UK and International Tax news
OECD and Harmful Tax Practices Update
Monday 12th February 2024
The OECD/G20 Inclusive Framework on BEPS has recently commented on progress being made in combatting harmful tax practices following ongoing reviews of preferential tax regimes.
At its October 2023 meeting, the Forum on Harmful Tax Practices (FHTP) reached new conclusions on four regimes as part of the implementation of the BEPS Action 5 minimum standard. The regimes in Hong Kong (China) and the UAE were found to be not harmful and two regimes in Albania and Armenia have now been abolished.
The total number of regimes reviewed by the FHTP has now reached 322 with over 40% of those regimes being or in the process of being abolished.
A breakdown of the outcomes of the FHTP’s work is set out below.
Harmful – 1
Potentially harmful but not actually harmful – 7
Not operational – 3
In the process of being eliminated/amended – 12
Abolished – 123
Out of scope and out of scope (amended) – 39
Disadvantaged areas – 3
Not harmful and not harmful (amended) – 134
As part of the standard on substantial activities requirements in no or only nominal tax jurisdictions, the FHTP undertakes an annual monitoring exercise to assess whether the standard operates effectively in practice. This exercise started in 2021 and the FHTP has now agreed on the conclusions for the third monitoring year.
Recommendations for substantial improvement were made for one jurisdiction (Anguilla) and four jurisdictions (Anguilla, the Bahamas, Barbados and the Turks and Caicos Islands) had areas where a need for focused monitoring was identified. No issues were identified for Bahrain, Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man and Jersey. The FHTP also concluded that since the introduction on 1 June 2023 of its corporate income tax rate of 9%, the United Arab Emirates is now no longer a no or only nominal tax jurisdiction.
The next annual monitoring exercise for no or only nominal tax jurisdictions will take place in the second half of 2024.
If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.
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