Progress continues in combatting harmful tax practices as new outcomes on the review of preferential tax regimes have been approved by the OECD/G20 Inclusive Framework on BEPS.
At its April 2021 meeting, the Forum on Harmful Tax Practices (FHTP) took new conclusions on 25 regimes as part of the implementation of the BEPS Action 5 minimum standard.
Based on an earlier government commitment, the Australian Offshore banking regime has now been abolished, with grandfathering provided to existing taxpayers within the FHTP’s timelines.
In addition, the Philippines will abolish its Regional operating headquarters regime as of 1 January 2022 (without grandfathering) and is "potentially harmful but not actually harmful" for the time being.
The United States has also confirmed its intention to abolish the Foreign derived intangible income (FDII) regime, which has therefore been classified as "in the process of being eliminated".
As Trinidad and Tobago was not able to fulfil its commitment to abolish its Special economic zone regime within the agreed timelines, it is now considered "harmful". Two newly introduced regimes were concluded as "not harmful" (Hong Kong (China) and Georgia).
Finally, the FHTP reviewed 12 regimes for the first time, and these are now "under review" (Armenia, Eswatini, Honduras, Lithuania, and Pakistan).