On 21 March 2023 the OECD released the latest peer review results following assessment of the actions taken by each country to prevent tax treaty shopping under BEPS Action 6. The Fifth Peer

Review Report on Treaty Shopping assesses the implementation of the minimum standard under BEPS action 6 in each jurisdiction subject to the peer reviews.

Treaty abuse, including treaty shopping, is one of the largest concerns around base erosion and profit shifting. The members of the Inclusive Framework on BEPS are implementing the minimum standard on treaty shopping; and using the multilateral instrument (MLI) to include the treaty related BEPS recommendations into their bilateral tax treaties.

Taxpayers attempt to obtain the benefits of a bilateral tax treaty despite not being resident in either of the contracting states. Implementation of the BEPS Action 6 minimum standard aims to reduce the opportunities for treaty shopping and other abuses of treaty provisions and the annual peer reviews are an important tool in monitoring the extent to which the standard has been implemented.

The 2022 peer review report is the fifth annual report and contains the aggregate results of the peer review and details of implementation of the standard in each jurisdiction in the Inclusive Framework. The report notes that at 31 May more than 1,050 agreements concluded by member countries of the Inclusive Framework were compliant with the minimum standard. This was an increase of almost 40% compared to the previous year.

The report notes that more than 2,385 agreements concluded between members of the Inclusive Framework were either compliant with the standard; subject to a complying instrument, subject to actions by a treaty partner to implement the minimum standard; or covered by a general statement by a treaty partner that it will use the limitation-on-benefits rule (LOB), with a mechanism to address conduit arrangements, to implement the minimum standard in all its treaties.

Many jurisdictions have followed the recommendations of the previous peer review by either formulating a plan for the implementation of the minimum standard or completing the relevant procedures for the BEPS MLI to take effect for the jurisdiction. As part of the current peer reviews jurisdictions have been invited to provide updates on progress made to put their plans into effect; and to outline any difficulties they have encountered.

The current peer review report recommends that countries should formulate a plan for the implementation of the minimum standard if one was not already in existence; and complete the procedures for the BEPS MLI take effect where the jurisdiction is using the MLI to implement the minimum standard.