The OECD has now reviewed 287 tax regimes since the start of the Base Erosion and Profit Shifting (BEPS) project
The OECD has released two reviews confirming its ongoing success in addressing harmful tax regimes. While both reviews offer positive results, they focus on different aspects of the OECD's project to review regimes that may be "harmful" under the base erosion and profit shifting (BEPS) Action 5 minimum standard. One OECD study is part of an on-going, multi-jurisdiction status update that examines preferential tax regimes; the other focuses on a small pool of 12 no tax or only nominal tax jurisdictions to ensure they have successfully implemented new tax laws requiring that "substantial activities" are carried out in the jurisdiction.
BEPS Action 5 "revamps" the work on harmful tax practices with a focus on improving transparency, including compulsory spontaneous exchange on rulings related to preferential regimes, and on requiring substantial activity for preferential regimes such as intellectual property (IP) regimes.
Review of preferential tax regimes
The OECD says 22 more jurisdictions are changing their laws to address "harmful" tax practices, the OECD shares this result following its review of 56 additional tax regimes, bringing the total number of regimes it has examined under this standard to 287.
Review of substantial activities standard
This study reviews the OECD standard for "substantial activities for no tax or only nominal tax jurisdictions", which was implemented in 12 jurisdictions' tax laws. This standard requires core income-generating activities in certain highly mobile business sectors to be conducted by qualified employees in the jurisdiction, they also require that operating expenditures be based in the jurisdiction.
According to this study:
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