Clarifying tax battle

OECD Observer

The OECD's effort to eliminate harmful tax practices is directed at "tax cheats" and is not intended to push countries into specific levels of tax, Secretary General Donald Johnston said. "There seem to be widespread misunderstandings as to what the project is all about," Johnston said in a letter to US Congressman Sam Johnson. "It has nothing to do with insisting that a jurisdiction use a particular tax structure or rate… What the project is aimed at is preventing non-compliance with the tax laws."

This is underscored by the fact that the OECD has welcomed commitments by Bermuda and the Cayman Islands to eliminate harmful tax practices, without requiring that they introduce an income tax. Johnston also noted that the fight against tax havens also concerns developing countries, not just the industrial world, citing a recent Oxfam report stating that developing countries are losing very large sums to tax havens.

©OECD Observer No 226/227, Summer 2001

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