Speaking at a virtual conference organized by London-based Jericho Chambers, Pascal Saint-Amans, who is leading negotiations among 137 countries and territories, said adapting the global tax framework for the digitalized economy remains a priority for world leaders.
The need for negotiations to take place virtually means the OECD won't begin work on anything else during the pandemic, he said.
"It is extremely difficult to negotiate without meeting physically," Saint-Amans said. "We continue our work … but there will be no new projects until the vaccine is developed."
The OECD's current international tax overhaul is proceeding under two pillars. The first pillar would reallocate taxing rights to jurisdictions where companies have customers but lack the physical presence that can be taxed under traditional rules. The second involves developing a global minimum tax.
Saint-Amans, who has been critical of countries' arguments that the tax rewrite will impinge on their sovereignty, said the current crisis may lead to a surge of nationalism. Any attempt to go it alone in dealing with the economic fallout from the pandemic is doomed to fail, he warned.
"If you try to exercise sovereignty on your own, you will fail because the economy is global," he said. "We have global issues, we need global answers. Countries should compromise; we need a tax policy mix that combines fairness, sustainability and growth."
Saint-Amans was echoing a sentiment expressed earlier in April by the German finance minister, Olaf Scholz, who said in a prerecorded speech: "Narrow self-interest will not help us; solidarity will. We need to stand together as a society and as a global community. Viruses don't discriminate by nationality."
Lending his support to the OECD reform project, Scholz said: "International cooperation is essential in effectively managing this pandemic and its economic fallout. When so much depends on the ability of states to take effective action, we must work to ensure fiscal firepower and robust national budgets, in all countries."
Saint-Amans on Friday spoke of a "tax paradox," in which a failure of countries to reach agreement will give more power to low-tax jurisdictions by causing a race to the bottom in tax standards and rates. If countries don't cooperate, he said, "tax havens [will] fix the rules."
Speaking broadly about economic recovery after the global health crisis, Saint-Amans said counties shouldn't rush to impose austerity measures, as this would damage tax receipts and national budgets.
"If you want to protect growth, you need to spend," he said, "to make sure you have the capacity intact."
--Editing by Vincent Sherry.
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