OECD preferential tax regime reviews

The OECD has published the results from its latest peer review of preferential tax regimes. At its April 2021 meeting, the OECD’s Forum of Harmful Tax Practices presented new peer review results for preferential tax regimes as part of its work on the BEPS Action 5 minimum standard on identifying and reviewing harmful tax practices.

The OECD highlights a number of areas of progress:

• the Australian Offshore banking regime which applied a 10% preferential tax rate has been abolished, with transitional protections for existing participants;
• the Philippines is to abolish its regional operating headquarters regime as of 1 January 2022 (but the regime is considered ‘potentially harmful but not actually harmful’ until that date; and
• the USA has confirmed its intention to abolish the foreign derived intangible income (FDII) regime, which has therefore been classified as ‘in the process of being eliminated’.

In addition, various governments have made commitments to amend or eliminate a number of potentially harmful regimes.