The FSF has scrutinised nearly 40 centres and judged that nearly 30 OFCs do not cooperate and devote insufficient resources to supervision. The forum has proposed that these OFCs should be closely monitored and that sanctions should be imposed if they do not comply. Sanctions would range from imposing extra requirements on financial institutions doing business in these OFCs to making access to World Bank and IMF facilities more difficult. The FSF has urged the IMF to take responsibility for assessing progress in this area. The low taxes in OFCs are also under attack.
Globalisation offers states an opportunity to compete for mobile economic activity.
This could lead to a race to the bottom, which would have negative effects on the distribution of the tax burden. As a response, the OECD in 1998 released a report on harmful tax competition. The objective of the OECD is to enable states to tax their subjects as they may wish, to promote a fair distribution of the tax burden and ensure that taxes are not the main reason when deciding where to allocate capital. In order to do so, the OECD is trying to improve the exchange of information and cooperation between tax collectors and to combat harmful tax practices, i.e. practices that erode the tax base of other countries. These jurisdictions are now invited to cooperate with the OECD and to eliminate their harmful tax practices before the end of 2005.