Glossary
These are the terms used across the index — the exit-tax rules, reporting frameworks and enforcement powers we track for each country — written for people who are not tax specialists.
- Audit hit rate
- The share of audits that result in an adjustment to the taxpayer's liability.
- Citizenship-based taxation
- Taxing citizens on their worldwide income regardless of where they live. Rare worldwide; the United States is the principal example.
- Common Reporting Standard (CRS)
- The earlier OECD standard for automatic exchange of financial account information between tax authorities.
- Compliance yield
- The additional revenue an authority attributes to its own compliance activity. Definitions differ by authority and are not comparable between countries.
- Controlled foreign company (CFC) rules
- Rules that attribute the profits of a low-taxed foreign subsidiary back to its domestic owners, so income cannot simply be parked in a low-tax jurisdiction.
- Country-by-country reporting (CbCR)
- A requirement for large multinational groups to file a report showing revenue, profit, tax paid and employees in each jurisdiction they operate in; tax authorities then exchange those reports with each other.
- Crypto-Asset Reporting Framework (CARF)
- An OECD standard requiring crypto-asset service providers to collect and report user and transaction information to tax authorities, which is then exchanged internationally. Committed jurisdictions begin exchanges from 2027 or 2028.
- DAC7
- The EU directive requiring digital platforms to collect, verify and report sellers' income to tax authorities.
- DAC8
- The EU directive extending that reporting obligation to crypto-asset service providers, aligning EU law with CARF.
- Deemed disposal
- Treating assets as if they had been sold at market value even though no sale took place, so the gain can be taxed at that moment.
- Effective tax rate
- The tax actually borne as a proportion of profit, which can differ substantially from the headline statutory rate once reliefs, allowances and timing are taken into account.
- Exit tax
- A charge on unrealised gains, or a deemed disposal of assets, triggered when an individual ceases to be tax resident. Distinct from ordinary tax on gains realised after leaving.
- Interest limitation rule
- A cap on how much interest a company may deduct, commonly a fixed ratio of EBITDA, designed to stop profit-shifting through intragroup debt.
- ISORA
- The International Survey on Revenue Administration, run jointly by the IMF, OECD, CIAT and IOTA. Tax administrations self-report operational data such as audit activity, staffing and digital services.
- ITTI
- The OECD's Inventory of Tax Technology Initiatives, in which tax administrations self-report their use of technology, including artificial intelligence.
- The instrument jurisdictions sign to actually switch on automatic exchange of information with each other under a standard such as CRS, CbCR or CARF.
- Public naming ("naming and shaming")
- A power allowing an authority to publish the identities of taxpayers penalised for non-compliance.
- Tax gap
- The difference between the tax theoretically owed under the law and the tax actually collected. Every authority estimates it differently, so tax gaps are not comparable between countries.
- Tax-to-GDP ratio
- Total tax revenue as a share of gross domestic product. General-government and central-government-only definitions produce very different numbers and must never be mixed in one ranking.
- Withholding tax
- Tax deducted at source from a payment such as dividends, interest or royalties, before the money reaches the recipient.
Terms marked as self-reported (ISORA, ITTI) come from administrations describing themselves, and the index labels them as such rather than treating them as independent findings.