On 22 February 2021 the OECD issued a report outlining the details of the new peer review framework for the peer reviews under Action 5 of the OECD/G20 action plan on base erosion and profit shifting (BEPS). Action 5 relates to action to combat harmful tax practices. The Action 5 Report is one of the four BEPS minimum standards which are subject to peer reviews to ensure that they are implemented in a timely and accurate way.

The report indicates that the OECD/G20 Inclusive Framework on BEPS which has more than 135 countries and jurisdictions engaging in the multilateral negotiation of international tax standards, has approved the process for the peer review of the transparency framework for the years 2021 to 2025. The report outlines the new terms of reference, methodology and questionnaires to be used for the annual review of compliance by the participating countries with the Action 5 transparency framework.

The process includes enhanced Terms of Reference for assessing the extent to which countries have implemented the minimum standard and the more streamlined methodology for approaching the task, involving the adoption of a risk-based approach to carrying out the peer reviews.

The methodology outlines the way in which the peer review is to be carried out. This includes details of the procedural mechanics to be used by jurisdictions to complete the peer review, such as the process for gathering the required data, the preparation and approval of reports, the output resulting from the review and the way in which the review will be followed up. The methodology indicates that the data relevant to the peer review should be collected by using standardised questionnaires, which are to be sent to the jurisdiction under review and to the jurisdictions from the OECD’s Inclusive Framework that are conducting the peer review.

The first phase of peer reviews under BEPS Action 5 took place from 2017 to 2020. The new framework draws on the experience of those peer reviews to introduce refinements to the process. The latest statistics from the 124 jurisdictions subject to peer reviews indicate that to date 36,000 exchanges of information have taken place on more than 20,000 tax rulings. The most recent peer reviews found that 81 jurisdictions are fully compliant with the requirements of the Action 5 minimum standard.

Following agreement on the revised peer review process the 2021 review of developments occurring during 2020 has now begun. The results will be released later in 2001.