Chile Becomes First South American OECD Member

by Mike Godfrey, Tax-News.com, Washington

14 January 2010

Chile will become the Organization for Economic Cooperation and Development’s (OECD) 31st member and its first in South America under an accession agreement signed in Santiago by OECD Secretary-General Angel Gurría and Chilean Finance Minister Andrés Velasco. Chile will formally become a member once its parliament ratifies this agreement.

Chile’s acceptance for OECD membership marks international recognition of nearly two decades of democratic reform and sound economic policies. For the OECD, Chile’s membership is a major milestone in its mission to build a stronger, cleaner and fairer global economy.

The OECD said that since it began talks with Chile in May 2007, "significant steps" have been taken with the introduction of new laws to "end the banking secrecy that provides a shield for possible tax evasion and enabling prosecutors to pursue companies suspected of bribery and corruption."

The Chilean economy has been growing at over 5% a year for the last 20 years. The OECD also praised Chile’s "groundbreaking pension reforms in the early 1980s [that] have served as a model for many other countries."

"When the financial crisis hit in 2008, Chile’s prudent tax policies gave it the financial leeway needed for stimulus measures to support demand and employment," the OECD stated.

“The ‘Chilean way’ and its expertise will enrich the OECD on key policy issues,” said Gurría during a signing ceremony in Santiago. “Chile has been engaged in a continuous effort to reform its economy. This experience will be an asset for the OECD as we try to address issues such as inequality or sustainable pension systems.”

In recent months, as part of the OECD accession process, competition laws and consumer protection have been strengthened. New legislation has established a clear separation between the State and the board of copper mining company Codelco, Chile’s largest state-owned enterprise.

In the private sector, a new law will boost transparency by requiring increased information for financial markets while combating misuse of insider information and reinforcing requirements for external auditors. Another major reform has seen the extension of public pension coverage.

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