The notion of HTC The EU practice against HTC The OECD work

The notion of
HTC
Theoretical perspective:
• Objective aspect: special tax incentives
• Subjective aspect: attraction of investments at the expense of
other countries
• Compliance aspect: non compliance with international tax
principles
The EU practice
against HTC
• Hard law: state aid provisions (Articles 107-109 TFEU)
Application of state aid provisions in the TFEU to tax
incentives, preferential tax regimes and tax rulings
“Selective advantage” criterion (Article 107 TFEU)
• Soft law: Code of Conduct for business taxation (1997): HTM
criteria; Reports
The OECD work
against HTC
• The initial work of the OECD against tax havens: Reports
(1998-2006)
• BEPS Action 5 (countering harmful tax practices): preferential
tax regimes
• Features of “acceptable” preferential regimes (example:
modified nexus approach for patents)
• Compliance aspect of international tax standards: automatic
exchange of tax information
WTO and tax
incentives
Potential HTC
in the Eurasian
region
• WTO agreement on subsidies and countervailing measures
(ASCM) and tax incentives
• “Specific subsidy” criteria (Articles 1-2 of the ASCM)
• “Foreign Sales Corporation” case (WT/DS108)
• Analysis of:
- SEZs
- preferential tax regimes
- tax incentives
• Conclusion on potential HTC in the region and
recommendations on tools/measures against HTC
The aim of the PhD thesis is to analyze what constitutes Harmful Tax Competition within the international
tax framework and discover practical tools that are being used in the European Union to fight this
phenomenon, namely State Aid rules as provided by Articles 107-109 of the TFEU and also Code of Conduct for
Business Taxation (December 1, 1997) with a view of possibly adopting and adapting such measures in the
Eurasian Common Economic Space (the Economic Union between Kazakhstan, Russia, Belarus and Armenia as of 1
Jan 2015). Since the European Union tools against Harmful Tax Competition touch upon WTO rules on subsidies
and also due to the fact that the OECD is a major player in forming international tax rules in international
arena, including rules against Harmful tax competition, the rules and guidelines of these two organizations
will also be reviewed throughout the PhD thesis to provide an understanding of international tax standards
of good tax competition that countries are highly recommended to follow.