THE ORGANISATION FOR ECONOMIC DEVELOPMENT AND CO-OPERATION
In May 1998 the GECD issued a report under the title Harmful Tax Competition: An Emerging Global Issue. The GECD members expressed reservations as to some of the conclusions and abstained in a vote on the proposals at the GECD ministerial meeting in Paris in April 1998. The report essentially dealt with the issues of harmful competition, as well as harmful tax practices. In respect of harmful competition, the report looks towards tax avoidance schemes and not merely tax evasion activity. Hence, it considers schemes in offshore financial centres which are using preferential tax regimes for certain activities. The report at para 37 exhorts governments to intensify their international cooperation so as to protect their tax bases and thereby avoid any reduction in their own welfare which has been caused by distortions in capital and financial flows as a result of preferential tax regimes.