Governments are continuing to make progress in bringing their preferential tax regimes in compliance with the Organisation for Economic Co-operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS) standards to improve the international tax framework.
The Inclusive Framework on BEPS which brings together over 100 countries and jurisdictions to collaborate on the implementation of the OECD/ G20 BEPS package released the updates to the results for preferential regime reviews conducted by the Forum on Harmful Tax Practices (FHTP) in connection with BEPS Action 5.
Eleven new preferential regimes were identified since the last update. This included four new regimes designed to comply with FHTP standards, meeting all aspects of transparency, exchange of information, ring fencing and substantial activities and are found to be not harmful (Lithuania, Luxembourg, Singapore, Slovak Republic), four regimes were abolished or amended to remove harmful features (Chile, Malaysia, Turkey and Uruguay) and a further three regimes do not relate to geographically mobile income and/or are not concerned with business taxation, as such posing no BEPS Action 5 risks. Therefore they have been found to be out of scope (Kenya and two Vietnam regimes).
This addition brings the total of regimes to 175 in over 50 jurisdictions considered by the FHTP since the creation of the Inclusive Framework.
Out of the 175, 31 regimes have been changed; 81 regimes require legislative changes which are in progress; 47 regimes have been determined to not pose a BEPS risk; four have harmful or potentially harmful features and 12 regimes are still under review.
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