THE world's tax system revolves between WTO and OECD just as the earth rotates on an axis between the North and South poles. Well, something on these lines might emerge as staple text in the economics books for schools in the coming years.

The basis for this visualization is the de facto emergence of World Trade Organization (WTO) as World Tax Organization (WTaxO) for indirect taxes over the last two decades. Similarly, the Organization for Economic Cooperation and Development (OECD) is coming in full bloom as the informal WTaxO for direct taxes.

This visualization is also influenced by two new developments. First, a detailed paper titled 'Is the WTO a World Tax Organization? A Primer on WTO Rules for Tax Policymakers' issued by International Monetary Fund (IMF) in March 2016 for the benefit of revenue administrations. The Primer "examines the extent to which World Trade Organization (WTO) rules impinge on policy makers' freedom to formulate tax policies" including the ones relating to a few segments of direct taxes.

Second, the title of World Bank's conference- 'Winning the Tax Wars: Global Solutions for Developing Countries' to be held during 23-24 May 2016 at Washington. The conference's one session is captioned 'Tax Competition, Tax Coordination and Tax Cooperation in a Globalized World'.

The Conference agenda says: "Domestic tax policy is under pressure to design a tax system that distorts economic activity in order to stay competitive in a globalized world. This panel will offer insightful thinking from national leaders about how countries can protect their tax sovereignty in a globalized world, whether or not it is possible to achieve tax coordination, and how to better protect the tax base of developing countries through better tax cooperation."

WTO has consolidated its position as the world indirect taxes organization since its incorporation in January 1995 as successor to General Agreement on Tariffs & Trade (GATT).

As put by IMF Primer, "WTO rules can therefore be expected to continue to be an important factor in shaping tax policies, as Members will undoubtedly want to ensure that their tax policy measures do not infringe WTO rules." It has a word of caution: "Indeed, even if certain tax measures are permissible under WTO rules, it may be inadvisable for Members to use them. In the case of tax incentives for investment, for example, judging from the experience of countries that evaluate such measures, they are seldom cost effective."

To what extent WTO regime and OECD's BEPS& other project are constraining developing countries' sovereign right to revise indirect and direct taxes to promote domestic manufacture such as India 'Make in India' Initiative or mobilize additional funds for poverty elimination? Has the working of WTO-OECD combine changed the total revenue collections and their composition? The answers to these questions at the global or national level are hard to come by. Such issues should thus be subject of intense study by academics and revenue authorities.

The original proponents of WTaxO did not foresee emergence of dual tax regulatory framework at the global level without any administrative planning. IMF's veteran economist, Dr Vito Tanzi, was perhaps the first expert to expound the concept of WTaxO. Way back in August 1996, he pitched for this idea in a paper titled 'Does the World Need a World Tax Organization?'presented at the 52nd Congress of the International Institute of Public Finance held at Tel-Aviv.

Later, Dr. Tanzi articulated this concept in a lecture titled 'Is There a need for a World Tax Organization?'

As he put it, "The World Tax Organization would identify tax developments that create cross-national spillover effects and would bring these to the attention of a board of directors representing all the countries. The board would recommend changes in those areas where the tax behavior of a country has clearly negative implications for other countries. For example, it would recommend changes in countries that are obviously raiding the world tax base. The Organization would not get involved in tax issues that do not have significant cross-border spillovers. And, of course, it would only recommend changes and not force them."

Shortly after retiring from IMF, he wrote an article in IMF's Finance & Development magazine (March 2001) contending "Globalization is likely over time to have a significant negative impact on countries' ability to raise revenues through their tax systems."

Well his observation has turned out to be true as is evident from WTO's rulings on several tax-related trade disputes. A notable case in point is ruling against imposition of export tax on rare earth minerals by China following a complaint from the US in 2013. Reckon also the fact how OECD is making difficult the sustenance of low-tax or zero tax regimes through attacks on aggressive tax planning and tax avoidance.

It is thus not surprising to see OECD getting flak from certain analysts for protecting and facilitating increase in tax revenue of developed countries through BEPS.

A case in point is Daniel Mitchell, Senior Fellow, Washington-based Cato Institute, who has been fighting against OECD's different initiatives that are limiting developing countries 'tax sovereignty but are meant to shore up tax revenues of developed countries.

In an article headlined 'With Obama's Help, OECD Wants a World Tax Organization' contributed to Fobes Magazine in June 2011, Mr. Mitchell noted that at its Global Tax Forum in Bermuda, OECD "unveiled a new scheme that effectively would result in the creation of something akin to a World Tax Organization."

He continued: "The vehicle for this effort is a Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This may sound dry and technical, but the OECD wants all nations to participate in this pact, which has existed for a couple of decades but was radically expanded last year to give high tax governments sweeping new powers to impose bad tax law on income generated in low tax jurisdictions."

He added: "For all intents and purposes, the Multilateral Convention outlaws certain pro-growth tax policies and discourages others. Equally worrisome, it creates a system allowing foreign tax collectors to cross borders."

Mr. Mitchell also observed: "OECD historically has tried to portray its efforts as a fight against tax evasion, but the Multilateral Convention explicitly talks about 'combating tax avoidance.' This should not be a surprise since the Capital Export Neutrality ideology is based on the notion that taxpayers should have zero ability to lower their tax burdens."

In March 2013, he questioned OECD's "policy activism" and its hobbyhorse BEPS.

In paper captioned 'OECD Launches New Effort to Undermine Tax Competition' published by Cato Institute, he contended: "BEPS report is very similar to the OECD's 1998 "Harmful Tax Competition" report, which asserted that so-called tax havens were causing damage but did not offer any hard evidence of any actual damage."

Mr. Mitchell noted that it is tax competition that has spurred OECD governments to cut their corporate tax rates from an average of 48 percent in the early 1980s to 24 percent today.

OECD has been perceived as an emerging WTaxO even by experts who are not its critics. It is here pertinent to cite a research paper titled 'The rise of the OECD as informal World Tax Organization through national responses to e-commerce tax challenges' published by Yale Journal of Law & Technology in 2006.

According to the Paper authored by Arthur J. Cockfield, as evidenced by the e-commerce reform initiatives which involved unprecedented global tax cooperation, the OECD is increasingly acting as an informal world tax organization in contrast to the sometimes touted need for a formal World Tax Organization that could impose binding tax rules on participating nations.

Mr. Cockfield observed, "In a world where governments jealously protect their tax sovereignty, the OECD reform process, which emphasizes multilateral deliberation and consensus-building through 'soft institutions,' may be the best available option for the development of international tax policy that promotes international welfare while permitting nations to continue to pass tax laws in their perceived national self-interest."

Notwithstanding concerns over sovereign taxation rights, there appears to be little scope for backtracking for the countries  from growing influence.

This is evident from absence of any direct opposition to curtailment of developing countrie's flexibility to mobilize additional tax revenue amidst growing clout of WTO-OECD combine.

It is here apt to factor in The Addis Ababa Action Agenda (AAAA) of the Third International Conference on Financing for Development drafted at a UN summit held in Ethiopia during July 2015.

As put by AAAA, "We commit to scale up international tax cooperation. We encourage countries, in accordance with their national capacities and circumstances, to work together to strengthen transparency and adopt appropriate policies, including: multinational enterprises reporting country-by-country to tax authorities where they operate; access to beneficial ownership information for competent authorities; and progressively advancing towards automatic exchange of tax information among tax authorities as appropriate, with assistance to developing countries, especially the least developed, as needed. Tax incentives can be an appropriate policy tool. However, to end harmful tax practices, countries can engage in voluntary discussions on tax incentives in regional and international fora."