In the mid-1960s, the United Nations renewed its interest in the problem of double taxation as part of its action to promote flows of foreign investment to developing countries. The UN stated that «The growth of investment flows from developed to developing countries depends to a large extent on what has been referred to as the international investment climate. The prevention or elimination of international double taxation – i.e. the imposition of similar taxes in two or more States on the same taxpayer in respect of the same base – whose effects are harmful to the exchange of goods and services and to the movement of capital and persons, constitutes a significant component of such a climate»50.

In 1980, the United Nations published the UN Model Double Taxation Convention between Developed and Developing Countries, which was preceded by the Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries (1979). Like all model conventions, the UN Model Convention is not enforceable, i.e. its provisions are not legally binding. The UN Model Convention reproduces many Articles of the OECD Model Convention.

Ironically enough, the UN and OECD Conventions not only boosted flows of foreign direct investments but also had created a legal basis for massive tax avoidance. Multinational corporations took advantage of legal loopholes and skillfully used aggressive tax planning in order to hide their assets and profits in offshores. That became possible due to concluding bilateral tax treaties on avoiding double taxation. Shortly after successfully creating a worldwide network of more than 3,000 bilateral tax treaties, the OECD committed itself to developing an anti-offshore legislation.

The Convention on Mutual Administrative Assistance in Tax Matters represents a kind of transitional law from protecting MNEs against double taxation to preventing double non-taxation by the same MNEs. The Convention was developed jointly by the OECD and the Council of Europe in 1988 and was amended by the Protocol in 2010. The Convention provides for administrative co-operation between states in the field of assessment and collection of taxes, in particular, with a view to combat tax avoidance and evasion. This co-operation ranges from exchange of information, including automatic exchanges, to recovery of foreign tax claims51. 106 jurisdictions currently participate in the Convention, including 15 jurisdictions covered by territorial extension. This represents a wide range of countries including all G20 countries, all OECD countries, all BRICS, major financial centres and an increasing number of developing countries.

However, it was not until the late 1990s that world powers had begun their first coordinated attack on offshore shell games.

Notably, first measures to prevent harmful tax competition from the part of low tax jurisdictions were undertaken by the European authorities. On 1 December 1997, the EU Council of Economics and Finance Ministers (ECOFIN) adopted the Code of Conduct for business taxation. The Code is the EU’s main tool for ensuring fair tax competition in the area of business taxation. It sets out clear criteria for assessing whether or not a tax regime can be considered harmful. All Member States have committed to adhering to the principles of the Code. The Code of Conduct requires Member States to refrain from introducing any new harmful tax measures («standstill») and amend any laws or practices that are deemed to be harmful in respect of the principles of the Code («rollback»). The Code covers tax measures (legislative, regulatory and administrative) which have, or may have, a significant impact on location of business in the EU.