OECD: First exchanges of “no or only nominal tax jurisdictions”

OECD: “No or only nominal tax jurisdictions”

The Organisation for Economic Cooperation and Development (OECD) today issued a release reporting that 12 “no or only nominal tax jurisdictions” began their first tax information exchanges under the OECD Forum on Harmful Tax Practice’s global standard on substantial activities.

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The 12 “no or nominal tax jurisdictions” are Anguilla, Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Turks and Caicos Islands, and the United Arab Emirates.

The OECD release explains that under the standard, mobile business income can no longer be “parked” in a low tax jurisdiction without the core business functions also being conducted from that jurisdiction and that the countries where the parent entities and beneficial owners are tax residents are to have access to the tax information through regular exchanges of information.

The new annual exchanges:

  • Cover information on the identity, activities, and ownership chain of entities established in “no or only nominal tax jurisdictions” that are either non-compliant with substance requirements or engage in intellectual property or other high-risk activities
  • Will enable receiving tax administrations to carry out risk assessments and to apply their controlled foreign company, transfer pricing, and other anti-base erosion and profit shifting provisions

The Forum on Harmful Tax Practice will monitor the implementation of the standard by no or only nominal tax jurisdiction through an annual peer review process under Action 5 of the OECD/G20 Inclusive Framework on BEPS. The next annual results will be released in December 2021.

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