The OECD today released an updated report, approved by the 123-nation “Inclusive Framework on BEPS,” which identifies preferential tax regimes considered “harmful” according to criteria established in 2015 in the OECD/G20 base erosion profit shifting (BEPS) plan Action 5 outcomes.
The effort is aimed at tax regimes offered to multinationals by countries that are designed attract to their shores geographically mobile activities, such as financial and other service activities and the provision of intangibles, that are harmful to other countries’ tax bases.
Countries that make up the “Inclusive Framework on BEPS” have agreed to be bound by the BEPS standards and be reviewed for compliance by the OECD-led Forum on Harmful Tax Practices (FHTP). The FHTP is also assessing compliance by countries that are not framework members to pressure them to change their ways.
The OECD said in a press released that today’s update shows the following:
- 18 regimes where jurisdictions have delivered on their commitment to make legislative changes to abolish or amend the regime (Andorra, Curaçao, Hong Kong (China), Mauritius, San Marino and Spain).
- Four new or replacement regimes that have been specifically designed to meet Action 5 standard (Lithuania, Mauritius and San Marino).
- New commitments to make legislative changes to amend or abolish a further ten regimes, by Aruba, Australia, Maldives, Mongolia, Montserrat, the Philippines and Saint Lucia.
- An additional 17 regimes that have been brought into the FHTP review process (Aruba, Brunei Darussalam, Curaçao, Gabon, Greece, Jordan, Kazakhstan, Malaysia, Panama, Paraguay, Saint Kitts and Nevis and the United States).
- Four other regimes that have been found to be out of scope, not yet operational or were already abolished or without harmful features (Aruba, Kenya, Paraguay).
The total number of regimes reviewed to date is 246. Only tax regimes established by France, Italy, and Turkey have been deemed harmful through this process.
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