Progress Made In Elimination Of Harmful Tax Practices, Says OECD

by Robert Lee, Tax-News.com, London

24 March 2004

Member nations of the OECD have made great strides in eliminating harmful tax practices and abolishing preferential tax regimes, stated a report released by the organization on Monday.

According to the report, issued by the OECD’s Committee on Fiscal Affairs, out of a total 47 preferential tax regimes cited in 2000, 18 regimes have been abolished or are in the process of being abolished, 14 have been amended so that any potentially harmful features have been removed, and 13 have been found on further examination not to be actually harmful.

Two regimes, Switzerland’s so-called ‘50/50’ practice (previously referred to as the Administrative Company regime) and Luxembourg’s 1929 Holding Company regime, on which proposals for modification are currently before the Luxembourg Parliament, are to be the subject of further discussion later this year.

Meanwhile, five jurisdictions including Andorra, Liberia, Liechtenstein, the Marshall Islands, and Monaco remain on the OECD’s blacklist of Unco-operative Tax Havens, but the OECD said that it is continuing to seek their cooperation.

"We’re pleased with the progress that OECD countries have made in eliminating harmful tax practices as they relate to their preferential tax regimes and with the progress that we are making in establishing a co-operative working relationship with non-OECD countries and jurisdictions," stated Bill McCloskey, Chairman of the OECD’s Committee on Fiscal Affairs.

"We will continue to promote the kind of tax competition that is based on high standards and leads to real and lasting benefits. Tax competition provides a useful discipline for governments, but it should not lead to an abuse of tax measures since this would undercut the faith of honest taxpayers in their countries’ tax systems," he concluded.

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