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June 23, 2023

OECD releases 2023 update on peer review of preferential tax regimes

  • The updated results cover new decisions on five preferential tax regimes. The total number of tax regimes that have been reviewed, or are under review, is 319.
  • This Alert summarizes the updated conclusions of the preferential tax regimes review.
  • The release of the updated results provides information to taxpayers on the status of preferential regimes in jurisdictions in which they may operate.

Executive summary

On 21 June 2023, the Organisation for Economic Co-operation and Development (OECD) released an update on the results of the peer reviews of jurisdictions’ domestic laws under Action 5 (harmful tax practices) of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. The Inclusive Framework on BEPS approved the results on 9 June 2023.

The updated results cover new decisions on five preferential tax regimes. According to the press release, a total of 319 tax regimes have been reviewed, or are under review by the Forum on Harmful Tax Practices (FHTP). This latest review reflects that three regimes have been abolished (one for Aruba and two for San Marino). Additionally, a regime for Jordan has been amended to align with the standard and is now considered nonharmful, and a regime for Albania is currently in the process of being amended. No regimes are identified as currently under review.

Detailed discussion


On 5 October 2015, the OECD released its final report on Action 5, Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance (the Action 5 Report) under its BEPS Action Plan.1 The Action 5 Report covers two main areas: (i) applying the “substantial activity” criterion when determining whether tax regimes are harmful; and (ii) improving transparency. The Action 5 Report also includes a strategy to expand the review of preferential regimes to third countries beyond the OECD/G20 countries.

This expansion has been executed through the Inclusive Framework on BEPS, which currently has 143 member jurisdictions.2 Each member jurisdiction has committed to the 2015 BEPS package and its effective implementation, including fulfilment of the minimum standard under Action 5. This means that the existing preferential tax regimes of the Inclusive Framework member jurisdictions have been reviewed based on the Action 5 criteria.

Since the OECD’s publication of the 2017 Progress Report on Action 5,3 the FHTP has continued its work reviewing preferential regimes within the scope of BEPS Action 5. Prior to this 2023 update, the OECD released nine earlier updates to the reviews of preferential tax regimes. The OECD also has released four updates to the reviews of the standard on substantial activities factor for “no- or only-nominal tax” jurisdictions.

Updated conclusions of the preferential tax regimes review

On 21 June 2023, the OECD released an update on the results of the peer reviews for five preferential tax regimes, which had been approved by the Inclusive Framework on 9 June 2023. According to the updated results for the regimes reviewed, the “investment promotion” regime of Aruba was abolished and the IP regime and the new companies regime of San Marino also were abolished. In addition, the “Aqaba special economic zone” of Jordan was amended and regarded as not harmful. Lastly, the “industries incentive (software production/development)” of Albania is in the process of being amended.

Taking into account this update, the FHTP has reviewed a total of 319 tax regimes. The conclusions are as follows:

  • One regime is currently harmful (“free trade zone” regime of Trinidad and Tobago)
  • Seven regimes are potentially harmful but not actually harmful
  • 131 regimes are not harmful
  • 16 regimes are in the process of being eliminated or amended
  • Three regimes are not operational
  • 119 regimes have been abolished
  • 39 regimes have been found to be out of scope
  • The remaining three regimes relate to disadvantaged areas (i.e., regimes designed to encourage development in disadvantaged areas)

Next steps

The FHTP will soon initiate its annual monitoring of the substantial activities requirements for jurisdictions with no or only nominal tax and will review any new or outstanding regimes of Inclusive Framework members. The FHTP also is currently conducting the seventh annual peer review of the BEPS Action 5 transparency framework.


The updated results of the review of preferential tax regimes reflect the continuing focus of the Inclusive Framework on jurisdictions’ implementation of the BEPS Action 5 minimum standard. These results will also shape the assessments conducted by the EU Code of Conduct Group, potentially impacting taxpayers through updates to the EU list of non-cooperative jurisdictions. The next update of the EU assessment is scheduled for October 2023.

With implementation activity with respect to the Pillar Two global minimum tax rules ongoing in jurisdictions around the world and the potential for changes to incentives regimes, it is important for businesses to monitor tax policy developments in relevant jurisdictions. Businesses may also want to engage with policy makers to provide their perspectives on new rules and modifications to existing rules that are under consideration.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP

Ernst & Young LLP (United States)

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor



1 See EY Global Tax Alert, OECD releases final report on countering harmful tax practices under Action 5, dated 8 October 2015.

2 The OECD on 9 June 2023 announced that Uzibekistan has joined the Inclusive Framework. See

3 See EY Global Tax Alert, OECD releases progress report on preferential regimes under BEPS Action 5, dated 18 October 2017.