EUROPE- A new survey by KPMG of taxation and regulation of funds in more than 70 countries suggests that governments are failing to harmonise tax laws and that progress towards a global investment market remains slow.

The research finds aspiring EU entrants such as Hungary, Poland and Lithuania are making strongest headway in terms of lifting cross-border barriers thanks to economic pressure.

The EU applicants have taken steps to remove discriminatory tax legislation which will allow foreign fund managers to operate abroad, but these countries are among the exceptions.

Jane McCormick, partner at KPMG said: “the global economy is still struggling with localised and fragmented tax regimes. More needs to be done to bring about greater cross-border harmonisation to facilitate a truly global market.”

A more positive theme emerging from the study is the continued pressure on offshore centres to fight tax evasion - the result being that many offshore centres have now tightened their regimes and accepted OECD provisions.

“It is encouraging to see that the distinction between onshore and offshore is decreasing, and transparency and accountability are increasing”, says Robert Barker, a partner at KPMG in Dublin.

The report also highlights the growing status of onshore hedge funds in countries such as Finland, Italy, Sweden and Switzerland.