The report for the South African G20 Presidency examines cross-border tax complexity and how multilateral co-operation can simplify rules, increase tax certainty, and support growth, while outlining next steps for consultation and practical solutions.
The OECD has released a report titled “Enhancing Simplicity to Foster Tax Certainty and Growth” on 18 November 2025.
Taxation of cross-border business activity is inherently complex for taxpayers and governments. Taxpayers operating across borders must understand, comply with and bear the consequences of the interactions of multiple sovereign tax systems. Governments drafting rules that deal with taxation of cross-border income need to consider the impact of the interaction of multiple tax systems on taxpayer behaviour and on their tax base.
This inherent complexity can be mitigated by effective international co-operation designed to avoid double taxation, remove barriers to cross-border activity, and promote certainty.
Significant reforms to the cross-border business taxation landscape have taken place, particularly over the last decade, many of which were championed by the G20. To promote certainty and stability and improve the integrity of the cross-border business tax system, jurisdictions across the world have made legislative and administrative changes in various aspects, including with respect to transfer pricing, treaties, and antibase erosion rules. Considerable progress in addressing base erosion and profit shifting and improving certainty has been achieved.
In the current environment, complexity in the cross-border business taxation landscape remains challenging. In part this reflects the increased integration of the global economy and related supply chains and the sophistication of business models (including the significance of intangible property). It is also a function of the speed of changes to the cross-border business taxation rules that have taken place in recent years, as well as their extensive and often detailed nature. The importance of consensus building amongst jurisdictions and stakeholders, critical to the effectiveness and inclusivity of multilateral co-operation in tax matters, can itself drive complexity.
Lower capacity jurisdictions in particular have expressed their concern about complexity, including the administrability of rules, and the collateral impact on the ability to protect their tax base. In some instances, concerns about complexity may hinder the adoption of new rules in the first place – because of perceived administration challenges or incompatible designs given unique needs. As such, complexity can pose a direct challenge to domestic resource mobilisation efforts.
Taxpayers also have concerns about complexity and the related costs of compliance. This includes the concern that compliance costs can be excessive relative to the tax at stake; the costs drain resources that can otherwise be used in the business; and the concern that complexity increases the risk of disputes.
There is therefore a need for international organisations such as the OECD and Inclusive Framework, and domestic governments to consider simplification. Benefits of simplification can include:
- Improving ease for taxpayers in implementing the rules and reducing cost of compliance;
- Improving the ease of administration, which can reduce costs for tax administrations or, over time, allow for deployment of tax administration resources elsewhere;
- Wider and more consistent adoption of common rules by a larger and more diverse group of jurisdictions;
- Promoting voluntary compliance and improving investor confidence and growth;
- Enabling greater consistency in interpretation of the rules which can prevent and limit tax disputes, avoid double taxation and build greater trust in tax systems.
In pursuing simplification, there is also a recognition of the need to balance other policy objectives which may pull in a different direction. For instance, an overly simple rule may not be sufficiently clear or fair in its application to vastly different fact patterns. Equally, an overly simple rule might be more susceptible to abuse and negatively shape taxpayer behaviour in unintended ways.
This report, prepared at the request of the South African G20 presidency, considers ways to bring simplification, foster tax certainty and reduce compliance costs in the cross-border business tax system for both taxpayers and tax administrations.
Chapter 1 of the report acknowledges the inherent complexities in the taxation of cross-border business activities and describes the contribution this report is intended to make. Chapter 2 discusses the hallmarks of simplicity and drivers of complexity in the context of the domestic rules which form the foundation for implementing multilaterally agreed solutions and outputs.
Chapter 3 explores the additional drivers of complexity that arise in the context of multilateral co-operation, the relevance of multilateral co-operation for reducing complexity, and the progress to date in using tools for promoting simplicity and certainty in the context of multilateral co-operation. Chapter 4 then suggests opportunities and areas for further focus to reduce complexity in the context of multilateral co-operation. The conclusion and next steps in Chapter 5 identify areas where further work could be explored, in consultation with interested jurisdictions, organisations and businesses.
Given the relevance of this topic to many stakeholders, this report invites further development of the ideas presented. Further consultation with lower capacity jurisdictions in particular would be crucial to ensure that their experiences and priorities are adequately taken into account.
The analysis in this report draws on relevant academic literature, guidance and recommendations of the OECD Regulatory Policy Committee, discussions at the April 2025 Cape Town Plenary, as well as subsequent discussions with a range of jurisdictions in the Inclusive Framework. It is also informed by the Secretariat’s experience over recent years, including in providing capacity building with lower capacity jurisdictions.
This report is delivered to G20 Finance Ministers and Central Bank Governors under the South African presidency.
