Tax Policy Challenges in the 21st Century

S. 366I. Introduction

A. Purpose of this chapter

One of the acute policy challenges faced by governments in the 21^st century deals with the design of rules and instruments for counteracting tax avoidance and tax evasion in ways which enable the creation and maintenance of competitive tax systems. Today, we can already observe the first tangible outcomes of concerns raised by non-profit organizations concerning the aggressive tax planning schemes of multinationals. Tax avoidance and tax evasion have become priority discussion issues on the global agendas of international bodies such as the OECD, the G20 and the EU, which is another distinct feature of present-day tax policy development. Notwithstanding the fact that current efforts are mainly focused on issues involving multinationals, e.g. the OECD action plan on Base Erosion and Profit Shifting, attention to tax avoidance and tax evasion by high-net-worth individuals (HNWIs) has not been omitted either.

Several whistleblowing articles concerning tax evasion by wealthy American and German individuals by means of Switzerland and Liechtenstein, well-known for their strict bank secrecy regulations, appeared in the press in 2008. In 2009, the O...