A report released by the OECD on 16 October 2017 noted that countries are dismantling or amending almost 100 preferential tax regimes as part of the implementation of standards under the project on base erosion and profit shifting (BEPS). The report sets out information on peer reviews carried out in relation to 164 preferential tax regimes that were in place in the countries participating in the OECD Inclusive Framework on BEPS.
The jurisdictions participating in the inclusive framework are involved in the monitoring process for the four minimum standards under BEPS and in the review mechanisms for other parts of the BEPS package. The participating countries provide input to the BEPS standard-setting work. The member countries are committed to ensuring that any preferential tax regimes in place comply with the recommendations of BEPS Action 5 on harmful tax practices. This means that taxpayers benefiting from a preferential tax regime must carry out the core business activity themselves and the tax treatment should be aligned to the substance of the transactions.
The report notes that of the 164 preferential tax regimes under review 99 required action, and in the case of 93 of these tax regimes changes are already being made. 56 of the regimes reviewed were found not to pose a BEPS risk while 9 of the tax regimes are still under review.
The member countries of the Inclusive Framework have agreed a timetable under which tax regimes that have harmful features should be amended as soon as possible and the changes should be completed no later than October 2018.
