanuel. Just wanted to ask you some questions about, first about Martin's joint research paper on the inclusive framework, and then Emmanuel, your experiences with the inclusive framework as a delegate representing Nigeria.

Let me start by asking Martin: Can you please explain your paper and also your title of the paper, which is very interesting? It's "At the Table, Off the Menu? Assessing the Participation of Lower-Income Countries in Global Tax Negotiations." So, maybe start us off by explaining what does "at the table, off the menu" mean?

Martin Hearson: OK, great. Hi, Stephanie. Thanks very much for having us. For the paper, we called it "At the Table, Off the Menu." It's a play on this slogan that I keep hearing pretty much every conference on tax and development that I go to, which is if you're not at the table, you're on the menu. And it's a slogan that came from the campaigners who said there should be a intergovernmental global tax body. They said, you know, developing countries, they're are not at the table at the OECD. And that means they're on the menu. That means they're going to get eaten, metaphorically at least, by the OECD countries.

And then what happened was that a couple of years ago, I noticed that Pascal Saint-Amans had co-opted the term. And he was starting to say, "Well, look, we've created the inclusive framework. Developing countries are at the table now. So, we agree with what the campaigners were saying and we fixed it."

And yet, at the same time, you had campaigners and then you had some critical reports coming from the African Tax Administration Forum, for example, saying, "Well, there's this inclusive framework, but it is not really very inclusive." And in fact, the ATAF reports that I'm thinking of from a year or two ago, it ran with this metaphor of "at the table, off the menu" quite extensively, discussing the ways in which the developing countries may be at the table, but the menu was still not quite inclusive enough. So, we thought it would be great to kind of inject a bit of objective research into this debate and try and kind of get inside a little bit what happens inside the inclusive framework and what it is that could be done to make it work more effectively, given that I think everybody acknowledges that developing countries aren't always able to be as influential as we would like.

And I would say that I think it's not that the OECD secretariat and the OECD countries don't want developing countries to be more effective. I think everybody realized for this project, the inclusive framework to work, there's got to be a sense from the countries that are part of it that they're really getting something out of being part of it. And then just one other thing, from an academic perspective, I feel that I listened to people talking about the OECD. "The OECD has done this. The OECD has announced that" in a very non-specific way. And I think too often when we say that, what we're meaning is the OECD secretariat and we're not teasing out the fact that, well, is it the member states? Is it the committees and the working parties? Or is it the Center for Tax Policy and Administration in this? Or is it the secretariat as a whole? And I think looking inside a bit at the way things work from academic perspective was something I've been keen to do for a while.

Stephanie Soong Johnston: Thanks so much. And Emmanuel, would you like to weigh in on what this phrase means to you being on a table, off a menu? How did you feel about that phrase?

Emmanuel Eze: The phrase is an interesting one. It's a phrase which is not unpopular within the tax policy circles in Africa and the world generally. It's a phrase I'm used to and the phrase for me reflects the experiences we have had, mostly coming from developing countries and trying to negotiate tax policy reform at a global level. It used to be the case that we were said not to be on the table, but on the menu. That metaphor, with the establishment of the inclusive framework, maybe said not to be 100 percent reflective of what is happening now.

But issues are also being raised. We are on the table right now. We're on the table, [whether] as a diner or the dinner, without on the table or on the table, eating in equal ration with other members of the inclusive framework, so that is still left to be seen. I've had the privilege of having a scan through the research and many issues raised by the research are practical reflections of the experiences we have on the field as well. So, it's quite an interesting topic for an interesting research paper.

Stephanie Soong Johnston: Excellent. Thanks. And Martin, back to you about — maybe tell us more about this research and how you designed it and what your findings were. Could you just walk us through?

Martin Hearson: So, the design is really a 2020 design — had to be changed a little bit. So, we originally, what we wanted to do was in order to interview people who had experience inside inclusive framework negotiations, we were going to go to Paris, the OECD secretariat were going to help us gain access to the kind of perimeter of an inclusive framework meeting and just grab people during the coffee breaks, which I always thought was going to be a bit tricky. And then when COVID-19 happened, it kind of changed completely the design. And so, actually for us, it's been this shift to a world where you just email someone and say, "Can I arrange a meeting with you next week?" And they write back and say, "Sure. Do you want to use Zoom or Teams?" It's has been great.

So, we managed to speak with 48 people. Most of those people who actually had experience directly either in international organizations or representing countries. And we also had data from the OECD secretariat which was about the attendance at different meetings. And that enabled us both to do some analysis of the numbers, but also to cross-reference with the people we wanted to talk to to know who would [have] been in which meeting when particular decisions were taken so that we could be more specific in the interviews.

We also relied very heavily on an important and influential source of information, which was Tax Notes International, which was a great source just for being able to pick up on some more detail about what was going on at the time when discussions are being undertaken.

So, what we wanted to do was to get away from discussions about generalities and be more specific. So, we identified particular cases where there were policy decisions that have been taken. It was suggested that developing countries had been actively part of that decision. So, whether that's for example, country-by-country reporting was adopted during the BEPS process or more recently discussions on how to value intangibles.

So, we identified the eight case studies that we wanted to look at. And so, we asked our interviewees specifically, what evidence can you give us that developing countries, low-income countries were — did things which changed the outcome?

And one of the things that came out from that was that sometimes the answer is, "Well, there wasn't much." And so we had to say, "Well, in some of the instances that are commonly attributed to lower-income countries, when you look at it, actually it's the actions of other people that led to these outcomes which people think are, have been beneficial for low-income countries". With that in mind, we then came up in the findings with these four categories of influence.

So we talk about two categories in which low-income countries are quite passive. It's other agents who are acting, whether that's other countries or whether that's secretariats or individuals who've identified things they think will be to the benefit of lower-income countries. And then two mechanisms in which it's lower-income countries themselves. So, whether that's through coalitions that they form at state level, or whether that's through the actions of particular individuals who kind of go maybe above and beyond the influence you'd expect them to have given the size of their country. And so, the discussion in the paper is around:, well, when do those mechanisms work really well and when do they work less effectively?

And I think we're really in the recommendations we're wanting to get to sort of pointing out really a couple of things. One is that the emphasis on having a large number of countries at the table and trying to get them all participating, which is how I think we might think about it, that's not necessarily the way that it's going to work best. What's going to work best is that you have a few people who are able to speak on behalf of a broader constituency. And so, the aim should be to try and build up that small number of kind of representative really effective negotiators, because that's how it works amongst the OECD countries, too.

And the other thing is then about the formation of blocs and how we can support more collaboration amongst lower-income countries to develop an agenda that they share about what it is they'd want to see different and then to work together to try and push for that, whether that's at the OECD or the U.N. or elsewhere.

Stephanie Soong Johnston: So, Martin, please tell me what surprised you most about your research.

Martin Hearson: There's a couple of things that I learned in the interviews that we did that I found quite interesting. So, the first is about the steering group with the inclusive framework. So I asked people, you know, "How is the steering group arrived at? What determines who's on it?" And for a long time, at the beginning, when I interviewed people who had a fair bit of experience on the steering group, I got the impression that it was basically handpicked by the secretariat and they just decided who was on there. And then someone said to me, "Oh no. No, they're elected." And I looked into it. And actually it was very hard to get a clear answer from anyone as to how the steering group is composed.

But it turns out yes, they're elected. There's kind of like, I think how it works is there's kind of a slate that the secretariat puts together and then the vote is kind of yes or no on that slate. But it kind of surprised me that even people who were on the steering group didn't quite know how they'd got there. Also that they're there in a personal capacity.

When you actually look at the steering group of the inclusive framework and you compare it to the U.N. Tax Committee, given that the steering group is often the most intense negotiations of the inclusive framework, you know, it's the same thing. It's 24 or 25 people in a personal capacity, not officially representing their countries when they speak. Half of them from OECD countries, half of them not. It's very similar to what the U.N. committee looks like. Even though the big distinction that's often made is that the U.N. committee are there in a personal capacity and that the OECD, it's the states. So, that whole distinction was very interesting for me.

The other thing that came up quite a bit was about actually about the African bloc and quite a few people mentioned it. Somebody said, "I'm from a developing country, but we're not in Africa. And we can't expect to have the same influence that the Africans have because you know, they work as a bloc and my region doesn't." And I think that African strength is really clear.

The other thing that people said about this was there are been occasions on which smaller OECD countries have been unhappy with something that's been proposed or on the table, or even agreed in the past, but they've either not been able to influence or they've actually just not spoken up. And it was the Africans who pushed on something and got something changed. And afterwards they found out that there was more support in the room from places they didn't really expect it to come.

So, my sense is that with this whole discussion talking about lower-income countries as if they face unique challenges, and some of the challenges they face are unique. But actually in many ways what's happened with the inclusive framework is the exacerbation of a dynamic that was already there in the OECD, which is that smaller countries with less well-resourced bureaucracies are sometimes also face challenges trying to influence outcomes. That to me was quite interesting and useful to break down that developing country distinction a bit.

Stephanie Soong Johnston: That's really cool. I know when you first told me about this project, I was a little jealous because you were getting all the inside scoop on what really was going on behind the scenes of the inclusive framework. So, this is really cool paper. That raises some questions for Emmanuel actually and about drawing from Nigeria's experience in the inclusive framework, what has it been like for Nigeria to participate in this multilateral body? It's a new body. And as you said before, it's evolving. So, could you just tell us a little bit about how your experience has been?

Emmanuel Eze: Yeah. I want to just take that from where Martin stopped. So it is the truth that some initiative which are currently attributed to developing countries were not originally started off by developing countries in the level of the inclusive framework. However, some of those initiatives, which we found to be beneficial to us as developing countries, we do champion it. Take CbCR for instance. This year, CbCR is currently under review. And Nigeria and some other developing countries are participating strongly in that review. Part of the representations which we are making is about how the thresholds, which have hampered most of our members from accessing CbCR, could be reduced to maximize access to the relevant information.

The [CbCR] initiative was [originally] championed by the U.K. It's nevertheless very important to us in assessing high-level BEPS risks or transfer pricing risks. So, we are championing that to try to level the grounds for developing countries, to try to reduce the threshold so that even when developing countries have access to the information, they have access to information that are relevant to their jurisdiction. Because it is said that the companies, the MNEs, that meet that threshold of up to €750 million that operate in our jurisdiction are fewer. So if the threshold, for instance, is reduced to €500 million, we have more of those companies or MNEs captured in the reports, so it is important to us.

Then another point I want to briefly reply to in the context of the question you asked me is about numbers. Yes, there is a need for effective representation and the effective representation does not in all times mean the numeracy or the size of the countries that are attending a given meeting. So, that's true. But then, in Europe for instance, Europe has the G-5. The G-5 comes on and says, "Most of the things that I need to say, or to cover the interest of not just the five countries who are G-5, but most of the European countries as well." But it does not stop other countries in Europe from attending these meetings as well. And why so?

It is important because in some instances you are in these meetings and people are asked to just speak up about their view and when we're talking about speaking up, they may just be like, "I support this direction. I support this decision. I support this program." So, if you have two people saying, "I support this program," and then 20 people saying, "I support this program," the practical reality is that the secretariat would definitely accord more interest to the greater number of people saying, "I want us to go in this direction," than just perhaps Nigeria and South Africa saying, "I want to go to this direction," as against the 50-something nations or countries in Africa. So, there is strength in numbers. That's all I'm trying to say. And it's played itself out in various engagement within the level of inclusive framework.

Then there's another issue which was raised by the paper concerning our willingness as developing countries to easily adopt a U.N. initiative including Article 12 in the treaty model and also including them in our tax treaties that are adopting the CbCR. It is important to point out that from practical aspect of our reality, many African countries or developing countries do not have access to CbCR today. Not because it is not of interest to us. The [cost of putting in place the process that enables you to access CbCR] is simply prohibitive. And that is not to be said with the Article 12 that was included by the U.N. In adopting the article, all you need is to insist that it be part of your treaty when negotiating treaties, so it doesn't come at extra cost. So, that is a major difference between the two approaches or attitudes to options by developing countries.

So, bringing it down again to our general experience in inclusive framework, having worked alongside the Nigeria representative, who is Mr. Mathew Olusanya Gbonjubola, and having attended meetings and worked in the different papers, and I would say that so far the experience is that we win some, we lose some. We have been able to move a couple of things in our favor. We have been able to hold the line sometimes where it matters most, not just for Nigeria, but for developing countries where there is still a lot of work to be done. A lot of work to be done in convincing our sister nations. [It is also important that] the high-income countries [recognize] that it's not always about your interests as a country. It's also important to look at the bigger picture. The bigger picture being that people get their fair share of taxes, especially as it concerns international transactions and international business. So, that's it for us.

Do we have challenges? Yes. We have challenges. We have lots of challenges. Challenges ranging from the cost of attending those meetings — when we have to attend them physically — and among other things. We think there's room for us to gain more using the platform.

Martin Hearson: Can I add a bit to what Emmanuel said about country-by-country reporting? I think it's really interesting. In the paper we contrast country-by-country reporting, which is a decision taken in the BEPS process at the OECD with the Article 12(a) adopted by the U.N. Tax Committee. And the contrast isn't really about the fact that one's an OECD instrument and one's a U.N. instrument. It's about this mechanism that we call anticipation. So, when a reform emerges, which hasn't been put on the table by developing countries themselves but by somebody else thinking in their interests, what determines how successful it is?

And I think what you see with country-by-country reporting is exactly as Emmanuel was saying that there's not actually at the time it was proposed, but now, now that it's out there, this data exists, developing countries really want to get their hands on it. But because the delivery mechanism and the reporting mechanism was designed without them being really actively implicated in the discussions as much as they perhaps might be now, the outcome, yes, it was country-by-country reporting, but it had several key elements in the design that made it significantly more difficult to access and less useful for lower-income countries.

And that's why so far the uptake has been quite limited. So, as Emmanuel says, there's real, I think, desire to get their hands on this data and for the data to be reported in a way which is more comprehensive. And I think it demonstrates that having lower-income countries involved from the beginning of a discussion and therefore setting an agenda based on the things that they are interested in pursuing is really important.

Stephanie Soong Johnston: Thanks for that. I guess, running with the CbCR example, Emmanuel, it's encouraging to hear that that Nigeria is starting to become more actively involved with the review of the standard because it is five years and we are in the middle of reviewing Action 13. So, how confident do you feel that this time around Nigeria's concerns will be taken into account when the review is finished?

Emmanuel Eze: In the inclusive framework, Stephanie, we work by concessions, which has its advantages and disadvantages, right? Well then, the primary point to be made is that— I won't tell you specifically how the outcome will be because it's an ongoing work. But I believe that having worked and followed up with the work that the inclusive framework, and the outcome would be such that it will reflect various positions for different members as agreed by these members. So, we are positive that the report will be agreed by all. We are also positive that the inclusive framework will take into consideration concern from lower-income countries like Nigeria and the rest.

Stephanie Soong Johnston: So, Martin, let me ask you. What recommendations then does the paper include? Seeing as the inclusive framework is still an evolving body, what can be done to increase the inclusiveness of the framework?

Martin Hearson: Yep. We kind of make three categories of recommendation and I think, and the first two categories are not specific to the inclusive framework. They are applicable equally to U.N. committee and other environments. So, the first is a focus here on building the quality of negotiators rather than the quantity of participation. So, that means designing interventions that look at well, which of the countries that are really investing in the capabilities of their negotiators, Nigeria being a really good example, what can donors and international organizations and others do to help make the space for people like Emmanuel to be as active as possible in these environments? To build their own networks and skills so that they can become the most effective negotiators that they can be.

One of the things we picked up in our conversations is the fact that it's really critical that negotiators have a sustained period of time in their roles representing their countries in order to build that experience and those networks. It doesn't come overnight. And in quite a lot of countries, one of the problems is the turnover of staff. That people are either moved around inside the bureaucracy, or they leave to go out of the public sector. And in those situations, you know, it can be difficult for the country to maintain consistent representation. So, there's a bit of work on the part of countries to be done, but also on the part of donors to support that. Not for all countries, for some of the most strategic countries, which are acting leaders within coalitions.

The second point we make is that because one of the things that we think comes across is that the most successful reforms are ones which are built on the experience of lower-income countries. Whereas we tend to, and if you look at the digitalization discussions, this is really good example of this, it tends often to be that the agenda of development donors and also the broader international community starts from what's being discussed at the OECD and maybe the U.N.? Rather than, well, what's going on in lower-income countries? What are they doing themselves, or what could they do themselves?

And if you start there instead, from the bottom up, then you can start to work out what actually is going to work practically in lower-income countries. They can start to learn from each other. And then you can start to build a platform or an agenda for saying, "Well, here's how international tax rules could be changed to reflect what we already know works." And I think that's one of the things that country-by-country reporting, for example, didn't do very well. It kind of came out of nowhere from the top down, and that's partly why the design of it in its current form doesn't really work for lower-income countries. If there'd been some experimentation in countries, first of all, you would have got to something which would look a bit more like something that is useful for countries.

So, that's what the second thing is about — kind of getting more cross-fertilization amongst developing countries and more coalition formation. Because the thing we noticed, if you look what happens in trade negotiations, you have this big ecosystem of different coalitions. Some of them long-standing blocs that have decades of experience and go beyond just trade. And then some which form around really specific things such as agriculture. And we kind of need the same thing for tax. We need this more diversity of coalitions that have formed around particular priorities.

And then we also make some recommendations about what could be done differently inside the inclusive framework specifically. And there's kind of quite a lot there. But just a couple of things that's worth saying: I think one is not everything that is being discussed in there is either a high priority for lower-income countries or actually something which realistically they're going to be able to exert a significant influence over. And so, there could be a better prioritization effort that's done there. And when there are particular discussions that are of real significance and potential for lower-income countries, there could be a slightly different approach that has a longer timeframe that focuses on translation, which is something that comes up a lot into particularly French and Spanish, of all the documents and meetings. And in which there's more investment in building capacity.

One of the other things that we talk about in this area is that a lot of the capacity-building work or the technical assistance that's focused on the negotiations tends to be about trying to bring everyone up to speed on the basics. So, you get pre-meetings and inductions, which are kind of organized in that way. Make sure that all the representatives from developing countries who are quite new, that they know what's going to go on in the next day's plenary session.

But what you really need is interventions, which are designed to go a bit beyond that and to help the people that kind of already have that knowledge to go to the next level of really being able to influence, to work out together strategically what they can do and how, and whether that's the OECD secretariat's job or someone else's job is I think to be discussed a bit more. But I think that's the other intervention that seems like it would be a smart thing to do right now. And ATAF is already doing quite a lot of that. And maybe Emmanuel can talk a bit about the way that AFAT works in the run up to working party meetings, for example.

Stephanie Soong Johnston: Yes. Emmanuel, would you like to weigh in on that?

Emmanuel Eze: Actually, Martin has covered most of the grounds on why it's important to have that to make the inclusive framework more inclusive. There are two parts to it. There are duties or jobs, which the developing countries themselves must do. One of which is sending in your best people, sending your best skilled person in international tax. If you do not have one, you should probably be proactive in trying to train one. It is good we get this person trained by donor agencies or by other interested international groups. But the training you give your staff, you give your representative yourself, also counts. So, we have to get those priorities right. That's number one.

Then number two, if they get such people on the table, those people themselves should also be able to intervene on issues. Sometimes you see people come to the proverbial table and they sit quietly. Some other times you see the working parties calling for the technical inputs by way of written procedure. People don't contribute. No matter how effective you are, no matter how trained you are, if you did not put in your contribution, it goes to naught. So, that is for the developing countries, in my view.

Then, for the developed countries, it is about tolerance. It's about accommodation. It's about looking at the bigger picture. I believe that the inclusive framework could be a program to achieve many, many good things, both for developed and developing countries, but the parties must always be willing to give and take. And that's what negotiation is all about. You give some, you take some, then you try to balance the stakes. So that's it.

Then from where Martin stopped talking about the role ATAF played, ATAF played important roles in our involvement in international discussion around tax policy reforms, generally as developing countries. As appointed, ATAF goes a long way in trying to aggregate views from members and the members transcend membership of the inclusive framework.

So you have a situation where African countries are not necessarily in the inclusive framework are able to make the issues through ATAF or representation through ATAF, CBT, and other forms. But then it's also important that the developing countries themselves participate in ATAF activities. And ATAF activities include from aggregation and trying to aggregate these views to also trainings and other associated events. And again, no matter how hard ATAF tries, if the countries themselves do not avail themselves of the opportunities, I think there's not too much ATAF could achieve at the end of the day. So, those are the thoughts for me.

Martin Hearson: I think we have a slightly different conclusion to Emmanuel about one of those points, actually, which is if you're a country that doesn't have a large technical capacity and you only have one person, I think it's a strategic question. Does it make sense to throw yourself into these global tax negotiations and to take that capacity away from your other priorities domestically? And I think one of the lessons we've felt that our research kind of showed was that for some countries, it seems quite logical to stay outside of the big global negotiations. To work within the regional coalitions instead, and not to try and get yourself a seat at the table if you know that you're not going to be able to eat, if that's the right way to use the metaphor.

So, we spoke to people from some countries, which are not members of the inclusive framework, where the revenue authority people very much said, "We don't think this is the right place to invest our resources right now. And we've made that case to our finance ministry. And we've won in that internal argument. And it's not that we aren't in favor of multilateralism or not that we don't want to do international tax. Just that we aren't able to devote sufficient resource to participating in this way for it to make sense for us to join."

Emmanuel Eze: If I may, let me clarify that I don't see much difference between our two points. What I have said is, if you need to send your representative to the inclusive framework, you have to send the best you can. If you don't have one, you can train one. And if you cannot train one, there are other channels through which you can participate. That's the whole essence of what I have said.

And I pointed out, [there are] other venues, including ATAF. Apart from ATAF, there are other regional tax organizations. In West Africa, we have WATAF. So by having the interaction in this various forums, you should be able to make your views known. And there's also a channel for bilateral engagement. As in Nigeria, I know that if a neighboring country or an interested African country turns to Nigeria and says, "Nigeria, this turns out to be our view about this issue. Please, could you help us present this issue?" Nigeria will verbally do that. So, I believe we take that on and run with it. So, interaction with each other, interaction with the subregional and regional organizations, for those who cannot participate at global level, it's one aspect of participation and it could as well have its own influence. That's my point.

Stephanie Soong Johnston: Thank you for clarifying. So, this conversation just brings up in my mind a question about communication, right? And of course, because of the pandemic lockdowns, we're all on Zoom, we're all on Teams. How have virtual communications helped or hindered multilateral negotiations and should this continue after the pandemic's over?

Emmanuel Eze: It's an interesting question because it has its pros and cons. For starters, it is good to the extent that the cost of traveling is reduced for developing countries. The cost of travels and the cost of engagement with the various working groups in Paris is quite prohibitive. And it's been pointed to as one of the reasons why most developing countries are not participating at the optimal level. That's one good aspect of it.

Then there's also the issue of sometimes, in the course of our work, you learn by participation. So, one of the things that I've seen when it went virtual is that more of my colleagues are able to join these meetings because the cost is practically low. So, you have more revenue staff or the staff who may tomorrow be in the position to actually represent countries in this were attending virtually. It may be heavy, but I tell them they get experience as to what goes on in this world. They also get experience as to what is being discussed. Some of them also get exposed to the technical papers and documents, which implies indirectly the capacity that's actually being built. So, that's another point to be made about that.

But then when you get down to negotiation properly, if you have attended physical negotiations and their virtual negotiations, you see the difference is significant. It is better to get more done looking at someone's eyes than looking through the screen. It's better to understand someone's position, like matters pointed out before. You could pull one by the side lane and try to explain your position to them than sending and typing and writing. Most of this communication that leads to groundbreaking agreement in negotiations are done by chitchat, just explaining yourself, talking, looking at each other's eyes, and gauging the sincerity of what is being proposed.

But when you [deviate from] procedure, everything is secret. You send it across, maybe your boss, you have to look at it, remove or add one or two things. I send it over. The other boss does the same. So, it's more difficult from my point of view to get things done virtually than to get them done physically.

So, going forward, I'm hoping that when the COVID-19 challenge is finally over, that as next steps, they could adopt a mix of the two. You could have your head leader, head negotiators, attending these meetings physically, while the subordinates and others who are supporting the work could join in virtually. With that, you get best of virtual and the best of physical. Because your head lead or the lead of the negotiators would still be the one that would make the final call. One of the other subordinates who maybe attend virtually will get the benefit of also following the work and then getting acquainted with the meetings and how it works for capacity-building purposes. And that's my view.

Stephanie Soong Johnston: OK. I think you're right that we will have a hybrid. It seems to make sense since we know what we are now capable of — doing a lot of things virtually. You are right to point out that there are a lot of things that cannot be accomplished virtually that happen in coffee breaks and in the hallways. I mean, that's where a lot of negotiations happen, really. So I think you're right that a hybrid approach will be adopted after this is all over and we meet again. Martin, what do you think?

Martin Hearson: Yeah, I think that analysis is right. I mean, it definitely came up in conversations where you had that. People mentioned ATAF quite a lot as having been — ATAF delegations, we speak to them in the coffee breaks. And often that's when we find the most productive conversations with them. So, I think that's definitely the case.

I think another sense I have is that for all the benefits of, in terms of cost of not having to travel to Paris, there is a downside, which is the negotiators from lower-income countries especially, are, when they go to Paris, they're often simultaneously having to stay on their computers and manage work back home because they're not in roles where they can just clear their week to focus on being at the OECD. And that's sometimes a bit of an inequity between those negotiators and those from OECD countries who may be, it's a bigger part of their job to participate in the OECD. And I think if you're not physically taking yourself to another place, it can be harder to communicate to everybody else that you are busy with something else. And so, I would imagine that's kind of what some people said to us that the virtual meetings can, in that sense, be a bit more tricky sometimes.

Stephanie Soong Johnston: Yeah, it's difficult to strike the right balance then. Too bad we can't all be in the same place at the same time all the time. We can't double ourselves and clone ourselves and, you know, and do double the work. Actually Emmanuel, I had a quick question for you about how much time you spend. How do you divide your time between your regular work plus inclusive framework work and multilateral work? How do you divide that time?

Emmanuel Eze: It's indeed one of the reasons we flew through my interventions. I've continued to say "Capacity, capacity, capacity." Because it turns out to be one of the most challenging things that we have as developing countries. It is difficult to balance your work within the context of your service to the Revenue, and then your work at the global level. It is difficult. I, you will see, like Martin, try to point out, sometimes you just have to go home with work, right? You work at night, you work over the weekend, you work on Sundays. Because if there's a deadline and there's a need for you to contribute to technical documents, you must contribute to the technical documents. So, and finding balance is not an easy task. So it's one of the challenges we have. We are pushing. We are tagging and we continue to push to see that more of our colleagues are brought up to speed and also trained to represent and to help out fairly often. So, it is a task, but we are doing it. What are the options?

Stephanie Soong Johnston: Let me just ask you one last question before we go. How optimistic are both of you about the future of truly inclusive multilateralism and why?

Emmanuel Eze: I would say I'm optimistic. I'm optimistic, like I've hinted about before. The global tax landscape is changing. It's evolving. I know that as time goes on, the inclusive framework that we have today will move to take care of concerns which have been raised by many about its inclusiveness and move to become more effective, more equitable. More in comparison of who's developed and developing nations. So, my perception is that of optimism. I want to be optimistic [about the future]. It's also important to point out that the inclusive framework is solving a problem, which ordinarily existed prior to its founding. It may not have solved all the problems, but it's not true to say it's not solving some of these problems. So, we are just hoping that as time goes on, we are able to achieve more, realize more, and then take the organization or any of us to the greater level.

Martin Hearson: So I think we have to be optimistic. Right? I'm sitting in the U.K., which right now doesn't feel like a beacon of multilateralism with Brexit and everything. But, you know, we have to be optimistic. I would say in terms of this particular situation that the onus really rests on the lower-income countries themselves is my impression. That we can talk about it in terms of the global institutions and what can be done there and are they going to become more effective and will they evolve in the way that Emmanuel talked about. But, I think it's down to the lower-income countries themselves to build that capacity, to build that collaboration, and make of the existing institutions what they will. And if that's not going to work then to set an agenda for reshaping those institutions.

And there's things that others of us can do, whether it's donor organizations or the secretariats or the other member countries. But I think to be optimistic, we have to actually look at the new generation of negotiators coming up, and that's partly why I'm pleased to have Emmanuel here with us. I think there's a great amount of talent visible amongst negotiators from lower-income countries. And I think the objective has to be to help develop those people who have got many more years of negotiating in them and can really be the ones who create something better in the future.

Stephanie Soong Johnston: Well, thank you for ending on that positive note. Thank you both, Emmanuel, Martin, for your time and your insights. I really enjoyed talking with you today.

Emmanuel Eze: Thank you, Stephanie.

Martin Hearson: Thanks for having us.

David Stewart: Now, coming attractions. Each week, we highlight new and interesting commentary in our magazines. Joining me now from his home is Executive Editor for Commentary Jasper Smith. Jasper, what will you have for us?

Jasper Smith: Thanks, Dave. In Tax Notes Federal, practitioners from Agostino & Associates examine IRS-imposed penalties for international information reporting missteps. Practitioners from KPMG consider the tax implications of special purpose acquisition company transactions from the vantage points of sponsor, investor, and target. In Tax Notes State, Carley Roberts, Robert Merten III, and Malcolm Brudigam review the landscape of market-based sourcing rules. Craig Fields and Timothy McGurrin examine issues regarding a state’s ability to tax income of individuals based on domicile or statutory residency. In Tax Notes International, Richard Asquith considers the changes that will affect e-commerce businesses selling into and out of the United Kingdom after Brexit. Practitioners with Davies Ward Phillips & Vineberg compare tax incentives for green energy in Canada and the United States. And finally, on the Opinions page, Joseph Thorndike looks at President-elect Joe Biden's ability to make a deal.

David Stewart: You can read all that and a lot more in the pages of Tax Notes Federal, State, and International. That's it for this week. You can follow me online @TaxStew, that's S-T-E-W, And be sure to follow @TaxNotes for all things tax. If you have any comments, questions, or suggestions for a future episode, you can email us at And as always, if you like what we're doing, please leave a rating or review wherever you download this podcast. We'll be back next week with another episode of Tax Notes Talk.

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