OECD G20 Report: Simplicity Checklist and Programmable Rules Key to Global Tax Certainty
SDG 17: Partnerships for the Goals | SDG 8: Decent Work and Economic Growth
Institutions: Ministry of Finance | Central Board of Direct Taxes (CBDT)
The OECD report to the G20, “Enhancing Simplicity to Foster Tax Certainty and Growth,” addresses the inherent complexity of cross-border taxation caused by the interaction of multiple tax regimes and the risks of double taxation. The report argues that simplification is a vital economic tool that reduces compliance costs, improves administrative ease, and promotes voluntary compliance.
To operationalize this, the report proposes a “Simplicity Checklist” for rule-making. This framework includes specific steps such as conducting impact assessments, holding early consultations with stakeholders, ensuring clarity in drafting, and performing rationalization reviews to remove duplicative rules (especially regarding the Global Minimum Tax). Looking ahead, the report advocates for the design of “programmable rules”—tax laws specifically drafted to align with technology-based compliance systems—to reduce manual interventions and compliance costs.
The report specifically highlights India’s Income-tax Act, 2025 as a successful case study of domestic simplification. It notes that India replaced its 1961 Act with a streamlined version that reorganized chapters and reduced sections (from 819 to 536), utilizing tables and simpler drafting to enhance clarity. This process involved extensive public consultation and review by a Select Committee of Parliament, ensuring transparency.
The report validates India’s recent legislative strategy, recognizing the Income-tax Act, 2025 as a global example of balancing transparency with simplification. For the Ministry of Finance, the recommendation to adopt programmable rules offers a clear strategic direction: future Finance Bills should be drafted to be natively compatible with India’s digital public infrastructure (like the GST Network), ensuring that tax policy leverages technology to automate compliance and minimize disputes.
What are “Programmable Rules” in the context of tax administration? Programmable rules are tax regulations designed from the outset to be machine-readable and compatible with digital compliance systems. Instead of relying on complex, subjective text that requires manual interpretation, these rules are structured (often with the help of software providers and tax experts) to allow for automated execution within enterprise resource planning (ERP) systems. This approach bridges the gap between policy design and software solutions, significantly reducing the cost of audits and the risk of errors.
Follow the full report here: Enhancing Simplicity to Foster Tax Certainty and Growth