OECD pressure on tax havens pays off

Link: Tax havens exploited by US businesses

Following further analysis, 13 of the 47 systems identified as harmful at the turn of the century had been found ‘not to be harmful’ by OECD officials, leaving just two in the frame. These are Switzerland’s so-called 50/50 practice (previously known as the administrative company regime), and Luxembourg’s 1929 holding company regime.

Both will be discussed at the OECD later this year and, although reforms have been tabled in Luxembourg, the international think-tank has concerns about the system’s transparency. The organisation considers tax laws that allow for low or zero taxation on geographically mobile services to be harmful, especially where there is a dearth of information about the taxpayers.

The body considers these systems to stymie open tax-competition between jurisdictions.

Bill McCloskey, OECD fiscal affairs committee chairman, said pressure from his organisation since 2000 has ‘resulted in real change’, adding: ‘OECD countries have shown that they will take action to ensure that tax competition is fair.’

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