The latest report from the OECD on aggressive tax planning describes arrangements which put substantial tax revenues at stake. According to the report, New Zealand settled cases involving 4 banks for a combined sum exceeding NZD 2.2 billion. Italy recently settled a dozen cases involving hybrids for an amount of approximately EUR 1.5 billion. In the United States, the amount of tax evaded in 11 foreign tax credit generator transactions has been estimated at USD 3.5 billion.

The report focuses on arrangements that exploit national differences in the tax treatment of instruments, entities or transfers to deduct the same expense in several different countries, to make income “disappear” between countries or to artificially generate several tax credits for the same foreign tax.

The report, which draws from the OECD Directory on Aggressive Tax Planning, concludes that these arrangements generate significant policy issues in terms of tax revenue, competition, economic efficiency, fairness and transparency. It notes that concerns about distortions caused by double taxation also apply to double non-taxation.