The OECD Forum on Harmful Tax Practices (FHTP) has released its latest peer-review results on 18 preferential tax regimes previously identified as potentially harmful.

The results are based on conclusions presented to the FHTP’s April 2021 meeting as part of the implementation of the OECD's Base Erosion and Profit Shifting (BEPS) Action 5 minimum standard. The BEPS initiative aims at deterring governments from operating business tax practices that encourage harmful profit-shifting between jurisdictions.

In most cases, the review found that the tax practices have either been abolished or the governments concerned have given undertakings to abolish or modify them.

The review noted that:

• Australia has fulfilled its commitment to abolish its offshore banking regime and offers a grandfathering facility to existing taxpayers that is within the FHTP’s permitted limits;
• the Philippines will abolish its regional operating headquarters regime as of 1 January 2022, without any grandfathering. In the meantime, the regime is classed is 'potentially but not actually harmful'; and
• the US has indicated its intention to repeal the foreign derived intangible income (FDII) regime, introduced in the Tax Cuts and Jobs Act 2017. This is based on a proposal that has yet to pass Congress; however, the FHTP has agreed to class the FDII deduction as 'in the process of being eliminated.'...