With minor differences all above mentioned definitions feature three main characteristics of offshore financial centres, namely, 1) low or zero tax rates, 2) high secrecy or lack of transparency and 3) providing these benefits to non-residents. The current anti-offshore crusade is concentrated on cracking down these artificially created advantages, which inflict harmful tax competition. The main battlefields are tackling base erosion and profit shifting, unveiling beneficial ownership and promoting transparency.

Historic background of the modern international tax law

First concerns about the role of tax havens in money laundering and tax evasion had been arisen as early as at the beginning of 1920^>th. Many national and international rules addressing double taxation of individuals and companies have been originated from the principles developed by the League of Nations in the 1920s. However, it took the international community almost a century to join forces in combating tax avoidance via offshores.

Initially, international legislative efforts were focused on preventing double taxation in order to promote international investment process. During 1923—1927, a group of international experts under auspices of the League of Nations drafted the Bilateral Convention for the Prevention of Double Taxation in the Special Matter of Direct Taxes dealing with income and property taxes, the Bilateral Convention for the Prevention of Double Taxation in the Special Matter of Succession Duties, the Bilateral Convention on Administrative Assistance in Matters of Taxation and the Bilateral Convention on [Judicial] Assistance in the Collection of Taxes. This work led to drawing up the first Model bilateral convention (1928) and later on the Model Conventions of Mexico (1943) and London (1946). Neither of these Model Conventions, however, was fully and unanimously accepted.

Specifically, the League of Nations group decided that international tax issues should be addressed not by a multilateral global agreement, but at bilateral level. As a result, since the 1920s countries had signed thousands of bilateral «double-tax treaties» that followed the general League of Nations guidelines of source-based taxation and arm’s length pricing, but differed in a myriad of specific ways. While international trade was governed by a multilateral agreement since 1947, namely, the General Agreement on Tariffs and Trade (GATT), to date no such a multilateral treaty exists for corporate taxes48.

In 1954, the focus of action in the field of international taxation shifted from the League of Nations to the Organization for European Economic Co-operation and further on to the OECD. On 30 July 1963, the Council of the OECD adopted the Recommendation concerning avoidance of double taxation and published a new Model Convention and Commentaries in 1977.

According to the OECD, «International juridical double taxation can be generally defined as the imposition of comparable taxes in two (or more) States on the same taxpayer in respect of the same subject matter and for identical periods. Its harmful effects on the exchange of goods and services and movements of capital, technology and persons are so well known that it is scarcely necessary to stress the importance of removing the obstacles that double taxation presents to the development of economic relations between countries». Correspondingly, «the main purpose of the OECD Model Tax Convention on Income and on Capital is to provide «a means of settling on a uniform basis the most common problems that arise in the field of international juridical double taxation»