The Office of Economic Co-operation and Development (OECD) report identifies harmful tax competition as tax practices that affect the location of financial and other services that erode the tax base of other countries; distort trade and investment patterns; and undermine the fairness, neutrality and broad social acceptance of tax systems.
This definition begs the question of whether any policy that diverts investment from one jurisdiction to another is harmful tax competition. It also begs the questions: what is the harm and who does it harm? The answer is self-evident – it is harmful to the territories which, because of their tax policies, are unable to attract inward investment. Effectively, this means the high-taxing and highly-regulated G7, European Union (EU) and OECD members.
