By promoting the implementation of the principles of transparency and effective exchange of information, OECD countries seek to enable each country to retain sovereignty over national tax matters and to apply effectively its own tax laws. The decision on the appropriate rate of tax is a sovereign decision of each country. OECD member countries do not seek to dictate to any country, either inside or outside the OECD, whether to impose a tax, what its tax rate should be or how its tax system should be structured. The aim of this work is to create an environment in which all countries, large and small, OECD and non-OECD, those with an income tax system and those without, can compete freely and fairly thereby allowing economic growth and increased prosperity to be shared by all. Transparency and international cooperation through effective exchange of information are important elements of such an environment. The present report focuses only on the progress made in connection with the work on potentially harmful preferential tax regimes of OECD member countries.