"AN APPRAISAL OF HARMFUL TAX COMPETITION"

Taxation

The process of globalisation has led to increased competition among businesses in the global market place. Multinational enterprises (MNEs) are increasingly developing global strategies and their links with any one country are becoming more tenuous. In addition, technological innovation has affected the way in which MNEs are managed and made the physical location of management and other service activities much less important to the MNE. International financial markets continue to expand, a development that facilitates global welfare-enhancing cross-border capital flows. This process has improved welfare and living standards around the world by creating more efficient allocation and utilization of resources. Globalization and technology have not only leaded to tremendous economic benefits for some but have also created many serious negative side effects for others. National boundaries are becoming less important. Multinational Enterprises ("MNEs") and wealthy individuals are more easily able to avoid taxation using tax havens.

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