BEPS Action 5 is one of the four BEPS minimum standards that all Inclusive Framework
members have committed to implement. One part of the Action 5 minimum standard relates
to preferential tax regimes where a peer review is undertaken to identify features
of such regimes that can facilitate base erosion and profit shifting, and therefore
have the potential to unfairly impact the tax base of other jurisdictions.This progress
report is an update to the 2015 BEPS Action 5 report and contains the results of the
review of all Inclusive Framework members' preferential tax regimes that have been
identified. The results are reported as at October 2017.The report also contains guidance
on preferential tax regimes, including timelines for amending regimes, how certain
features of preferential regimes will be monitored, and guidance on the requirement
that jurisdictions offering preferential regimes must require substantial activities
to be undertaken in the regime.
As well as the results of the review of preferential tax regimes, the 2017 Progress Report includes important guidance in its four annexes:
Timelines for implementing the nexus approach for IP regimes;
Guidance on closing off of regimes and grandfathering for non-IP regimes;
The Action 5 minimum standard consists of two parts. One part relates to preferential tax regimes, where a peer review is undertaken to identify features of such regimes that can facilitate base erosion and profit shifting, and therefore have the potential to unfairly impact the tax base of other jurisdictions. The second part includes a commitment to transparency through the compulsory spontaneous exchange of relevant information on taxpayer-specific rulings which, in the absence of such information exchange, could give rise to BEPS concerns.