OECD Council Agrees to Recommend Ending Tax Deductibility of Bribes to Foreign Public Officials

Issued by Transparency International Secretariat



On 11 April, 1996 the Council of the Organisation for Economic Co-operation and Development (OECD) agreed to recommend to all Member countries of the OECD in a strongly worded resolution to stop tax deductibility of bribes to foreign public officials. The Council instructed its Committee on Fiscal Affairs in cooperation with its Committee on International Investment and Multinational Enterprises to monitor the implementation of this recommendation, to promote the Recommendation in the context of contacts with non-Member countries of the OECD and to report to the Council as appropriate.

Peter Eigen, the Chairman of Transparency International (TI) expressed today in Berlin his satisfaction with this important step. "We have been supporting the OECD initiative on combatting corruption in international trade and investment whole heartedly" he said, "and the Recommendation on Bribery of Foreign Public Officials in International Business Transactions of May 1994 has become an important element in our strategy to build a global coalition against corruption."

Tax deductibility permitted by some countries is considered particularly damaging to efforts to control international corruption, both as a symbol of official acceptance of corruption, and as a tangible subsidy to those companies, who make the tax payers carry a major portion of their bribe payments. " Disallowing tax deductibility for bribes would serve as the strongest and most politically visible symbol of the common international commitment to combat bribery" says the OECD Report.

This recommendation can best be implemented by making bribes to foreign officials illegal, which was another step proposed in the 1994 Recommendation. "We at TI hope that the OECD will develop a consensus also on making corruption illegal under criminal, civil, commercial and administrative law, and will move swiftly through the other clusters of measures recommended in 1994" says Eigen; "this coordinated approach offers to companies, that have been caught in the international corruption trap, an escape from their prisoners' dilemma: all countries can stop allowing bribes simultaneously. Most companies have understood that their present corrupt practices cannot continue -- they have become too expensive and too risky, and too damaging to open markets and democracies.

Transparency International welcomes the OECD action. It confirms a global trend evidenced last week by 21 members of the Organisation of American States, when they signed a far-reaching Convention against foreign bribery in Caracas.


For any press enquiries please contact

In Germany
Prof. Dr. Peter Eigen, Chairman
tel. + (49 30) 343 8200
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http://www.transparency.org

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Mr. Jeremy Pope,
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