Harmful Tax Competition: An Emerging Global Issue
Encyclopedia
Harmful Tax Competition: An Emerging Global Issue is a report issued by the Organization for Economic Co-Operation and Development.
In the report, the OECD groups countries into three categories: member country preferential regimes, tax havens, and non-member economies, and extablishes criteria for identifying each. Tax havens are characterized by having only nominal or no taxes, impeding the free exchange of information
on taxpayers with other governments through administrative practices or laws, non-transparency
, and a lack of substantial activities. Harmful preferential regimes, whether in member or non-member countries, are identified by four main traits. Like tax havens, their legal or administrative systems hamper the exchange of information and create an absence of transparency, and have effectively low or no taxes. Finally, the regime may partially isolate itself from the taxpayers and bear little to none of the tax burden, a practice known as “ring-fencing.”
In the report, the OECD groups countries into three categories: member country preferential regimes, tax havens, and non-member economies, and extablishes criteria for identifying each. Tax havens are characterized by having only nominal or no taxes, impeding the free exchange of information
Exchange of information
In the area of tax policy, Exchange of Information is a critical tool in assuring compliance with tax codes. As the as economy becomes increasingly globalized taxpayers gain greater freedom to move between countries and regions. Tax authorities, however, are restrained by national borders...
on taxpayers with other governments through administrative practices or laws, non-transparency
Transparency (social)
Transparency is a general quality. It is implemented by a set of policies, practices and procedures that allow citizens to have accessibility, usability, utility, understandability, informativeness and auditability of information and process held by centers of authority...
, and a lack of substantial activities. Harmful preferential regimes, whether in member or non-member countries, are identified by four main traits. Like tax havens, their legal or administrative systems hamper the exchange of information and create an absence of transparency, and have effectively low or no taxes. Finally, the regime may partially isolate itself from the taxpayers and bear little to none of the tax burden, a practice known as “ring-fencing.”