International organizations are important participants in the system of international relations. They are an institutionalized form of cooperation between states (international governmental organizations – IGOs) or between institutions, legal and natural persons from different countries (international non-governmental organizations – INGOs).
International governmental organizations (IGOs)
International governmental organizations are organized associations of at least three states established under international agreements. They are established to implement the objectives of the activity specified in the founding documents (usually in the statute).
Intergovernmental organizations are characterized by international legal subjectivity, which means that they may have and assume on their own behalf rights and obligations under international law. This is expressed primarily in the possibility of concluding international agreements, maintaining diplomatic relations or participating in international conferences.
Functions of intergovernmental organizations
In practice, three types of functions of intergovernmental organizations are distinguished in the field of international relations, they are:
Regulatory functions, consisting in establishing legal, moral and political norms that influence the behavior of participants in the system of international relations,
Control functions, consisting in examining the compliance of the Member States’ actions with the content of the established standards and models,
Operational functions, consisting in the provision of services to Member States or other entities directly by an international organization (e.g. conducting research, preparing reports).
An attribute that characterizes intergovernmental organizations is the existence of permanent bodies. Usually these are:
- a general assembly in which all members of the organization are represented,
- a council with a smaller number of rotating members and endowed with executive powers,
- a permanent office or secretariat that performs administrative and technical functions.
Division of international governmental organizations (IGOs) International governmental organizations are divided according to the geographical criterion and the nature of the organization’s competences.
Breakdown based on the geographic key:
- general organizations, all countries of the world can become members (e.g. the United Nations ),
- regional organizations associating countries according to their geographic location (eg African Tax Forum “ATAF”, Pacific Association of Tax Administrations “PATA”, Central America Center for Tax Administrations “CIAT”).
Division according to the nature of the organization’s competences:
- general (e.g. OECD ),
- specialized in a given field of social life (eg Joint EU Transfer Pricing Forum ) .
International non-governmental organizations (INGOs)
International non-governmental organizations are of a different nature. The activity of such structures is not regulated by international law, but by the law of the state in which such an organization is registered. Such organizations do not have international legal subjectivity.
Among international non-governmental organizations, one of the most numerous groups are those with humanitarian, pacifist and cultural goals. INGOs have a great power to influence their environment, both as members of social dialogue and as lobbying groups acting for the cause they support.
The Organization for Economic Cooperation and Development was established in 1960 by 20 countries – 18 participants in the so-called Marshall Plan and Canada and the USA. Poland became a member of the OECD in 1996. Currently, the OECD has 38 countries. The organization aims to support member states in achieving the highest possible level of economic growth and living standards for citizens. The OECD is a leading international organization dealing with transfer pricing – the influence of OECD on the behavior of countries relates to a total of about 100 countries that follow the guidelines of this organization in their local regulations.
Within the OECD, a number of agreements and codes of conduct relating to business transactions and taxation have been established. In 1979, the OECD published the first transfer pricing document – “Transfer Valuation for Multinational Enterprises”, which can be considered the first international guidelines for related party settlements.
One of the most important projects carried out by the OECD in the field of transfer pricing was the “plan to combat the erosion of tax bases”, or BEPS.
Over time, the OECD guidelines have become a reference point for tax administrations not only of OECD member countries, but also of other countries. OECD work on transfer pricing is still ongoing – in addition to the OECD Guidelines recently updated in 2017, detailed reports are issued, e.g. Transfer Pricing Guidelines for the Effects of the Covid-19 Pandemic or Transfer Pricing Guidelines for Financial Transactions.
OECD documents and BEPS reports are available on the OECD website
The United Nations
Established after World War II, the United Nations is primarily a political organization that aims to ensure international peace and security, develop cooperation between nations and promote the observance of human rights. However, transfer pricing issues were included in the broad agenda of the United Nations and its individual agendas. The result is the Transfer Pricing Manual for Developing Countries, which was first published in 2013 and has had two subsequent editions by 2021. Contrary to the OECD, which has developed guidelines for transfer pricing, the UN document is a practical development of the OECD principles dedicated to developing countries as well as an extension of Art. 9 of the UN Model Convention on Double Taxation (dedicated to associated enterprises).
UN documents are available on the organization’s website – http://www.un.org
BEPS or “plan to combat the erosion of tax bases” is a project launched in 2012 by the leaders of the G20 – the world’s largest economies. The project was led by the OECD under three pillars:
1) introducing coherence of national laws on cross-border activities
2) strengthening essential requirements in existing international standards
3) improving transparency, while promoting greater certainty and predictability.
The BEPS initiative ran until 2015 and included 15 actions that should be taken by individual countries to prevent unfair tax avoidance and shifting profits to tax havens. Actions 8-10 and 13 BEPS are strictly devoted to transfer pricing. One of the results of the BEPS work is the Country-by-country reporting introduced by the administration of OECD and G20 member states. The CbC report is a document where international capital groups report on the size of their activities, revenues, profits, tax as well as places of business. Such a report has been submitted by large taxpayers in Poland since 2016.
BEPS reports are available on the OECD website
Joint EU Transfer Pricing Forum
The organization operating at the EU bodies has created the “Code of Conduct on Transfer Pricing Documentation for Associated Enterprises”. This document concerns the creation of standardized and partially centralized transfer pricing documentation for companies associated in the European Union. This document was adopted by the Resolution of the Council of the EU and representatives of the Member States in June 2006.
Other important documents of this organization include documents on intra-group low-value-added services, advance pricing agreements and avoidance of disputes in the European Union.
The documents of the Joint EU Transfer Pricing Forum are available on the organisation’s website