Political Influence of OECD as Soft Law and the Implementation of Pillar 2

Abstract

This study analyzes the political influence of the OECD’s soft law tax instruments, focusing on the most recent initiatives that culminated in the Model Rules of Pillar 2 (Global Anti-Base Erosion Rules). The issue at hand concerns adopting non-binding recommendations by the OECD, which induce states to follow its guidelines to avoid economic and political disadvantages, especially in developing countries. The objective is to investigate the political influence of the OECD’s soft law tax instruments in light of the rules of Pillar 2, using a hypothetico-deductive methodology and bibliographic research. It concludes that, although soft law is not binding, it exerts a strong influence on states, which, fearing adverse consequences, adopt the measures recommended by the OECD.