Tax Diplomacy

Abstract

The aim of this paper is to analyse the methods of achieving coordinate tax systems, and practical application of the best tax practices of one country to another, with emphasis on the significance of a country's membership in particular associations, namely the OECD, fiscal decentralisation and the increasing coordination of tax systems on the global level with the subsequent effect of interconnection. The presented hypotheses are: Membership in the Organisation strengthens tax integration and emphasizes the effect of diplomacy in coordinating tax systems; Strengthening of tax diplomacy and fiscal cooperation ensures creation of new methods of preventing tax evasion. In order to test the hypotheses, descriptive and comparative research methodology of the OECD members and non-members were used. Both hypotheses have been confirmed, leading to the conclusion that membership in the OECD results in better tax integration and transparency, reduced tax evasion and enhanced understanding and willingness of taxpayers to participate in the tax system.