The OECD has released the latest peer review results on preferential tax regimes under BEPS Action 5 on 5 February 2025, including new conclusions on eight regimes from the December 2024 Forum on Harmful Tax Practices (FHTP) meeting.

According to the OECD release, the Forum on Harmful Tax Practices’ (FHTP) December 2024 meeting concluded on eight regimes (in Barbados, Croatia, Fiji, Hong Kong, Malaysia, and Trinidad and Tobago) and completed its fourth annual review of substantial activities requirements in low or no-tax jurisdictions as part of the BEPS Action 5 standard on harmful tax practices. The Inclusive Framework on BEPS approved these results on 31 January 2025.

Action 5 Report is one of the four BEPS minimum standards. Each of the four BEPS minimum standards is subject to peer review in order to ensure timely and accurate implementation and thus safeguard the level playing field. All members of the Inclusive Framework on BEPS commit to implementing the Action 5 minimum standard, and commit to participating in the peer review.

The OECD Forum on Harmful Tax Practices (FHTP) has been conducting reviews of preferential regimes since its creation in 1998 in order to determine if the regimes could be harmful to the tax base of other jurisdictions. The current work of the Forum on Harmful Tax Practices (FHTP) comprises three key areas:

• Firstly, the assessment of preferential tax regimes to identify features of such regimes that can facilitate base erosion and profit shifting and, therefore, have the potential to unfairly impact the tax base of other jurisdictions.
• Secondly, the peer review and monitoring of the Action 5 transparency framework through the compulsory spontaneous exchange of relevant information on taxpayer-specific rulings which, in the absence of such information exchange, could give rise to BEPS concerns.
• Thirdly, the review of substantial activities requirements in no or only nominal tax jurisdictions to ensure a level playing field.

The FHTP has concluded its fourth annual review of substantial activity requirements in low or no-tax jurisdictions, including Anguilla, Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, and Turks and Caicos Islands. All were deemed not harmful, though some issues were noted with monitoring and information exchange in a few jurisdictions, including Anguilla, Bahamas, British Virgin Islands, and Turks and Caicos Islands.