A. Regime Complexity in International Law

Regime complexity is a useful framework for analyzing today’s international tax regime because it captures overlap without assuming multiplicity is accidental, temporary, or pathological. The foundational definition describes partially overlapping institutions that are not hierarchically ordered.Footnote ⁸⁴ The absence of an agreed hierarchy among institutions and rules is the key political feature.Footnote ⁸⁵ Rather than bargaining on a blank slate, states operate in crowded environments where new arrangements must coexist with prior bargains.Footnote ⁸⁶ Broader labels such as “global governance complex” or “hybrid regime complexity” capture hybrid and non-state bodies, but the core insight is unchanged: multiplicity alters governance.Footnote ⁸⁷ Regime complexity has increasedFootnote ⁸⁸ and contributed significantly to the analysis of different international fields.Footnote ⁸⁹ This Article uses it to explain the interactive dynamics of institutions and great powers within an asymmetric international tax regime.

This Article follows the classical definition of regime complexity but treats asymmetric regime complexity as a subtype of regime complexity in which overlapping institutions are not functionally equivalent and do not exercise interchangeable forms of authority. Instead, authority is durably differentiated: some institutions acquire technical and operational centrality through standard setting, guidance, peer review, and administrative coordination, while others derive authority from broader participation, sovereign equality, and distributive contestation. This definition is particularly apt for the international tax regime. It is an asymmetric regime complex in which the OECD remains technically and operationally central even without legal supremacy. The OECD supplies the field’s technical expertise. By contrast, the United Nations supplies political legitimacy grounded in sovereign equality and distributive contestation. Neither institution displaces the other. Their coexistence produces a durable dual structure, allowing actors to navigate the field strategically rather than hierarchically.Footnote ⁹⁰ OECD expertise, UN legitimacy, and strategic state practice can each participate in producing legal order within an asymmetric regime complex without occupying equivalent positions in a single hierarchy.Footnote ⁹¹

The significance of international regime complexity in taxation lies not only in co-existence but in how complexity shapes bargaining and strategy among states and other actors occupying non-equivalent positions within the regime.Footnote ⁹² Actors respond not to a single hierarchy but to a structured field in which choice becomes part of governance itself.Footnote ⁹³ Institutional choice becomes a form of power within a durably differentiated field of authority: dominant states can exploit alternative venues, while weaker coalitions invoke competing forums, build coalitions, and mobilize legitimating principles to resist them.Footnote ⁹⁴ Multiple centers of authority sharpen questions of coherence, accountability, and distributive fairness.Footnote ⁹⁵ Regime complexes that include non-state actors may display greater functional differentiation and thus benefit from more ordering.Footnote ⁹⁶ At the same time, new actors and exogenous shocks can generate overlap and disorder, reshaping the complex.Footnote ⁹⁷ These dynamics intensify in networked settings.Footnote ⁹⁸

Institutional multiplicity produces familiar problems of competing forums, conflicting rules, and uncertain coherence.Footnote ⁹⁹ Because governance often relies on soft instruments, technical guidance, peer review, and other non-treaty forms that can shape behavior durably, such instruments may induce compliance effects comparable to treaty commitments.Footnote ¹⁰⁰ Their force depends on combinations of precision, obligation, and delegation,Footnote ¹⁰¹ while authority also turns on legitimacy claims grounded in expertise and effectiveness,Footnote ¹⁰² or in participation and sovereign equality.Footnote ¹⁰³ Regime complexity need not produce disorder. Recurrent interaction across institutions often settles into patterned arrangements, even when contested.Footnote ¹⁰⁴

Within this asymmetric regime complex, as the analysis of international tax dynamics will show, actors navigate overlapping authority through five main mechanisms:^{Footnote 105}

1. (1) Forum Shopping: choosing one venue over another to maximize advantage without relocating authority.Footnote ¹⁰⁶ In tax governance, states emphasize OECD processes when technical credibility and market reassurance matter most but turn to the UN when distributive fairness and sovereign equality are foregrounded.

2. (2) Regime Shifting: moving debate or pressure to a different forum so as to unsettle the status quo in the original one.Footnote ¹⁰⁷ Analytically, it functions less as a clean “outside option” than as an “inside option” within a governance complex.Footnote ¹⁰⁸ In tax governance, the Africa Group’s push for a United Nations General Assembly resolution launching negotiations toward a framework convention is best understood in this way. The aim is not merely leverage within OECD bargaining but shifting the expected baseline and the perceived site of legitimate global tax rulemaking.Footnote ¹⁰⁹

3. (3) Contested Multilateralism: creating or strengthening alternative institutions to discipline incumbents.Footnote ¹¹⁰ In international taxation, UN debates and regional bodies such as the ATAF counter OECD dominance by articulating approaches to profit allocation and minimum taxation. The point is not just another venue, but a rival platform pressuring the OECD to broaden participation and justify distributional choices. Inclusive Framework participation and the Pillar Two compromise on the QDMTT rule illustrate this.

4. (4) Orchestration: indirect governance through intermediaries rather than hierarchical command.Footnote ¹¹¹ The OECD’s Inclusive Framework exemplifies this strategy by diffusing rules through peer review, guidance, and capacity building rather than treaty obligation. Hybrid initiatives such as Tax Inspectors Without Borders further entrench standards through professional exchange.Footnote ¹¹²

5. (5) Sequencing/Layering: relates to how actors embed domestic preferences before multilateral negotiations.Footnote ¹¹³ Sequencing refers to domestic moves that later constrain multilateral rule design. FATCA illustrates this: the United States globalized its financial-transparency model through unilateral measures and intergovernmental agreements, shaping the baseline for the OECD’s Common Reporting Standard.Footnote ¹¹⁴ Layering, by contrast, adds multilateral rules to existing domestic architectures rather than replacing them. GILTI illustrates this in the Two-Pillar context: Pillar Two had to operate alongside U.S. minimum-tax structures introduced in the 2017 reform, creating a “stack” of concurrent domestic and multilateral rules.Footnote ¹¹⁵

B. Strategic Ambivalence in the Regime Complex

This asymmetric regime complex generates a posture among dominant actors, including the United States and China. Neither consolidate authority in a single forum nor withdraw from multilateral coordination. Instead, they exhibit ambivalence: simultaneously reinforcing and reserving toward the prevailing order.Footnote ¹¹⁶ Where technical rulemaking, political inclusion, and binding force are institutionally differentiated, dominant actors can distribute commitments rather than entrench them in one site, using pluralism as strategic insurance.Footnote ¹¹⁷

The strategic value of institutional multiplicity is unevenly distributed. Regime complexity often advantages actors with greater resources, because powerful states can more readily navigate multiple venues, deploy specialized expertise, and use strategies such as regime shifting and contestation; yet it may also create openings for experts, bureaucracies, and non-state actors.Footnote ¹¹⁸ Great-power ambivalence is therefore an asymmetrically available strategy: dominant actors are best positioned to exploit overlapping institutions as leverage, while dispersed authority also makes problem-solving and accountability less straightforward for all participants.Footnote ¹¹⁹

Daniel Drezner’s broader insight helps specify the mechanism at work.Footnote ¹²⁰ Once authority is dispersed across overlapping institutions, no single venue monopolizes focal-point status, legal obligation, or reputational sanction. Under those conditions, powerful actors gain leverage not by abandoning multilateralism, but by preserving institutional optionality across sites. In global tax governance, that optionality is unequally distributed: actors with greater technical capacity, market power, and domestic legislative reach can combine multilateral participation with unilateral instruments and alternative forums, thereby reducing exposure to distributive lock-in. Great-power ambivalence is thus a structural privilege of asymmetric regime complexity.

China is useful for theorizing this ambivalence.Footnote ¹²¹ Its posture suggests that ambivalence under conditions of regime complexity is not merely wavering between support and resistance, but may instead be understood as strategic hedging across differentiated institutional settings.Footnote ¹²² Historical suspicion of hierarchical legal order, sharpened by the legacy of the unequal treaties, renders full commitment to any single authoritative venue unattractive.Footnote ¹²³ At the same time, China has continued to invest in forums, particularly the United Nations, whose institutional design combines sovereign equality with differentiated great-power status and thus affords influence without requiring full normative surrender.

This logic is also visible in China’s institutional practice. Participation in OECD processes enhances credibility, while engagement with UN-centered initiatives and South-South platforms sustains claims grounded in distributive justice and sovereign equality.Footnote ¹²⁴ China’s ambivalence therefore appears less as hesitation than as selective embeddedness: it remains within Western-led tax institutions even as it challenges, defends, and supplements existing norms through alternative venues.Footnote ¹²⁵ The U.S. ambivalence is different. As a principal architect of OECD-centered standards, it benefits from residence-based allocation norms and the technocratic infrastructure that supports them, while unilateral instruments such as FATCA, GILTI, and subsequent minimum-tax reforms preserve fiscal autonomy and bargaining leverage. Multilateral participation secures influence on rule elaboration; domestic legislation preserves insulation from adverse distributive consequences.Footnote ¹²⁶

Ambivalence functions as insurance: by retaining footholds across institutional sites and preserving domestic room to maneuver, dominant actors reduce the costs of lock-in to any single venue. In international tax, institutional multiplicity structures the channels through which power operates, while domestic legislation serves both as a medium of coordinated compliance and as an instrument of selective divergence. Durable dualism is the most plausible trajectory of global tax governance, especially given deepening multilateral negotiations and the UN process launched by the General Assembly. It also reflects the persistence of domestic legislative primacy as the point at which international tax norms become operative.Footnote ¹²⁷

On this framework, international tax governance should crystallize into neither hierarchy nor disorder. Asymmetric regime complexity instead tends toward asymmetric hybridization: one venue dominates technical coordination while others remain sites of legitimacy and distributive contestation, with outcomes shaped by strategic hedging across forums rather than consolidation in a single authority.

A. OECD Dominance: Genealogy and Authority

As noted, the OECD has long led international tax coordination, while the UN Model has had more limited influence.Footnote ¹²⁸ The OECD’s authority rests on three features: technocratic expertise; soft-law instruments that balance competing considerations and give OECD commentaries and guidelines interpretive weight; and path dependence, because once embedded in bilateral treaties, OECD standards became costly to revise.Footnote ¹²⁹

The 2013 BEPS Project consolidated and extended this authority.Footnote ¹³⁰ It renewed OECD leadership during a legitimacy crisis and created treaty and monitoring mechanisms that preserved formal sovereignty while raising the costs of departure. It shifted coordination beyond double taxation by making anti-avoidance and “taxed somewhere” expectations central through a 15-action plan.Footnote ¹³¹ BEPS advanced the “single tax principle”—that cross-border income should be taxed once, not twice, and not not at all.Footnote ¹³² The BEPS Multilateral Instrument (MLI) let states update many bilateral treaties without renegotiating them one by one.Footnote ¹³³ BEPS also built infrastructure through minimum standards, monitoring, and peer review, including Action 13 Country-by-Country Reporting reviews.Footnote ¹³⁴ The Inclusive Framework brought the G20 and emerging economies into the process and tied broader participation to implementation expectations.Footnote ¹³⁵

Yet OECD dominance has never been uncontested. Even after the shift from the G7 to the G20, developing countries still lack “a meaningful voice in global tax policy dialogue.”Footnote ¹³⁶ Although the Inclusive Framework broadened participation, it did not redistribute influence. Formal membership expanded dramatically, but technical rulemaking remained concentrated in the Steering Group and working parties, where lower-income countries were underrepresented and faced serious resource, language, and procedural barriers.Footnote ¹³⁷ Moreover, while BEPS targeted tax avoidance, it largely preserved the underlying source-residence allocation of taxing rights, leaving intact a framework that continued to favor capital-exporting states despite limited source-based concessions. Critics therefore argue that OECD-centered governance reproduces structural inequalities in the distribution of taxing rights.Footnote ¹³⁸ Asymmetric regime complexity allows the OECD to retain technical primacy through expertise, soft law, and treaty path dependence, while preventing that primacy from hardening into monopoly by preserving alternative sites of legitimacy, contestation, and distributive challenge.Footnote ¹³⁹

B. The UN’s Counterclaim: Legitimacy and Inclusivity

UN tax apparatus has remained institutionally weaker than the OECD’s. The attraction of the UN therefore lies chiefly in its claim to more inclusive and representative authority.Footnote ¹⁴⁰ That contrast, however, is not simply one between OECD technocracy and UN universality. In practice, the OECD’s Steering Group and the UN Tax Committee are institutionally closer than the caricature suggests, but they differ: the OECD process is consensus-driven and backed by a far stronger secretariat, while the UN offers a more representative setting in which distributive conflict can be expressed more openly.Footnote ¹⁴¹ This helps explain why the OECD remains the technical center of gravity while the UN retains political appeal as a forum for challenging OECD-led bargains.Footnote ¹⁴² Recent years have revived this counterclaim.Footnote ¹⁴³

UN General Assembly Resolution 78/230, adopted in 2023, established an ad hoc intergovernmental committee to draft the terms of reference for a UN framework convention on international tax cooperation; those terms were approved in 2024, and intergovernmental negotiations are now underway.Footnote ¹⁴⁴ However, this is unlikely to promote stable tax cooperation; rather, it signals that geopolitical tensions have entered international tax and threaten the regime in its current form.Footnote ¹⁴⁵ This did not displace the OECD, but it created a credible alternative venue for distributive bargaining and raised the political costs of ignoring developing-country demands. OECD efforts to deepen developing-country engagement are best understood against that background.

The OECD’s shift toward an Inclusive Framework can be read as a response to legitimacy criticism and the availability of a universal UN venue. The OECD/G20 process adopted features long demanded by developing countries, especially the treaty-based Subject-to-Tax Rule (STTR), which restores a limited source-country taxing right and was described as integral to consensus for developing members and “especially important” to them.Footnote ¹⁴⁶ Pillar One’s partial reallocation of taxing rights to market jurisdictions likewise moved, however modestly, toward claims long pressed in UN debates.Footnote ¹⁴⁷ These developments do not make the UN the sole driver of change, but they show that pressure from the UN and developing-country coalitions helped shift the OECD’s bargaining frontier.Footnote ¹⁴⁸ Rebecca Kysar argues that the global tax deal is best understood not simply as a technical response to profit shifting, but as part of a broader transformation in international economic governance after the decline of the Washington Consensus. She frames both pillars through distributional and geopolitical concerns, emphasizing demands for more inclusive governance, greater fiscal capacity, and a fairer allocation of taxing rights across jurisdictions.Footnote ¹⁴⁹

The UN’s substantive contributions reinforce this role. Article 12B of the UN Model Convention directly challenged Pillar One.Footnote ¹⁵⁰ Where the OECD favored residence jurisdictions, the UN proposed a simpler withholding mechanism that is easier for many developing-country administrations to use. Article 12B has not displaced OECD proposals, but it provides a concrete alternative template with different distributive priorities.Footnote ¹⁵¹

This revival also depends on a wider landscape.Footnote ¹⁵² The UN does not act alone: its resolutions resonate with ATAF, CIAT, and South–South initiatives such as China’s BRITACOM. These bodies amplify legitimacy claims and translate them into technical and bargaining positions.Footnote ¹⁵³ The result is not a rival institutional system so much as a coalition that checks OECD expertise by foregrounding inclusivity, distributive justice, and fiscal sovereignty.

In the larger asymmetric tax regime complex, the United Nations does not exercise authority equivalent to that of the OECD, but it remains politically hard to bypass. The OECD retains greater bureaucratic and technical capacity and continues to anchor convergence, especially on transparency and information exchange. Yet the politicization of international tax has strengthened demand for a globally inclusive forum at the political level, and the UN’s universal membership gives it continuing legitimacy on distributive questions. As a result, coordination may continue under OECD auspices on administrative and transparency issues, while the allocation of taxing rights remains contested and increasingly channeled through UN-centered processes.

C. The Convergence Paradox: Doctrinal Hybridization and Contested Tax Legitimacy

The OECD-UN divide is doctrinal as well as institutional, because it concerns how taxing rights should be distributed between residence and source or market states. The UN Model itself frames the difference in those terms and states that it generally favors greater source-country taxing rights. That distributive conflict is most visible in digital taxation.Footnote ¹⁵⁴ OECD Pillar One Amount A is designed to reallocate 25 percent of the profit of the largest and most profitable multinationals above a 10 percent profitability threshold to market jurisdictions, whereas UN Article 12B preserves source-country taxing rights over automated digital services through a relatively simple withholding-based rule that better preserves developing countries’ taxing rights than the OECD/G20 proposal.Footnote ¹⁵⁵

Dispute resolution shows the same divide: the OECD increasingly promotes mandatory binding arbitration, which many developing states view as sovereignty-reducing and biased toward wealthier countries, while the UN has defended MAP without binding force, preserving state control at the cost of efficiency.Footnote ¹⁵⁶ Yet doctrinal divergence has not produced a clean bifurcation. Instead, the two sites interact and hybridize. OECD dominance has pushed the UN to adapt its models, while UN pressure and Global South mobilization have pushed the OECD to widen participation through the Inclusive Framework.

The Platform for Collaboration on Tax (PCT), which brings together the OECD, UN, IMF, and World Bank, illustrates inter-institutional coordination even as substantive agenda-setting and rule development remain unevenly distributed, with the OECD-led Inclusive Framework retaining the central standard-setting role.Footnote ¹⁵⁷ Tax Inspectors Without Borders (TIWB) likewise shows that even within a fragmented and rivalrous global tax architecture, institutions can still achieve practical complementarity: the joint OECD-UN Development Programme (UNDP) initiative places expert auditors alongside officials in developing-country administrations on live cases, combining OECD tax expertise with UNDP’s country-level presence.Footnote ¹⁵⁸ Regional organizations also mediate this hybridity. The European Union transposed Pillar Two through its 2022 directive, effectively Europeanizing a global standard.Footnote ¹⁵⁹ ATAF has issued technical notes supporting stronger source-based measures and coordinating African bargaining positions.Footnote ¹⁶⁰ Inter-American CIAT plays a comparable regional intermediation role in Latin America, helping translate OECD-led tax standards into region-specific consultation, guidance, and implementation support.Footnote ¹⁶¹

What these bodies supply is not an alternative center of authority so much as mechanisms of influence within an asymmetric regime complex. Lower-income countries have secured modest gains through four recurring pathways: association with stronger states, anticipation of their concerns by secretariat actors and allies, coalition-building through ATAF and the G24, and the authority of expert negotiators. This helps explain why regional and South-South bodies matter even when they do not displace OECD control: they alter bargaining dynamics inside OECD-centered rulemaking rather than replace it. The result is a hybrid, asymmetrical order: OECD standards still govern day-to-day coordination, while the UN remains indispensable for challenging OECD agenda-setting and keeping distributive justice on the table.Footnote ¹⁶²

A. Architect and Agenda-Setter of the OECD-Centered Order

For decades, the United States has been the architect of the OECD-centered tax order and changes in the U.S. role within that order may therefore reshape the content and architecture of international tax law.Footnote ¹⁶⁹ More broadly, U.S. power and international law were co-constituted, so the United States did not merely influence discrete tax rules but helped constitute the legal and institutional order within which OECD-centered tax coordination acquired authority, even as that support remained selective and self-interested.Footnote ¹⁷⁰ The U.S. Model Income Tax Convention became a template for bilateral treaty practice and OECD model drafting.Footnote ¹⁷¹ U.S. transfer-pricing regulations supplied the template for the OECD Transfer Pricing Guidelines and entrenched the arm’s-length principle.Footnote ¹⁷² U.S. preferences have repeatedly defined the outer limits of reform by constraining reallocation under Pillar One and preserving carve-outs under Pillar Two.Footnote ¹⁷³ U.S. influence has long rested on networks of officials, technical experts, and private intermediaries, not on state consent alone.Footnote ¹⁷⁴ The United States shaped outcomes through agenda control, technical expertise, and its central position in global finance and information flows.Footnote ¹⁷⁵ FATCA leveraged foreign institutions’ dependence on U.S. market access to induce reporting abroad.Footnote ¹⁷⁶ In the minimum-tax arena, GILTI helped shape the design and bargaining of Pillar Two, while CAMT became part of the later U.S.-Pillar Two compatibility and side-by-side bargaining.Footnote ¹⁷⁷ U.S. dominance depended in part on transatlantic alignment.Footnote ¹⁷⁸ But that bargain frayed in the 2010s as Europe backed digital taxes and U.S. gridlock stalled Pillar One.Footnote ¹⁷⁹

The post-2008 period made asymmetric regime complexity more visible. The financial crisis unsettled the earlier equilibrium of stability, sovereignty preservation, and expert insulation, widened the role of the G20 and emerging economies, and exposed how strongly OECD centrism depended on U.S.-European alignment.Footnote ¹⁸⁰ Yet U.S. influence remained decisive: Washington continued to shape the architecture through unilateral rulemaking and earlier legal templates while resisting more inclusive multilateralization and redistribution of the international tax pie.Footnote ¹⁸¹

B. Unilateral Leverage: Domestic Substitutes, Extraterritorial Rules, and Trade Threats

Since multilateral instruments can both project and limit power, dominant states may prefer domestic law as a more effective means of imposing hierarchy.Footnote ¹⁸² Major powers can use domestic legal and financial instruments to reshape the operative environment of international cooperation without displacing the broader legal order.Footnote ¹⁸³ U.S. power in tax often works through unilateral leverage. Three patterns matter most: domestic rule innovation that others emulate;Footnote ¹⁸⁴ domestic substitutes presented as functionally equivalent to multilateral standards;Footnote ¹⁸⁵ and coercive pressure through market access, withholding, or trade threats.Footnote ¹⁸⁶ This mix explains why U.S. unilateralism can sometimes stabilize order by supplying workable templates yet also destabilize it by creating uneven obligations and forum conflict.Footnote ¹⁸⁷ Some measures set new templates; others change the bargaining range by creating a unilateral fallback; still others use unequal access to finance, information, or markets to force accommodation. The same episode may therefore be institutionally cooperative yet distributionally unilateral.Footnote ¹⁸⁸ Monica Hakimi’s account of “unfriendly unilateralism” helps explain why under conditions of institutional deficiency, unilateral measures may also reshape and stabilize legal order, even while generating legitimacy and distributive concerns.Footnote ¹⁸⁹

But unilateral leverage carries systemic legal and political costs. Realist critics argue that if the United States acts too unilaterally, other major powers will coordinate to check U.S. power.Footnote ¹⁹⁰ Institutionalist critics argue that multilateral institutions make cooperation more efficient and that unilateralism reduces those gains by weakening institutionalized cooperation.Footnote ¹⁹¹ Constructivist critics argue that even if unilateralism does not trigger balancing or institutional collapse, it erodes the legitimacy of U.S. leadership and makes the order more fragile and costly to sustain.Footnote ¹⁹² However, Stephen Brooks and William Wohlforth reject these claims, and argue that existing international relations theory does not persuasively establish these as general costs.Footnote ¹⁹³ Legally, unilateral instruments can generate retaliation, sovereignty concerns, legitimacy deficits, and conflict over the role of international law and institutions.Footnote ¹⁹⁴ Retaliation leaves U.S. multinationals in a vulnerable position,Footnote ¹⁹⁵ with the potential to affect American interests far more than in the past.Footnote ¹⁹⁶

FATCA remains the clearest example of constructive U.S. pressure:Footnote ¹⁹⁷ its extraterritorial design pushed reluctant jurisdictions toward greater transparency and helped catalyze the OECD Common Reporting Standard.Footnote ¹⁹⁸ Christians shows that FATCA exemplifies the capacity of a powerful state to use domestic law as a transnational regulatory instrument, but she also shows that this turn raises questions of reciprocity, jurisdictional reasonableness, and procedural legitimacy, especially where unilateral information extraction outpaces genuine multilateral consent.Footnote ¹⁹⁹ The arm’s-length standard offers another example in which the United States acted as the standard setter.Footnote ²⁰⁰ It spread across North America through cross-border and OECD-led diffusion, but Canada and Mexico adopted it on different timelines and in different ways, shaped by domestic institutions and politics.Footnote ²⁰¹

U.S. domestic rules can act as credible commitments in negotiation, signaling a fallback position while preserving room for equivalent deals, carve-outs, or interpretive adjustment. Minimum-tax concepts first developed in controlled foreign corporation rules and were later illustrated through GILTI and CAMT without a corresponding embrace of binding multilateral constraint.Footnote ²⁰² The 2017 Tax Cuts and Jobs Act showed both the power and the limits of this approach. GILTI and BEAT, functioned as domestic substitutes for a global minimum-tax regime yet pointed in different directions: GILTI allowed cross-crediting and blending, and BEAT produced disappointing revenue.Footnote ²⁰³ The package thus moved the negotiating frontier without solving the underlying competitiveness and base-erosion problems. The 2022 corporate alternative minimum tax continued the pattern by offering a domestic analogue to parts of Pillar Two without fully matching the OECD design. The later U.S. turn to minimum-tax unilateralism was more destabilizing, as GILTI and other U.S. minimum-tax rules entrenched domestic preferences while requiring accommodation from other jurisdictions.Footnote ²⁰⁴ The G7’s June 2025 side-by-side understanding extended that logic by recognizing U.S. minimum-tax rules as a functional alternative and thus shielding U.S.-parented groups from the full reach of Pillar Two, despite the absence of full U.S. legislative alignment with the OECD package.Footnote ²⁰⁵ The United States thus remains both a driver of reform and a source of fragmentation.Footnote ²⁰⁶

Wouter Lips marks an important limit to the FATCA analogy.Footnote ²⁰⁷ FATCA could catalyze CRS because automatic exchange of information presented broad interest alignment and relatively little distributive conflict over how the gains of cooperation would be shared. Corporate tax coordination was different. In BEPS, the central disputes were more overtly distributive, especially along source-residence lines and in the transatlantic struggle over digital and intangible income. In that setting, a FATCA-style unilateral U.S. shock would likely not have generated multilateral emulation. More likely, it would have triggered competing unilateral or regional source-based measures directed at U.S.-parented multinationals. The significance of U.S. power is therefore issue-specific: where interests align, U.S. unilateralism may induce convergence; where distributive conflict is acute, it more often produces bargaining and fragmentation within the asymmetric regime complex.

Seen together, U.S. policy does not simply swing between cooperation and defection. Domestic innovations often migrate into OECD projects, even as Washington resists reciprocal treaty commitments and prefers domestic law that others internalize. This can leave governance formally non-binding yet practically difficult to resist, so conflict shifts from compliance alone to the legitimacy of a process shaped by pressure, informal accommodation, and unequal bargaining power.Footnote ²⁰⁸ These are typical dynamics of regime complexity. For present purposes, the main point is straightforward: U.S. unilateralism is not external to complexity; it is one of the main ways the United States bargains within regime complexity. U.S. interaction with other states adds further layers of complexity to the regime as well as contestations of legitimacy and fairness.

C. Exceptional Implementation

U.S. administrations can still shape the behavior of foreign governments, financial intermediaries, and multinational firms through softer forms of coordination, even when formal policy implementation triggers domestic distributional conflict.Footnote ²⁰⁹ Non-binding arrangements can deliver cooperation and agenda influence without the domestic lock-in associated with treaties or new statutes. That flexibility also strengthens the U.S. hand in the OECD and G7, where legal form itself becomes part of bargaining strategy.Footnote ²¹⁰

By 2024 and 2025, that exceptionalism had become more explicit. Congressional leadersFootnote ²¹¹ moved to defund U.S. engagement with the OECD and rejected the 2021 global tax deal, even as newer reforms increasingly relied on what Noam Noked describes as “Congress-proof” legal design, meaning legal structures meant to survive congressional resistance.Footnote ²¹² They were structured to reduce congressional inaction as a barrier to rollout or to the effectiveness of agreed rules. Pillar Two advanced because its legal architecture was designed to move forward without U.S. legislative implementation, whereas Pillar One faltered because it depended on a treaty path vulnerable to a U.S. veto. The clearest example was the G7’s endorsement of a side-by-side approach that treated existing U.S. minimum-tax rules as a functional alternative and spared many U.S.-parented multinationals from Pillar Two’s IIR and UTPR, while the withdrawal of proposed retaliatory measures such as I.R.C. § 899 underscored that no new U.S. legislation was required.Footnote ²¹³

The United States has repeatedly failed to secure domestic implementation of OECD tax commitments and then pursued carve-outs through the OECD/G7 core, while China has engaged both the OECD/G20 process and the emerging UN tax track to preserve bargaining leverage and distributive room for maneuver.Footnote ²¹⁴ Those gaps allow non-OECD states to press legitimacy claims in broader forums and challenge the distributive consequences of U.S. non-implementation.Footnote ²¹⁵

D. The United States in the Asymmetric Regime Complex

These dynamics are best understood through asymmetric regime complexity. Because authority is distributed across overlapping but unequally weighted and non-equivalent institutional sites, powerful states can shift venues, threaten exit, and recalibrate bargains without abandoning cooperation altogether.Footnote ²¹⁶ In international tax, the United States continues to defend OECD primacy, but when negotiated rules collide with domestic coalitions it pivots to unilateral statutes and extraterritorial enforcement.Footnote ²¹⁷ FATCA, GILTI, and CAMT thus operate as domestic substitutes that other jurisdictions must consider, while the 2025 G7 side-by-side arrangement showed how U.S. preferences could reshape implementation from within the broader regime.Footnote ²¹⁸

The point is that the United States need not exit the system to revise it.Footnote ²¹⁹ Because it remains deeply embedded in the OECD/G7 architecture and global corporate and financial networks through which tax enforcement increasingly operates, it can reopen distributive bargains from within.Footnote ²²⁰ Technical coordination continues, but cooperation becomes less reciprocal. Washington insists on OECD centrality even as domestic inaction and negotiated carve-outs weaken the authority of the center itself. OECD authority thus persists, but on asymmetric terms.Footnote ²²¹ Legitimacy and distributive bargaining increasingly migrate elsewhere when allocation conflicts cannot be resolved within it.Footnote ²²² That dynamic increases the salience of broader forums in which developing countries and other non-OECD states can challenge OECD-centered outcomes, even as China combines OECD engagement with more inclusive pathways.Footnote ²²³ U.S. unilateralism, therefore, produces fragmentation: compliance pressure on others, limited reciprocal constraint on major powers, and legitimacy disputes.

A. From Reluctance to Ambivalence

For much of the late twentieth century, China approached international tax rules cautiously. ^{Footnote 239} It largely borrowed prevailing rules while adapting them to domestic priorities, especially attracting foreign investment, preserving fiscal sovereignty, and protecting source-based interests. China’s early treaty practice drew on both the UN and OECD Models, but aligned more closely with the UN Model and preserved broader source-country taxing rights.Footnote ²⁴⁰ In earlier negotiations with developed countries, China generally defended source-based taxing rights, but as outbound investment grew, it increasingly used tax treaties to protect Chinese firms abroad, especially in Belt and Road contexts. This record suggests that China does not speak from a fixed “developing country” position; its preferences are relational and situational. Its deeper participation in the 1990s and early 2000s was therefore pragmatic: China selectively adopted prevailing standards rather than converging wholesale.Footnote ²⁴¹ Beijing gradually adopted OECD-linked approaches to transfer pricing, information exchange, and anti-avoidance because non-participation increasingly risked marginalization.Footnote ²⁴² After the 2008 global financial crisis, Jinyan Li argues that China became less a passive norm-taker than a selective norm-shaker, especially in debates over fairness, inclusivity, value creation, transfer pricing, and location-specific advantages.Footnote ²⁴³

Chinese scholars frequently invoke “tax justice,” particularly in debates over the digital economy, where some portray UN proposals such as Article 12B on automated digital services as offering a fairer allocation of taxing rights for developing countries.Footnote ²⁴⁴ But this rhetoric is political as well as normative: it helps Beijing align with developing-country concerns and defend a more inclusive negotiating venue without abandoning OECD technical engagement.Footnote ²⁴⁵ Nevertheless, China remains deeply engaged in OECD-centered coordination even as it presses distributive claims, works through alternative forums, and builds administrative platforms such as BRITACOM.Footnote ²⁴⁶ A better characterization, therefore, is not a linear shift from “selective adaptation,”Footnote ²⁴⁷ long used to describe China’s trajectory in international economic law, to “selective leadership,”Footnote ²⁴⁸ a more recent label applied in some areas, but rather one of strategic ambivalence within a regime complex.

BEPS brought into sharper focus the extent to which profit shifting and low-substance offshore structures could erode China’s tax base, despite China’s emergence as a major production base and market, and it encouraged more active Chinese engagement in international tax governance.Footnote ²⁴⁹ While supporting the BEPS process, Chinese officials advanced a more substantive challenge through the language of location-specific advantages (LSAs). They argued that foreign multinationals derived extraordinary profits from operating in China because of location savings, market scale, and other local advantages, and that prevailing transfer-pricing rules understated China’s contribution to value creation.Footnote ²⁵⁰ Framed technically, this position had broader distributive implications: it questioned whether the arm’s-length principle fairly allocated profits between capital-exporting states and major production or market jurisdictions. China thus worked within the OECD-led process while pressing an interpretation that would expand its tax base and reopen debate over the supposedly neutral foundations of the prevailing regime.Footnote ²⁵¹

As Chinese multinationals expanded abroad, China participated actively in Inclusive Framework negotiations to reduce uncertainty for those firms. At the same time, Beijing sought a stronger voice in global tax governance over residual-profit allocation, while building institutions such as BRITACOM and expanding the use of mutual agreement procedures to advance those interests. ^{Footnote 252} In these interactions, China’s position was ambivalent: it generally favored limited reallocation of residual profits but resisted broader redistributions that could burden fast-growing Chinese firms. Pillar One could strengthen market-jurisdiction claims, while Pillar Two raised concerns about neutralizing tax incentives, constraining policy flexibility, and affecting structures linked to Hong Kong, outbound investment, and protection of Chinese multinationals from additional foreign tax claims.Footnote ²⁵³ Chinese commentary has engaged with Pillar Two while also stressing tensions with industrial policy, especially because minimum taxation can weaken low-rate incentives and shift competition toward subsidies, credits, and other non-rate tools.Footnote ²⁵⁴ These concerns help explain why China has supported Pillar Two in principle while preserving discretion over domestic implementation.Footnote ²⁵⁵

Reuven Avi-Yonah characterizes China’s position on Pillar Two as strategic ambiguity, not simple resistance. Because many Chinese multinationals are structured through tax-haven parent entities, they may face less immediate exposure if key rules are not adopted, which helps explain China’s limited urgency and may even give its firms an advantage while Beijing remains formally inside the BEPS/Pillar Two framework.Footnote ²⁵⁶ This ambivalence reflects the view that China’s Pillar Two fiscal upside is limited while its administrative and industrial-policy costs are real.Footnote ²⁵⁷ It also reflects both worsening China-U.S. relations after 2016 and China’s growing need, as outbound investment expanded, to protect its own MNEs, including digital firms and state-owned enterprises (SOEs), from double taxation and additional taxes.Footnote ²⁵⁸

Taken together, China’s evolution is from reluctance to pragmatic engagement, not from passivity to straightforward leadership. It accepts OECD standards where coordination gains are high but preserves room to invoke UN processes and alternative coalitions when distributive stakes sharpen. That mix of cooperation, hedging, contestation, regime shifting, and institution building is what makes China an emerging strategic ambivalent in the tax regime complex.Footnote ²⁵⁹

B. Strategic Ambivalence Through BRITACOM and BRICS

China’s clearest practice of strategic ambivalence lies in building platforms such as BRITACOM and BRICS to coordinate implementation and collective positioning.Footnote ²⁶⁰ BRITACOM is best understood as a tax-administration cooperation platform among Belt and Road jurisdictions. It operates through recurring forums, work programs, and multi-year action plans rather than binding multilateral rules, and its comparative advantage lies in administrative coordination rather than doctrinal innovation.Footnote ²⁶¹ Whereas the OECD Inclusive Framework remains the main site for technical standard-setting and the UN the principal venue for inclusivity debates, BRITACOM focuses on the “plumbing” of implementation: training officials, circulating templates, and routinizing cooperation among tax administrations.Footnote ²⁶² Through BRITA·Macao, it offers training on transfer pricing audits, e-invoicing, risk management, and related administrative practices.Footnote ²⁶³ Its annual reports circulate non-binding best-practice materials that resemble guidance.Footnote ²⁶⁴ Joint statements from BRITACOM perform a similar coordinating function, even though they stop short of treaty-making.Footnote ²⁶⁵

BRICS operates at a different level.Footnote ²⁶⁶ For China, it is valuable because it collectivizes positions that Beijing would have more difficulty pressing alone.Footnote ²⁶⁷ Since 2016, the BRICS Tax Authorities Meeting has convened annually around transfer pricing, information exchange, BEPS implementation, and related governance issues.Footnote ²⁶⁸ BRICS members often favor stronger source-based taxing rights than orthodox OECD positions, even if their treaty practices differ in important respects.Footnote ²⁶⁹ That orientation fits China’s long-standing interest in preserving source taxation.Footnote ²⁷⁰ BRICS countries broadly accepted automatic information exchange, but used their meetings to raise concerns about sovereignty, implementation capacity, and pace.Footnote ²⁷¹ Because member tax systems and administrative capacities differ substantially, however, BRICS is unlikely to produce a deep harmonization agenda of its own.Footnote ²⁷² The politics surrounding the Common Reporting Standard illustrate both the utility and the limits of this venue.Footnote ²⁷³ Nevertheless, BRICS gives emerging economies a forum from which to participate in OECD processes without accepting the role of pure norm-takers.Footnote ²⁷⁴ While publicly endorsing the OECD/G20 framework, BRICS also presses for greater attention to developing-country concerns.Footnote ²⁷⁵

BRITACOM and BRICS matter less as independent lawmakers than as complementary infrastructures. The first diffuses administrative practices and know-how; the second aligns narratives and negotiating positions among major emerging economies. Together, they widen the forums through which developing-country preferences can be articulated and coordinated. They can speed domestic uptake of BEPS-style practices without displacing OECD standard-setting, and shape how states arrive at OECD and UN negotiations. This is precisely where a regime complexity framework is useful: influence in a fragmented institutional landscape often operates through brokerage, coordination, and forum linkage. In line with the Article’s main thesis, BRITACOM and BRICS derive significance not from supplanting the OECD, but from mediating how developing-country preferences are organized, translated, and projected across interconnected sites of tax governance. Their significance is indirect but real: they affect bargaining leverage by structuring implementation, socializing priorities, and reducing coordination costs across forums.

C. Implications: Asymmetric Regime Complexity and Strategic Ambivalence

Within the asymmetric regime complex, China’s posture is best described as strategic ambivalence. The term does not mean indecision or lack of interest. It denotes calibrated partial commitment across overlapping venues. It arises when coordination gains remain valuable, distributive conflict remains unresolved, and an actor has enough market power, administrative capacity, and cross-venue access to keep multiple pathways open. Under those conditions, full alignment risks locking in unfavorable outcomes, while frontal opposition sacrifices insider benefits. Strategic ambivalence offers a third path. It lets China secure technical influence, tax certainty, and reputational standing within dominant institutions while preserving recourse to alternative venues, competing legitimacy claims, and implementation discretion.

Strategic ambivalence therefore cannot be reduced to the ordinary tradeoff between cooperation gains and sovereignty costs. All states confront that tradeoff. What is distinctive in a regime complex is that institutional overlap allows commitments to be disaggregated across forums. A state can accept coordination in one venue, resist distributive closure in another, and cultivate supplementary forums that preserve outside options without exiting the dominant order. Ambivalence arises not because interests are indeterminate, but because they are mixed across issue dimensions and time horizons, and because no single institution bundles coordination, legitimacy, and distribution in the same way. In China’s case, the problem is especially acute because it is simultaneously a major market jurisdiction, an outward investor, and the home of firms with expanding cross-border interests. Its preferences are composite: Beijing seeks certainty and voice within OECD-centered processes while resisting premature closure of distributive questions that may constrain present or future claims.Footnote ²⁷⁶

The China case illustrates this logic clearly. Its significance lies in how China operates across institutional overlap, not in any simple move from rule-taking to rule-making. China does not simply choose between the OECD and its alternatives. Rather, it works across them in different combinations depending on the objective. It remains deeply engaged in OECD-centered processes where technical coordination, peer review, and administrative standardization matter. At the same time, it invokes the UN where arguments about inclusivity, fiscal sovereignty, and distributive fairness are more useful. It invests in BRITACOM and BRICS not because those forums replace OECD rulemaking, but because they widen the channels through which Chinese preferences can be coordinated and carried into practice. Strategic ambivalence is thus the practical logic through which China navigates regime complexity: contesting outcomes that constrain its claims to market- or production-based taxing rights, supporting rules that protect Chinese firms and outbound investment from expansive foreign tax claims, and building complementary platforms that strengthen its influence over implementation without constructing a rival legal order. Its power lies not in avoiding commitment, but in participating in rule production while resisting premature distributive closure across the regime complex.Footnote ²⁷⁷

The broader implication is that regime complexity changes how power operates in global tax governance. Influence runs not only through formal rulemaking, but also through forum choice, claim framing, coalition coordination, and administrative infrastructure. Strategic ambivalence has both stabilizing and stratifying effects. It can stabilize cooperation across a fragmented landscape, but it can also reproduce asymmetry because the actors best able to sustain calibrated partial commitment are those with the power to keep multiple venues in play. What emerges is neither a straightforward transition from rule-taking to rule-making nor a simple OECD-UN rivalry. It is a denser asymmetric regime complex in which a rising power can remain embedded in the existing order while turning institutional multiplicity into leverage.Footnote ²⁷⁸

More generally, strategic ambivalence suggests that rising powers in asymmetric regime complexes need not choose between integration and revision. Where institutional overlap is durable and no single forum can settle coordination, legitimacy, and distribution at once, they may influence most effectively through calibrated partial commitment across multiple venues. China’s interplays are dynamic and continue to produce a hybrid order, more fragmented in some respects but not necessarily less integrated in others. The significance of the China case lies not only in what it reveals about one state’s tax diplomacy, but also in what it shows about the changing structure of global governance: authority is shaped not only by who makes rules, but also by who can most effectively navigate, connect, and exploit the spaces between them.Footnote ²⁷⁹

A. Case Study: Pillar Two – Global Minimum Tax (2021)

Pillar Two is best understood not as the restoration of a coherent multilateral tax order, but as the clearest contemporary manifestation of an asymmetric regime complex. The OECD remains the dominant site of technical rule production: it designed Pillar Two architecture, defined the operative categories of compliance, and continues to shape implementation through model rules, commentary, administrative guidance, and peer review.Footnote ²⁸³ Yet Pillar Two reveals the limits of technical centrality. The OECD remains indispensable to rulemaking but no longer enjoys uncontested authority over distributive consequences or political legitimacy. Pillar Two’s drafting has been criticized as insufficiently legitimate because it relied too heavily on expert design and negotiated consensus, and not enough on transparency, accountability, and meaningful scrutiny.Footnote ²⁸⁴ Minimum taxation therefore does not overcome fragmentation; it organizes fragmentation through a common framework that is implemented unevenly, adapted selectively, and justified differently across institutional settings.Footnote ²⁸⁵

The doctrinal architecture of Pillar Two reflects this mixed structure. The regime is built around a coordinated minimum effective tax rate of 15 percent, enforced through three interlocking domestic rules: the IIR, the UTPR, and the QDMTT.Footnote ²⁸⁶ But Pillar Two’s force does not arise from OECD guidance alone. Its practical effects depend on domestic enactment, coordinated uptake, and the expectation that income not taxed in one jurisdiction may be taxed elsewhere. It has already been translated into domestic and regional law, most notably through EU legislation and domestic top-up taxes.Footnote ²⁸⁷ Pillar Two thus shows soft-law coordination hardening through domestic legislation and defensive interaction rather than a single multilateral treaty.Footnote ²⁸⁸ At the same time, the architecture itself generates implementation fragmentation. Some countries adopt domestic top-up taxes to retain taxing rights at source, others rely on parent-level rules, and others remain only partly inside the regime while still shaping its operation. The result is not uniform diffusion of a common standard but differentiated legalization within a common framework.Footnote ²⁸⁹

The United States exemplifies this pattern through unilateralism within coordination: although it remained central to the design of the minimum-tax project, it also sought to preserve domestic substitutes, most notably GILTI and CAMT, while pressing to treat them as functionally comparable for coordinated implementation. Rather than exit, this reflects hegemonic adaptation, in which the principal architect of OECD-centered cooperation endorses coordination while resisting reciprocal disciplines. That differentiation emerges both politically and through the friction between domestic legal design and implementation. While the European Union and many Asia-Pacific jurisdictions moved toward legislative alignment with the OECD/G20 Inclusive Framework, the United States, by 2026, remained outside formal adoption while still in defensive alignment. The divergence between GILTI and Pillar Two shows how domestic substitutes can track the OECD framework while still unsettling implementation across jurisdictions.

China’s posture is better understood not as passivity, but as strategic ambivalence expressed through non-implementation. Although Beijing endorsed the political agreement and remains within the Inclusive Framework, it has not translated that commitment into mainland legislation. Read narrowly, this might appear to be mere delay. Read through the framework of this Article, however, it is better understood as calibrated partial commitment. That non-implementation is strategic because it reflects the mixed incentives China faces within the regime complex. As Jingxian Chen shows, the decisive consideration is distributive: China’s expected revenue gains from Pillar Two remain uncertain and likely limited, while the costs of implementation are concrete, including administrative complexity, possible constraints on industrial-policy tools, and premature lock-in to an OECD-designed regime whose long-term stability remains clouded by U.S. exceptionalism and widening legitimacy conflict.Footnote ²⁹⁰ Non-implementation therefore functions less as an absence of policy than as structural insurance: it preserves room for maneuver amid uncertain distributive gains, substantial technical burdens, and a still-contested settlement, while allowing China to retain voice within the OECD process without yet domesticating its commitments. China thus preserves flexibility, monitors how the regime develops in practice, and avoids legitimizing distributive arrangements it may later seek to revise through more inclusive multilateral pathways.Footnote ²⁹¹ By contrast, the United States seeks to reshape the regime from within through domestic substitutes and asymmetrical accommodations.

Taken together, U.S. unilateralism and Chinese ambivalent non-implementation generate fragmentation without collapse.Footnote ²⁹² Fragmentation also arises from the ongoing effort to patch a common framework so that it remains governable across unequal domestic systems.Footnote ²⁹³ Pillar Two has not failed because implementation is uneven; rather, unevenness has become its ordinary operating logic. The regime survives not through uniform application, but through differentiated legalization, safe harbors, domestic top-up taxes, administrative accommodations, and persistent disputes over equivalence. Although the OECD remains institutionally central because states continue to operate through its categories, implementation is increasingly segmented. Safe harbors, carve-outs, and differential rollouts weaken the promise of uniformity and preserve room for major-power adjustment through adaptation, delay, and reinterpretation. What emerges is a system that retains technical coherence while becoming ever more contested in normative terms, especially with respect to fairness, sovereignty, and distribution.

Minimum taxation has not ended tax competition.Footnote ²⁹⁴ Instead, it has redirected competition into legal forms compatible with the regime. The spread of QDMTTs is part of that shift: domestic top-up taxes allow states to retain revenue that would otherwise be collected elsewhere, while grants, refundable credits, and other compliant support measures let them recycle part of that revenue back to favored investors. Headline-rate convergence thus masks widening divergence in fiscal capacity, policy technique, and competitive strategy. Pillar Two standardizes the floor, but it also encourages differentiated adaptation above it, especially between jurisdictions able to finance sophisticated compensation mechanisms and those with fewer resources.

In conclusion, Pillar Two does more than illustrate implementation difficulties. It also reveals how minimum taxation intensifies the legitimacy problem at the center of the tax regime complex. The more the project appears to preserve exceptional maneuvering room for major powers while demanding extensive adjustment from everyone else, the more vulnerable OECD authority becomes to challenge from alternative sites of political legitimacy. Developing states need not disprove OECD expertise to contest OECD authority. It is enough to argue that expertise without distributive credibility is insufficient. Pillar Two should therefore be read as a principal legal form through which fragmentation is now produced, managed, and contested within global tax governance.

B. Case Study: The UN Tax Convention Initiative (2023)

The UN tax convention initiative, launched in 2023, exposes a distinct configuration of U.S.-China interaction within the tax regime complex. China has backed calls for a more inclusive UN process, while the United States has resisted that shift even as its own non-implementation of Pillar Two weakens the OECD-centered framework it seeks to defend. But the episode’s significance lies not in a wholesale transfer of authority from the OECD to the United Nations. Rather, it lies in reopening a struggle over institutional control, inclusion, and the allocation of taxing rights under sharper geopolitical conditions.Footnote ²⁹⁵ For many lower-income countries, the attraction of the UN track was not abstract inclusiveness alone, but dissatisfaction with an architecture in which effective participation required capacities they often lacked and produced standards that did not reflect their priorities or secure sufficient taxing rights. The turn to the United Nations thus marked not a retreat from cooperation, but an effort to renegotiate the institutional terms of the regime complex, a regime-shifting move.Footnote ²⁹⁶

In late 2023, the General Assembly adopted Resolution 78/230, launching an ad hoc intergovernmental process to develop terms of reference for a UN framework convention on international tax cooperation. By August 2024, that process had produced draft terms of reference.Footnote ²⁹⁷ Institutionally, this mattered because it shifted tax norm-making toward a more openly intergovernmental process in which developing countries could exercise greater agenda-setting power.Footnote ²⁹⁸

Despite claims that the resolution marked a pivotal moment, literature cautions against overstating it. As Christensen argues, the UN vote was potentially pivotal, but it did not itself settle substantive rules or guarantee a durable redistribution of authority.Footnote ²⁹⁹ Its significance instead depends on whether broader changes in power, capacity, and organizational inequality can sustain a stronger UN role over time. That caution matters here because it distinguishes symbolic rupture from institutional change: the vote did not rewrite the rules, but it altered the setting in which future claims to authority and legitimacy would be made.

A further caution is warranted. The UN initiative should not be read only as a legitimacy-correcting move toward more inclusive tax cooperation. It can also be read as evidence that broader power rivalry has entered international tax governance. The resolution was carried largely by non-Western support against broad Western resistance, and the resulting confrontation reflected not merely procedural disagreement, but a deeper struggle over who gets to define the institutional center of tax cooperation in a more multipolar order. Read in this way, the UN track marks not simply a normative challenge to OECD legitimacy, but a political challenge to Western leadership in international tax rulemaking.Footnote ³⁰⁰

The United States opposed that shift forcefully, arguing that “highly inclusive fora” already existed, a position that defended OECD/G20 primacy and its reliance on technical expertise, peer review, and implementation support.Footnote ³⁰¹ Yet that defense sits uneasily alongside U.S. efforts to preserve exceptional treatment for itself within the very framework it seeks to protect. China’s response was more cautious. Beijing supported the broader call for a more inclusive UN tax process while remaining active in the OECD/G20 Inclusive Framework.Footnote ³⁰² The resulting pattern is not one of regime collapse. Rather, each power contributes to a more contested authority structure: the United States by defending an incumbent forum whose even-handedness it simultaneously weakens, and China by sustaining a credible alternative without abandoning the incumbent one.

The resulting politics are best understood as a contest over institutional design. A recent governance analysis shows that the divide between advanced and less advanced economies in the current UN process runs along two connected axes: the decision-making rules of a new UN body and that body’s relationship to existing tax-cooperation institutions, especially the OECD/G20 Inclusive Framework.Footnote ³⁰³ A complementary analysis of the 2024 terms-of-reference process reaches a similar conclusion. Once the sequencing question was settled, the principal controversies concerned the rules and decision-making procedures of the convention process and the substantive topics to be addressed in the convention and its protocols.Footnote ³⁰⁴ On this view, optional protocols signal not a clean transfer of authority from the OECD to the UN, but a more plural institutional architecture in which states may join the framework without accepting every substantive instrument. Taking them together, these proposals matter less as blueprints than as evidence that the UN track has moved from symbolic protest to a serious contest over institutional design, pointing toward a denser regime complex of overlapping institutions serving different functions and constituencies.Footnote ³⁰⁵

The better inference, then, is not that the UN process has already rewritten OECD rules or supplanted OECD capacity. It is that the emergence of a credible UN track has altered the authority environment in which OECD outputs are produced and judged. The OECD remains the operational center of existing minimum-tax and transparency architectures, but it now operates under pressure from a parallel forum with a different membership, timing, and justificatory logic.Footnote ³⁰⁶ The result is a dual-focal environment in which states can use one forum to challenge outcomes in another, keep distributive questions open, and extract leverage through venue shifting. That is precisely the kind of structured interaction across overlapping but durably unequal and functionally differentiated sites that characterizes an asymmetric regime complex rather than a settled hierarchy.Footnote ³⁰⁷

In that setting, U.S.–China interaction destabilizes the old focal point in a different way. U.S. resistance to the UN route and continued defense of OECD primacy sharpen the perception that the incumbent forum remains tied to unequal bargaining structures. China’s calibrated support for the UN process, by contrast, helps sustain a credible alternative venue without requiring China to abandon the OECD outright. Developing countries exploit both dynamics. They use U.S. unilateralism and exceptionalism to question the universality of OECD discipline and China’s support to reinforce the credibility of a more intergovernmental path. Fragmentation thus emerges not from regime collapse, but from the interaction of U.S. unilateralism from within, China’s support for parallel venues from without, and developing-country efforts to relocate distributive conflict to fora where sovereign equality carries greater force. The result is a more contested and less hierarchical regime complex.

A. Hybridization

Contemporary tax governance reflects an evolving hybrid order rather than institutional breakdown: OECD expertise and UN legitimacy. Great-power behavior reinforces that hybrid equilibrium. China broadens the institutional field by investing in additional venues and capacity-building arrangements, while the United States pressures the system from within by insisting on flexibility for domestic choices. The result is an order in which coordination persists alongside disputes over fairness, allocation, and voice. Absent a negotiated settlement on allocation, the system is likely to oscillate between episodic coordination and renewed venue proliferation rather than consolidate around a single focal institution.

Multiplicity also creates opportunities for developing countries. It opens new access points, as the Africa Group’s 2023 General Assembly campaign moved tax-cooperation negotiations into a universal forum where developing countries have numerical weight. ATAF has used technical work on Article 12B and the STTR to shape debate, and CIAT has explored alternatives to OECD-centered approaches. It also strengthens South-South coalitions. BRITACOM and BRICS do not replace OECD standard-setting, but they provide capacity-building, coordination, and political backing that reduces dependence on OECD technical assistance and give smaller states more durable channels for articulating source-based and development-oriented preferences. Developing countries may also press claims grounded in fairness, inclusivity, and representation. Because OECD standards are often seen as efficient but exclusionary, shifting debate to the UN can reframe the argument and raise political costs for dominant actors. Still, these opportunities are limited: symbolic inclusion does not automatically yield substantive influence, and asymmetries of expertise, staffing, technology, and enforcement remain severe.

Without coordination, inequalities between developed and developing states are entrenched.Footnote ³⁰⁹ Those risks rise further because profit shifting erodes revenues disproportionately in developing economies, underscoring the distributive stakes of institutional design.Footnote ³¹⁰ Institutional duality may persist in a stable form, but instability can still arise from substantive and normative duality. OECD standards anchor practice, but distributive and legitimacy conflicts now move across overlapping venues. The architecture is therefore durable but unsettled: stable enough to organize behavior, yet unstable in the bargains and authority relations that sustain it.

B. Risks of Instability: Contestation, Forum Shopping, and Unilateralism

The central risk in current global tax governance lies in the regime’s unsettled normative and distributive basis and in how states use that structure. International tax bargaining now responds both to interstate venue competition and to firms’ tax-planning practices. Two dynamics are especially important: forum shopping across venues to secure preferred outcomes, and unilateral action by powerful states that exports domestic preferences with limited reciprocal constraint. Powerful states can use market access, enforcement, and network centrality to induce legal change abroad, but legal forms can also reshape bargaining power by creating focal points, reputational costs, and coalition opportunities. Peer review, public ratings, and agenda control do not erase asymmetry, yet they can sometimes give weaker states leverage unavailable through material power alone.

These dynamics are causal and mutually constitutive: power shapes law, and law reshapes power. On the power → law side, states and blocs at choke points in global markets can externalize domestic rules through enforcement-backed conditionality, producing de facto standards without multilateral consent. The logic is captured by work on weaponized interdependence, which shows how control over network hubs can become coercive regulatory reach.Footnote ³¹¹ A clear tax example is FATCA: foreign financial institutions face a 30 percent withholding consequence on certain U.S.-source payments if they do not participate in the reporting architecture, inducing jurisdictions and private actors to build interoperable compliance systems.Footnote ³¹² Diffusion is visible not only in legal texts but also in administrative infrastructures such as registration, reporting pipelines, and due diligence procedures. A second illustration is the EU’s credible DST outside option. The EU’s 2018 proposed Digital Services Tax was framed as an interim measure, never adopted EU-wide, and later put on hold as OECD/G20 negotiations advanced. Even so, the prospect of proliferating digital taxes, together with U.S. Section 301 actions and threats, increased pressure for agreement and fed into the negotiations that produced the two-pillar package. Pillar Two’s GloBE Model Rules and later guidance then turned that bargain into a stronger template for convergence.

Conversely, law → power operates through the way venues and legal forms redistribute leverage by structuring legitimacy, focal points, and coalition capacity. The strongest evidence often comes from institutionalized review and reputational technologies. For example, the OECD Global Forum’s peer review frameworkFootnote ³¹³ produces public compliance ratings and assessments that create audience costs and predictable review cycles, which materially weaker jurisdictions can invoke to discipline stronger or non-compliant actors by reframing disputes as failures to meet agreed standards. Likewise, in regime-complex settings, contested multilateralism and cross-institutional strategy can enable weaker states to shift arenas and aggregate coalitions, turning procedural control and legitimacy claims into bargaining leverage even without commensurate market power.Footnote ³¹⁴ Legal forms are not neutral vessels: they can alter outside options, coordination costs, and reputational stakes, thereby reshaping bargaining power and feeding back into later rule design.

Forum shopping has become a feature of tax diplomacy. Developing states invoke the UN to discipline OECD primacy, as with the Africa Group’s campaign for a UN tax convention in 2023. China hedges across venues, protecting its multinationals while amplifying inclusivity claims. These strategies mirror patterns in other issue areas, where dissatisfied states shift issues to rival forums when distributional concerns are excluded.Footnote ³¹⁵ While such maneuvers politicize debate, they remain embedded in multilateral bargaining. Forum shopping is visible in concrete markers: the Africa Group’s 2023 General Assembly campaign that secured a 125–48–9 vote in favor of UN negotiations; China’s dual presence in OECD working parties and BRICS communiqués; and Latin American references to CIAT papers during IF consultations.

Unilateralism, by contrast, generates sharper instability. The United States exemplifies this pattern through FATCA, the Tax Cuts and Jobs Act, GILTI, the CAMT, and Section 301 tariff threats against digital services taxes, as detailed in Chapter 5. Across these episodes, Washington acted ahead of, or beyond, multilateral agreement, using its market power to shape global standards unilaterally. Subsequent coordination, including the OECD’s Common Reporting Standard and Pillar Two guidance, was largely reactive and often adjusted to U.S. preferences without imposing reciprocal constraints. For governments, unilateralism corrodes trust: if the hegemon exempts itself from multilateral bargains, others may follow suit, producing a spiral of non-cooperation and illegitimacy.Footnote ³¹⁶ For firms, fragmentation creates duplicative compliance burdens and arbitrage opportunities.Footnote ³¹⁷ The result is not convergence, but hollowing out of multilateral frameworks.Footnote ³¹⁸

The broader implication is sobering but practical. Under complexity, stability is unlikely to come from uniformity or a single hierarchical institution. It is more likely to rest on a functional order: pockets of technical convergence, persistent bargaining over distribution, and overlapping institutions that divide authority rather than consolidate it.