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OECD: Progress report on harmful tax practices (BEPS Action 5)

OECD: Progress report on harmful tax practices

The Organisation for Economic Cooperation and Development (OECD) today issued a report on progress that certain jurisdictions have made with respect to their commitments to comply with the standard on harmful tax practices, under the implementation of Action 5 of the base erosion and profit shifting (BEPS) project


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The OECD report—Harmful Tax Practices - 2018 Progress Report on Preferential Regimes—contains results demonstrating that jurisdictions have delivered on their commitment to comply with the standard on harmful tax practices, including that preferential regimes align taxation with substance.

As noted in a related OECD release, assessment of preferential tax regimes was part of ongoing implementation of BEPS Action 5. The most recent review resulted in new conclusions on 57 regimes, including:

  • Forty-four regimes where jurisdictions have delivered on their commitment to make legislative changes to repeal or amend the regime 
  • All IP regimes that were identified in the 2015 BEPS Action 5 report are now "not harmful" and consistent with the nexus approach, following the recent legislative amendments passed by France and Spain
  • Three new or replacement regimes were found "not harmful" because they were designed to meet the BEPS Action 5 standard (Barbados, Curaçao, and Panama)
  • Four regimes were found to be “out of scope” or not operational (Malaysia, the Seychelles and two regimes of Thailand), and two further commitments were given to make legislative changes to repeal or amend a regime (Malaysia and Trinidad & Tobago)
  • One regime was found potentially harmful but not actually harmful (Montserrat)
  • Three regimes have been found potentially harmful (Thailand)

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