OECD publishes results of Harmful Tax Practices report

Feb 04, 2019

The OECD has released a report on Harmful Tax Practices, which assesses the progress of jurisdictions in reaching agreed standards to reduce harmful tax practices, including ensuring that preferential regimes align taxation with substance.

The Harmful Tax Practices - 2018 Progress Report on Preferential Regimes  is part of the ongoing implementation of Action 5 of the OECD/G20 BEPS Project. The assessments are conducted by the Forum on Harmful Tax Practices (FHTP), comprising of the more than 120 member jurisdictions of the Inclusive Framework. The latest assessment by the FHTP has yielded new conclusions on 57 regimes, including:

  • 44 regimes where jurisdictions have delivered on their commitment to make legislative changes to abolish or amend the regime (Antigua and Barbuda, Barbados, Belize, Botswana, Costa Rica, Curaçao, France, Jordan, Macau (China), Malaysia, Panama, Saint Lucia, Saint Vincent and the Grenadines, the Seychelles, Spain, Thailand and Uruguay).
  • As a result, all IP regimes 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" as they have been specifically designed to meet Action 5 standard (Barbados, Curaçao and Panama).
  • Four other regimes have been 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 abolish or amend a regime (Malaysia and Trinidad & Tobago).
  • One regime has been found potentially harmful but not actually harmful (Montserrat).
  • Three regimes have been found potentially harmful (for example, Thailand).