UK and International Tax news

OECD Issues Latest Peer Reviews Of Preferential Tax Regimes

Thursday 19th August 2021

The OECD/G20 Inclusive Framework on BEPS has recently commented that progress continues to be made in combatting harmful tax practices following ongoing reviews of preferential tax regimes.

At its April 2021 meeting, the Forum on Harmful Tax Practices (FHTP) concluded reviews on 25 regimes as part of the implementation of the BEPS Action 5 minimum standard and particular changes are noted below.

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.

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 US 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” including thos of the Dominican Republic, Gabon, Sint Maarten and Jordan.

Trinidad and Tobago has not able to fulfil its commitment to abolish its Special Economic Zone regime within the agreed timelines, and is now considered “harmful”.

Two newly introduced regimes were concluded as “not harmful”, being Hong Kong (China) and Georgia.

The FHTP also reviewed 12 regimes for the first time and these are now “under review” and include Armenia, Eswatini, Honduras, Lithuania and Pakistan.

Since the start of the BEPS Project, the FHTP has reviewed 309 regimes, and these are now classified as follows:

Not harmful – 63

Disadvantaged areas – 3

Out of scope – 38

Abolished – 106

Not harmful – 53

In the process of being eliminated/amended – 19

Under review – 12

Not operational – 3

Potentially harmful but not actually harmful – 9

Harmful – 3


If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

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