There has been some debate in the media concerning jurisdictions that are deemed to be ‘uncooperative’. Both the EU and the OECD are working on a set of criteria to determine the standards that must be met by countries to avoid falling into that categorisation. In addition to that, ‘unfair tax competition’ and harmful tax practices traditionally adopted by some jurisdictions are suggested to be disrupting the level playing field for businesses and individuals across the globe.

On the ‘uncooperative’ label, for most part of the countries involved it can only be described as incorrect, and the ‘unfair tax competition’ - its designation seems to be at least biased. Initiatives on global tax transparency such as: the Global Forum on transparency and exchange of information (formed by 130 jurisdictions), or the Common Reporting Standard (CRS for the automatic exchange of financial account information (101 countries have committed to implement it), are perfect examples of how bank secrecy has become a feature of the past, but more importantly, that offshore financial centres (OFC) which are often in the spotlight (for unfounded reasons), are leading in some areas of tax cooperation. Indeed, many OFCs have in place mutual assistance agreements, but also form an integral part of the global compromise for tax collaboration. Therefore, only a criteria-based approach seems to be needed when determining whether a particular jurisdiction is considered as ‘uncooperative’.

‘Unfair tax competition’ is apparently being addressed through the Base Erosion and Profit Shifting (BEPS) project. However, its recommendations are mainly focused on tax avoidance by multinationals, whereas the discussions should ideally have to adopt a broader stance, and contemplate tax competition that takes place between States. It seems imbalanced that whilst some countries’ domestic tax policies are overly criticized (essentially OFCs), onshore jurisdictions that offer comparable tax benefits do not suffer such discriminating reputational damage. The international tax system can only be stable in the long run, if there is no incentive for countries to compete with, and thus impose external pressures on others. Instead, it looks as if unilateral disparate tax rules will introduce double or multiple standards that not only create compliance challenges for business but essentially undermine the consistency of the international tax system.

While recognising that tax evasion, fraud and money laundering are serious concerns that need to be addressed, those problems are only solved with a strong legal and penal system, not by attacking tax sovereignty, foreign investment and multinational businesses. Within a measured international framework countries should be able to determine by themselves their national tax policies, which will reflect the very nature of their jurisdictions and inherent characteristics of their economies (fiscal sovereignty). Indeed, mutual support among countries is desirable, but has to be coupled with a degree of certainty for stakeholders and private parties.