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To our knowledge, no list enumerating those countries in which bribes are still tax-deductible exists or is readily available. Only four of the international organisations engaging in the issue have issued recommendations (OECD, Council of Europe) or binding agreements under conventions (UN, OAS) on the tax deductibility of bribes, but none, with the notable exception of the OECD, have taken action thus far to follow up on the adherence by member states to these rules.

The following text is destined to give you a quick overview of international actions against the tax-deductibility of bribes, and the links will hopefully provide you with at least some of the information you are after, including an up-to-date list containing countries implementing the legislation disallowing the tax deductibility of bribes.

OECD

The OECD offers perhaps the most comprehensive approach to disallowing tax-deductibility of bribes.

The practice of deducting bribes paid to foreign public officials in the context of international business transactions was condemned in a 1996 Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials by the OECD, in which member states were called upon to critically re-examine such treatment with the intention of denying this deductibility. While some countries, such as the US and the UK, already disallowed tax treatment of bribes in line with their general stance against bribery, others implicitly acknowledged - through their taxation system - the "need" of international companies to make bribe payments abroad in line with "local custom".

The compliance of OECD states to the Recommendation are monitored through two different mechanisms:

• The OECD's Committee on Fiscal Affairs in cooperation with its Committee on International Investment and Multinational Enterprises monitor the implementation of this recommendation and report to the Council as appropriate.
• Furthermore, the Commentaries on the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Convention) state that "a full participant also accepts the Recommendation on the Tax Deductibility of Bribes to Foreign Public Officials, adopted on 11 April 1996". While the disallowance of tax-deductibility of bribes is therefore not an integral part of the Convention, the Commentaries clearly establish the moral obligation for countries to adhere to the spirit of the Recommendation. Tax treatment of bribes by member states signatories to the Convention forms part of the OECD Conventions peer evaluation mechanism.

Click here to see a list of OECD member countries giving an overview of the implementation by countries signatories to the Convention.

COUNCIL OF EUROPE

The Council of Europe's Resolution on the Twenty Guiding Principles for the Fight Against Corruption was adopted by the Committee of Ministers in November, 1997. Tax deductibility of bribes is discussed under principle 8 in which member states are asked to "ensure that the fiscal legislation and the authorities in charge of implementing it contribute to combating corruption in an effective and co-ordinated manner, in particular by denying tax deductibility, under the law or in practice, for bribes or other expenses linked to corruption offences".

These are soft law principles. Their implementation is loosely monitored by GRECO (Group of States against Corruption), a structure established in 1998, which is responsible for the mutual evaluation through experts nominated by member states of measures taken by states signatories to the Council of Europe's Criminal Law Convention Against Corruption.

However, in light of the OECD's extensive efforts in the domain, no active steps have so far been taken by the Council of Europe and its agencies to monitor implementation of principle 8.

This text of the Resolution is available at

OAS

The Inter-American Convention Against Corruption of 1996 is not only the first international anti-corruption instrument of its kind, but also one of the broadest in scope. Under Article III/7 (Preventive Measures), the Convention calls on states to "agree to consider the applicability of measures within their own institutional systems to create, maintain and strengthen […] laws that deny favourable tax treatment for any individual or corporation for expenditures made in violation of the anticorruption laws of the States Parties".

Like the Council of Europe, the OAS is monitoring the implementation by states of the Convention in phases. The current, first phase, which is scheduled to conclude in mid-2006, is looking only at non-mandatory provisions relating to preventive mechanisms, such as codes of conduct and reporting of assets. Other aspects, such as tax deductibility of bribes, will not be examined until this phase is completed and information regarding the amount of countries signatories to the OAS convention who have not yet enacted legislation disallowing the tax deductibility of bribes is therefore unavailable.

UN

The UN has, under article 12/4 of its 2003 Convention Against Corruption, established the obligation for member states to disallow the tax deductibility of bribes: "Each State Party shall disallow the tax deductibility of expenses that constitute bribes, the latter being one of the constituent elements of the offences established in accordance with articles 15 and 16 of this Convention and, where appropriate, other expenses incurred in furtherance of corrupt conduct."

This provision comes under prevention and is mandatory.

The UN Convention will open for signatories in December 2003.