Global Daily Tax News, OECD Issues Update On Tackling Harmful Tax Practices, (Feb 7, 2025)

The OECD has released the results of the latest peer reviews assessing territories' preferential tax regimes under BEPS Action 5.

Under the BEPS Action 5 minimum standard, members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) have committed to counter harmful tax practices, with a focus on improving transparency.

As well as reviewing preferential regimes that may be harmful, the Forum on Harmful Tax Practices (FHTP) reviews the implementation of substantial activities requirements in no or only nominal tax jurisdictions.

The FHTP has reached conclusions on eight regimes, and completed its fourth annual monitoring of the substantial activities requirements in no or only nominal tax jurisdictions.

It deemed five regimes as not harmful: the patent box regime in Barbados; the Investment Promotion Act in Croatia; the revised ICT sector business investment incentives in Fiji; Hong Kong's IP regime, which was designed to be in compliance with the BEPS Action 5 requirements; and Trinidad and Tobago's concessions for special economic zone entities.

It continues to review Fiji's original ICT incentives regime and Malaysia's digital tax incentives. Finally, Trinidad and Tobago agreed to abolish its free trade zones regime and limit its special economic zone incentives to non-IP income.

The total number of regimes reviewed by the FHTP since the start of the BEPS Project is now 332, with over 40 percent of those regimes being (or in the process of being) abolished.