PRINCIPLE OF TAX NEUTRALITY • Tax neutrality is achieved where the structure of the business is not driven by tax considerations. • Under ceteris paribus conditions, businesses should make business decisions on economic factors since tax costs are in relative concert. • Jurisdictions which offer inappropriate tax conciliations compromise tax neutrality.
OECD’S COUNTER-MEASURES • Stop the outflow of funds, and • Increase the inflow of funds • How? – attacking tax havens and OFCs by: • Level the Playing Field through Tax Harmonisation • Exchange of Information
106