OECD Base Erosion and Profit Shifting (BEPS) – Harmful tax practices and the four minimum standards

When OECD published its final BEPS reports at the end of 2015 it identified four minimum standards under the 15 part Action Plan.

These covered:

  • Action 5 – Preferential tax regimes
  • Action 6 – Treaty abuse
  • Action 13 – Country by country reporting, and
  • Action 14 – Mutual Agreement Procedures (MAP) and dispute resolution

We reported in 2017 on these minimum standards when the monitoring and review process was getting underway to ensure that the minimum standards were in place OECD BEPS  Minimum Standards and Peer Reviews

The BEPS work is now undertaken by the Inclusive Framework of countries of which there were 127 countries in January 2019: you can view these countries by clicking here.

OECD has now published an update on its Action 5 work dealing with Harmful Tax Practices, the other part of its Action 5 work is in relation to tax rulings. See Harmful Tax Practices – 2018 Progress Report on Preferential Regimes

The latest assessment by the OECD Forum on Harmful Tax Practices (FHTP) which is responsible for this part of the work has yielded new conclusions on 57 regimes, namely:

  • 44 regimes where jurisdictions have delivered on their commitment to make legislative changes to abolish or amend the regime (Antigua and Barbuda, Barbados, Belize, Botswana, Costa Rica, Curaçao, France, Jordan, Macau (China), Malaysia, Panama, Saint Lucia, Saint Vincent and the Grenadines, the Seychelles, Spain, Thailand and Uruguay).
  • As a result, all IP regimes that were identified in the 2015 BEPS Action 5 report are now "not harmful" and consistent with the nexus approach, following the recent legislative amendments passed by France and Spain.
  • Three new or replacement regimes were found "not harmful" as they have been specifically designed to meet Action 5 standard (Barbados, Curaçao and Panama).
  • Four other regimes have been found to be out of scope or not operational (Malaysia, the Seychelles and two regimes of Thailand), and two further commitments were given to make legislative changes to abolish or amend a regime (Malaysia and Trinidad & Tobago).
  • One regime has been found potentially harmful but not actually harmful (Montserrat).
  • Three regimes have been found potentially harmful (Thailand).