The availability of safe harbours for a given category of taxpayers or transactions may have adverse consequences. These concerns stem from the fact that:
- The implementation of a safe harbour in a given country may lead to taxable income being reported that is not in accordance with the arm’s length principle;
- Safe harbours may increase the risk of double taxation or double non-taxation when adopted unilaterally;
- Safe harbours potentially open avenues for inappropriate tax planning, and
- Safe harbours may raise issues of equity and uniformity.