On February 25, 2021, ABDF Jovem held the "Joint event YIN/IFA - Brazil and Colombia", in which it discussed, among other topics, the process of Brazil's accession to the Organization for Economic Cooperation and Development (OECD).

It is no secret that Brazil would like to join the OECD as a full member. For many, joining the Organization means a "seal of quality" capable of providing the country with the desired credibility in the international arena. But what must be done to become a permanent member and why would joining this select group be important?

The entry of the applicant country into the OECD inevitably goes through a series of technical and political factors that influence the accession process.

Since its inception in 1961, the Organization has established elementary criteria to be considered for a candidate for accession, among them the need for "like-mindedness" in relation to the world view and shared values among OECD members (such as market economy and democratic principles).

With the success obtained throughout its operation and the growing demand from countries that have the objective of joining the Organization, the OECD Ministerial Council developed the document "Framework for the Consideration of Prospective Members", in order to provide members and prospective members with criteria and information to be observed in the process of joining the Organization [1].

Brazil formalized its interest in becoming a member in 2017 and is awaiting an invitation to begin the accession process, which will only occur with the unanimous acceptance of all OECD member countries. With the invitation, the country will be subject to an "accession roadmap," in which it must follow a long process of compliance with a series of requirements and conditions. Colombia, for example, recently completed its accession process after an intense seven years of work.

Although it is not yet a full member, Brazil has an active and prominent participation in the OECD as a "key partner", a status that allows it to play a relevant role in the entity. We believe that, because of this and other efforts, it currently seems to be the most advanced country to receive the invitation [2].

Once admitted as a member, the country will not necessarily be subject to sanctions for noncompliance with the lines drawn by the entity. However, the duty of compliance with its principles, guidelines and good practices will result from the desired "seal of quality" that the Organization provides, as well as from the multilateral surveillance provided by the international community that is part of its ranks. Naturally, part of this process involves a profound re-examination of its internal social and economic policies.

Within its economic proposal, one of the main objectives of the entity is the approximation and the increasing search for tax alignment of its members. In relation to this, Brazil and OECD predominantly diverge on two issues: transfer pricing and tax litigation.

Regarding the first point, OECD and the Brazilian Federal Revenue Service (RFB) have developed important work of analysis of the convergence and divergence points of the Brazilian transfer pricing rules to the OECD standard, seeking to identify the main aspects to be considered in the process of alignment of Brazil to the standards of the Organization (mainly, the adoption of the arm's length principle), as one of the conditions for its accession, without neglecting to take into consideration the peculiarities and specificities of the Brazilian system (particularly, its simplicity and resulting legal certainty).

According to a study developed by the Insper's Taxation Center, in December 2020, Brazil has a tax litigation equivalent to R$ 5.4 trillion, which corresponds to 75% of GDP [3]. This shows that our practices go against the OECD's intentions in proposing different alternatives to solve this problem and, consequently, improve the tax collection of its members. It is shocking to see that, for example, while Brazil has 15.9% of its GDP devoted only to disputes in the federal administrative sphere, OECD countries have, on average, only 0.28% of GDP of tax credits being administratively disputed, as can be seen in the following table from the same Insper study:

Thus, the misalignment of transfer pricing policies and tax collection mechanisms with OECD practices will have to be taken into account by Brazil in its pretensions to become a full member of the OECD.

The OECD develops important work of international coordination and alignment, and has already achieved relevant achievements, as it was recently recognized by the editorial board of the Financial Times, in an article entitled "The OECD is an underrated institution" [4]. Our efforts to join the institution are very valid.

In the tax field, if Brazil becomes a member of the OECD, it should adopt an increasingly relevant role in the discussion of the new international taxation standards that are being formed, ensuring that the interests of countries with its profile and level of development are heard.

Amidst the scenario of economic crisis and political instability aggravated by the advent of the COVID-19 pandemic, our view is that it has never been more important and urgent for Brazil to join the OECD in order to follow the entity's guidelines and take essential steps towards reaffirming its commitment to market economy and democratic values, adopting the best political and economic practices, which will certainly bring benefits and investments to Brazil.