The OECD report, Harmful Tax Competition: An Emerging Global Issue, published in 1998, established an international framework to counter the spread of harmful tax competition. The report focused on geographically mobile activities, such as financial and other service activities. It adopted certain criteria for determining whether preferential tax regimes in OECD member countries were harmful as well as guidelines for addressing such harmful preferential regimes. Under the guidelines, member countries were asked to refrain from adopting new measures or extending the scope of or strengthening existing measures that constitute harmful tax practices; review existing measures for the purpose of identifying those that constitute harmful tax practices; and remove the harmful features of any harmful preferential regimes within five years.
To carry out its work on identifying harmful preferential tax regimes, the OECD requested that each member country perform a self-review of its preferential tax regimes by reference to the relevant criteria.
Ireland has participated fully in the OECD harmful tax competition project and has completed a self-review of the four relevant regimes: international finance services centre, the Shannon Airport zone, foreign dividend exemption and foreign branch profit exemption. There are no outstanding issues in regard to these regimes.
Finally, the harmful tax competition work is carried out principally through the forum — working group — on harmful tax practices, a subsidiary body of the Committee on Fiscal Affairs. Officials from the Department of Finance and the Revenue Commissioners serve on the steering group of the forum, along with Government representatives of France, Japan and the United States.