Recent G8 and G20 statements, combined with a number of OECD campaigns have given an impression that the world has entered a phase of re-invigorated multilateral efforts to combat tax abuse. We argue that this impression is not entirely mistaken, but the centre of gravity in the battle against tax abuse generally, and tax havens specifically, is shifting decidedly towards unilateral approaches. The US is, in particular, in flexing its muscles attempting to ensure that the various mechanisms used to evade taxation and perpetrated through tax havens have little impact on its ‘back yard’. We call this the ‘Not In My Back Yard’ (NIMBY) principle of regulation, which underpins the new Foreign Account Tax Compliance Act (FATCA). The NIMBY principle, we argue, is likely to be adopted by other large political entities.
The re-focusing of anti-tax abuse measures from states to private financial intermediaries is proving effective. In addition, states should focus their efforts on offshore professional service providers.
Considering that business competitively emulates tax abuse practices, the OECD and G8 should encourage the competitive emulation of antiabuse measures.
The OECD should be used to integrate successful unilateral fiscal measures via technical support rather than develop multilateral antiabuse policies that are inevitably based on the lowest common denominator.
When multilateralism has proved weak, ad hoc unilateral measures will catalyze widespread change and increase the transaction costs of tax abuse.