HARMFUL TAX COMPETITION CAUSED BY GLOBALIZATION: PROBLEMS AND SOLUTIONS

Abstract

Globalisation, one of the most important phenomena of today’s world, is the unification of different nations at a common point. With globalization, the disappearance of obstacles such as borders and geographical boundaries has brought mobility to production factors such as labor and capital. These factors have created opportunities to earn additional income by taking advantage of tax system differences between countries. In this sense, tax has gained the characteristic of being an element of competition. In addition, with the developments in the technological field, commercial and economic connections between countries have increased, leading to the mobility of labour and capital. When international tax competition is used by some countries for development purposes, it is possible to talk about harmful tax competition.Harmful Tax Competition, is a situation that may cause many negative effects unless measures are taken on a global scale. In this respect, this study analyses the concept and scope of harmful tax competition, its criteria, costs and effects, respectively. In addition, detailed information will be provided on the practices that cause harmful tax competition and their consequences, the problems caused by harmful tax competition. However, the work carried out by the OECD, the EU, the USA and the G8 Financial Action Group in this field and the measures taken to address the problems will be mentioned. Concordantly, it is possible to say that a multilateral effort to be put forward regarding harmful tax competition.