The OECD: what it is, how it works and why it shapes global tax standards

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🌍 Why the OECD is an essential player in the international economy

The Organisation for Economic Co-operation and Development (OECD) is one of the international bodies with the greatest impact on global standards, public-policy assessment and the promotion of tax transparency. Although its recommendations are not legally binding, its influence shapes state decisions, economic strategies and regulatory reforms.

➤ To understand how these standards affect countries such as Andorra, you can read Evolution of Andorra’s tax framework.

🏛️ Origin, growth and purpose of the organisation

The OECD was created in 1961 as the successor to the Organisation for European Economic Co-operation (OEEC), which had been established to manage the Marshall Plan after the Second World War. Its creation marked a shift towards a broader international forum where industrialised economies could coordinate their economic, fiscal, social and environmental policies.

Its core mission remains unchanged: to promote more effective and sustainable public policies through comparative analysis, technical cooperation and the establishment of international standards.

🏰 Permanent headquarters in Paris and global presence

The OECD has a permanent and stable institutional structure:

• Main headquarters: Château de la Muette, 2 Rue André Pascal, 75016 Paris.
• Second campus: administrative and meeting facilities in Boulogne-Billancourt.
• Regional centres and external offices: Berlin, Tokyo, Mexico City, Washington D.C., among others.

This setup reinforces its permanent nature: the OECD is not an organisation that “meets occasionally”, but a body operating continuously and professionally.

🌐 How the OECD actually works

Its work combines technical analysis, intergovernmental coordination and the development of international standards. The structure rests on four pillars:

🔹 The Council: political decision-making centre

It represents the 38 member states. Each country has a permanent ambassador to the OECD and one vote. Decisions are taken by consensus, requiring constant negotiation and strengthening collective legitimacy.

🔹 Executive Committee: operational coordination

It prepares Council meetings, oversees work programmes and ensures initiatives align with member-state mandates.

🔹 Over 300 specialised committees and working groups

These are the organisation’s technical engine. Thousands of government experts work within them, examining policies, recommendations and standards. Major initiatives developed here include:

• the Common Reporting Standard (CRS),
• the BEPS framework against base erosion and profit shifting,
• the PISA assessments in education.

➤ To explore tax transparency in more detail, you can read Common Reporting Standard (CRS): the global standard for tax transparency and its impact on Andorra

🔹 Secretariat: analysis and implementation

Headed by the Secretary-General — appointed for renewable five-year terms — the Secretariat coordinates studies, reports, statistics and technical assistance. Its continuous work forms the organisation’s professional backbone.

🔄 Permanent meetings and ministerial sessions

The OECD’s functioning combines:

• ongoing technical work (several active committees each week),
• Council meetings (permanent representatives),
• an annual ministerial meeting where economy, finance, education or labour ministers set strategic priorities.

It is a continuously active organisation, not an occasional one.

⚖️ Global influence: pressure, reputation and standards

Despite lacking coercive power, the OECD’s ability to influence global policies rests on three pillars:

• Peer pressure: member countries are subject to periodic peer reviews that generate diplomatic pressure to adopt best practices.
• Reputational impact: its reports influence markets, investors, rating agencies and public opinion.
• International standardisation: many OECD guidelines have become global standards, especially in taxation, governance and education.

➤ To see how its criteria are incorporated into tax treaties, you can refer to Double Taxation Agreements (DTA) in Andorra

Initiatives such as BEPS, CRS or FATCA (which inspired the CRS) have fundamentally reshaped the international landscape in the fight against tax evasion.

➤ You can explore further reading with FATCA: the US model that transformed global tax transparency

💶 Funding: who pays the OECD and how contributions are calculated

The OECD is primarily funded through:

• Mandatory contributions from member states, forming part of the Core Budget (Part I), calculated on the basis of:
  • the economic size of each country (GDP),
  • its relative weight within the organisation.
• Voluntary contributions or additional programmes (Part II), financed by countries choosing to fund specific projects.

Approximate contributions:

• the United States provides around 20 %,
• Japan, Germany, France and the United Kingdom each contribute between 5 % and 10 %,
• smaller economies such as Estonia or Iceland contribute less than 1 %.

This proportional model ensures financial stability and equitable participation.

🌟 Major achievements since its creation

The OECD has shaped global policy in several fields:

🔹 Tax transparency and the fight against evasion

With the CRS, automatic exchange of information and the BEPS project, the OECD has transformed international taxation and administrative cooperation. Banking secrecy — tolerated for decades — has almost entirely disappeared.

🔹 Education and human capital

The PISA assessments have reshaped how countries analyse educational performance and compare their systems, generating internationally comparable data.

🔹 Environment and sustainability

The OECD has promoted policies on emissions reduction, circular economy and energy transition. It publishes public-policy frameworks such as the Green Growth Strategy and the Environmental Performance Reviews.

🌍 Accession and withdrawal: how a country joins (or could leave)

To join the OECD, a country must demonstrate commitment to the following principles:

• democracy,
• market economy,
• rule of law,
• effective implementation of OECD standards.

The accession process is rigorous, requires reforms and must be approved unanimously by the Council.

There is no formal procedure for withdrawal, but a country could leave through formal notification, as is the case with other international organisations.

Conclusion: why the OECD matters today more than ever

The OECD has no coercive power but possesses significant capacity to set global standards, guide reforms and promote evidence-based policymaking. It serves as a forum where advanced economies coordinate strategies to address global challenges such as taxation, sustainability, education, competitiveness and governance.

Its very existence demonstrates that multilateral cooperation — when grounded in data, transparency and technical rigour — remains essential in an interconnected world.

In practice, the OECD affects not only its member states but also international relations and, therefore, the global economy.

If you wish to analyse how OECD standards may affect your company, investments or tax position, you can contact us via our contact form.

Given that we operate internationally and organise complex structures and assets, it is essential for us to understand everything that affects them.

Last review: December 2025