Harmful tax practice is a term that is increasingly used instead of the previously more commonly used term harmful tax competition. Tax competition or practice can be interpreted in a narrower and broader sense. Tax competition in the narrower sense represents a situation in which tax authorities, independent of the influence of companies, determine tax rates, competing for a mobile tax base. Tax competition in a broader sense represents a situation in which the tax policy implemented by tax authorities affects the level of tax revenues available to other tax authorities. Not every tax competition (practice) is potentially harmful, as evidenced by the research of some economists for the existence of positive tax practices, but in this paper, attention is paid to harmful tax practices and their effects, which can be at the regional, national and global level. The paper explains the types of harmful tax practices and their characteristics, causes and consequences on the modern economy. The paper explores the ways in which major world organizations, such as the Organization for Economic Co-operation and Development and the European Union, try to prevent the negative effects of tax havens and preferential tax regimes, both on the development and functioning of the state, and on all taxpayers. The above-mentioned world organizations continuously introduce numerous reforms and initiatives, and the paper explains the latest and most prominent ones in combating harmful tax practices. The aspiration to establish a unified tax system, that is, tax harmonization, which primarily refers to the harmonization of the tax base, which would contribute to the transparency and efficiency of resource allocation, is highlighted.