OECD: Update on BEPS project | KPMG | US

OECD: Update on BEPS project; harmful tax incentives being dismantled

OECD: Update on BEPS project

The Organisation for Economic Cooperation and Development (OECD) today announced that governments have dismantled, or are in the process of amending, approximately 100 preferential tax regimes as part of the OECD/G20 base erosion and profit shifting (BEPS) standards to improve the international tax framework.

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The OECD’s progress report provides details on the outcome of peer reviews undertaken of 164 preferential tax regimes (identified among the more than 100 jurisdictions participating in the OECD inclusive framework on BEPS). 

As noted in today’s OECD release, BEPS Action 5 standard covers tax incentives (“preferential tax regimes”) that apply to mobile business income—e.g., financial and services income and income from intellectual property—that multinational entities can shift with relative ease. All members of the BEPS inclusive framework have committed to determining that any regimes offered meet the criteria that have been agreed as part of BEPS Action 5. This includes a requirement that taxpayers benefiting from a regime must themselves undertake the core business activity, providing for the alignment of taxation with genuine business substance. 

Of the 164 regimes reviewed in the last 12 months: 

  • 99 require action
  • 93 of these 99 regimes, the required changes have already been completed or initiated by inclusive framework members
  • 56 regimes do not pose a BEPS risk
  • Nine (9) regimes are still under review, due to extenuating circumstances such as the impact of the recent hurricanes on certain Caribbean jurisdictions

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