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OECD-Armenia-Australia-Dominican Republic-Eswatini (formerly Swaziland)-Gabon-Georgia-Honduras-Hong Kong-Jordan-Lithuania-Pakistan-Philippines-Sint Maarten-Trinidad and Tobago-United States

6 August 2021

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OECD Announces New Outcomes on Review of Preferential Tax Regimes under BEPS Action 5

The OECD has announced new outcomes on the review of preferential tax regimes under BEPS Action 5.

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Progress towards a fairer global tax system continues as additional countries bring their preferential tax regimes in line with international standards

05/08/2021 - Progress continues in combatting harmful tax practices as new outcomes on the review of preferential tax regimes have been approved by the OECD/G20 Inclusive Framework on BEPS, which groups 139 countries and jurisdictions on an equal footing for multilateral negotiation of international tax rules.

At its April 2021 meeting, the Forum on Harmful Tax Practices (FHTP) took new conclusions on 25 regimes as part of the implementation of the BEPS Action 5 minimum standard. Based on an earlier government commitment, the Australian Offshore banking regime has now been abolished, with grandfathering provided to existing taxpayers within the FHTP's timelines. In addition, the Philippines will abolish its Regional operating headquarters regime as of 1 January 2022 (without grandfathering) and is "potentially harmful but not actually harmful" for the time being. The United States has also confirmed its intention to abolish the Foreign derived intangible income (FDII) regime, which has therefore been classified as "in the process of being eliminated". Government commitments were also made for six other regimes that are now "in the process of being amended/eliminated" (Dominican Republic, Gabon, Sint Maarten and Jordan). As Trinidad and Tobago was not able to fulfil its commitment to abolish its Special economic zone regime within the agreed timelines, it is now considered "harmful". Two newly introduced regimes were concluded as "not harmful" (Hong Kong (China) and Georgia). Finally, the FHTP reviewed 12 regimes for the first time and these are now "under review" (Armenia, Eswatini, Honduras, Lithuania and Pakistan).

Since the start of the BEPS Project, the FHTP has reviewed 309 regimes.

Detailed tables with the regime results can be accessed online (available in English and French), with the next set of reviews expected to take place in the last quarter of 2021.

For more information on the BEPS Action 5 peer review and monitoring process, visit: https://oe.cd/bepsaction5

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