16 September 2025 OECD publishes 'Revised BEPS Action 5 Transparency Framework on Tax Rulings'
On 8 September 2025, the Organisation for Economic Co-operation and Development (OECD) released the report "Revised BEPS Action 5 Transparency Framework on Tax Rulings" on the spontaneous exchange of information on tax rulings. The report reflects the Inclusive Framework's completion of an effectiveness review as part of its ongoing peer review of the Action 5 minimum standard. The changes agreed by the Inclusive Framework are intended to enhance the effectiveness of the transparency framework, including modifications to the scope of rulings covered; revised terms of reference and an updated assessment methodology for peer reviews; and a revised Exchange on Tax Rulings (ETR) XML Schema and User Guide. In October 2015, the OECD released the final reports on all 15 focus areas of the BEPS Action Plan. The recommendations made in the reports take a variety of forms, from new minimum standards to reinforced international standards, common approaches to facilitate the convergence of national practices, and guidance drawing on best practices (see EY Global Tax Alert, OECD releases final reports on BEPS Action Plan, dated 6 October 2015). Commitment to implementation of the four BEPS minimum standards is a prerequisite for membership in the Inclusive Framework. The minimum standards relate to elements of Action 5 on harmful tax practices, Action 6 on treaty abuse, Action 13 on transfer-pricing documentation and country-by-country (CbC) reporting, and Action 14 on dispute resolution. The minimum standards are subject to an ongoing peer review process. The 2015 BEPS Action 5 report set out two core elements: a substantial-activity test for identifying potentially harmful tax regimes and a transparency framework for compulsory spontaneous exchange of information on certain taxpayer-specific rulings. The rulings covered include preferential regime rulings; unilateral advance pricing agreements (APAs) and other cross-border unilateral transfer-pricing rulings; rulings that produce downward adjustments of taxable profits; permanent establishment rulings; and related-party conduit rulings (see EY Global Tax Alert, OECD releases final report on countering harmful tax practices under Action 5, dated 8 October 2015). In February 2017, the OECD issued terms of reference for peer review of the Action 5 transparency framework, which set out four review areas (information gathering, exchange of information, confidentiality and statistics), and an assessment methodology describing the peer review and monitoring procedures (see EY Global Tax Alert, OECD releases peer review documents on BEPS Action 5 on Harmful Tax Practices and on BEPS Action 13 on Country-by-Country Reporting, dated 6 February 2017). The peer review process also involves ongoing evaluation of the effectiveness of the transparency framework and assessment of whether the scope of the rulings covered, and the information exchanged by tax administrations, appropriately balances the need to identify BEPS risks with the administrative burden on sending and receiving jurisdictions. On 22 February 2021, the Inclusive Framework issued a renewed peer review process for 2021 through 2025 that retained the transparency framework's core features and set out procedural steps for data collection, report preparation, outputs and follow-up for the new review period (see EY Global Tax Alert, OECD releases new transparency framework for Action 5 for 2021 through 2025, dated 26 February 2021). On 3 July 2025, the OECD released the report titled "Recognising progress and reducing burdens in the BEPS minimum standards," which contains recommendations endorsed by the Inclusive Framework during its April 2025 plenary in Cape Town, South Africa. The Inclusive Framework adopted measures to streamline peer review processes for BEPS minimum standards and endorsed proposals for targeted adjustments intended to optimize resource allocation among member jurisdictions, focusing on high-impact areas while maintaining the integrity of the standards. Emphasis was placed on strengthening the value proposition of the BEPS project by identifying priority areas for enhanced support. The report summarizes implementation progress with respect to the four minimum standards, sets out measures intended to reduce burdens and identifies renewed priorities of the Inclusive Framework aimed at maintaining progress (see EY Global Tax Alert, The Latest on BEPS and Beyond July 2025, dated 16 July 2025). On Action 5 and the exchange of information on tax rulings, the July report indicates that, based on statistics and the recommendations resulting from recent peer reviews of the transparency framework, the Inclusive Framework agreed to reduce the frequency of the peer review process to once every three years, rather than annually. An annex to the report contains the new methodology for the work of the Forum on Harmful Tax Practices on Action 5. The Action 5 report released by the OECD on 8 September 2025 contains a set of revisions to the minimum standard on the spontaneous exchange of information on tax rulings, developed based on the Inclusive Framework's effectiveness review of the transparency framework. The report includes modifications relating to the scope of rulings covered that will apply to rulings issued on or after 1 January 2025; revised terms of reference and a revised assessment methodology for peer reviews applicable for reviews starting in 2026; and revised ETR XML Schema, together with a User Guide, to be used for exchanges beginning in 2027. The Inclusive Framework had approved the Action 5 report on 10 July 2025 and the OECD Secretariat then prepared it for publication. As a result of its effectiveness review, the Inclusive Framework has made changes to scope of the Action 5 transparency framework and the template for information exchange. The changes are applicable for exchanges of information on rulings issued on or after 1 January 2025. The Inclusive Framework also endorsed specific mechanics for exchanging the information. The Action 5 report makes explicit that the spontaneous summary exchanges of information under the transparency framework are intended not only to help receiving tax administrations quickly identify risk areas but also to enable them to address BEPS concerns. Moreover, the Inclusive Framework's effectiveness review considered the final of the six categories of covered rulings listed in the 2015 BEPS Action 5 Report, which serves as a catch-all for other ruling types that could give rise to BEPS concerns and which would apply only if the Forum on Harmful Tax Practices makes a determination that other rulings give rise to similar concerns as the rulings already included within the framework. The Inclusive Framework agreed not to elaborate on this category at this time. The Forum on Harmful Tax Practices is to reassess the matter in 2028. The Action 5 report includes revisions affecting which past rulings are in scope and refinements of the cut-off rules that determine future rulings, including special rules for jurisdictions that join the Inclusive Framework or are identified as jurisdictions of relevance partway through a year. Specifically, the obligation to identify and exchange past rulings continues to apply for jurisdictions that joined the Inclusive Framework or were identified as jurisdictions of relevance by 1 September 2017, and for certain developing countries that were granted extra implementation time, to the extent that all covered past rulings have not yet been identified and reported. In contrast, jurisdictions joining or identified on or after 1 September 2017 are generally not required to search for and exchange information on past rulings. The Action 5 report also sets clear cut-off dates for categorization as future rulings for jurisdictions joining or identified on or after 1 September 2017, which determine the effective start date for exchange of information obligations. When a jurisdiction joins the Inclusive Framework or is identified as a jurisdiction of relevance in the first half of the calendar year, future rulings would be those issued on or after 1 September of that year. When a jurisdiction joins the Inclusive Framework or is identified as a jurisdiction of relevance in the second half of the calendar year, the date for future rulings would be those issued on or after 1 March of the following year. The Action 5 report reflects agreement by the Inclusive Framework on revisions to the two-step process for exchanging information and on the use of best-practice recommendations for completion of the summary section of the information exchange template. As the first step, the tax administration provides a standardized summary and basic information regarding the ruling. As the second step, the text of the ruling is provided upon request of the receiving tax administration, provided that the receiving administration demonstrates the foreseeable relevance of the ruling (based on the summary) and confirms it has exhausted reasonable domestic measures to obtain the ruling from the taxpayer (or explains why it believes that contacting the taxpayer would risk jeopardizing a tax investigation). The Action 5 report contains as Annex A an updated version of the template for information exchange. The updated template includes two new, optional fields of information to be completed to the extent available, relating to information from tax returns and financial statements. The report also contains as Annex B best practice recommendations for preparing a summary of the issue covered by the ruling as required to be provided on the information exchange template. The Inclusive Framework agreed these recommendations are an integral part of the transparency framework. To facilitate automated processing and interoperability, the Inclusive Framework endorsed the use, on a best-efforts basis, of revised ETR XML Schema and the OECD Common Transmission System (CTS) for information exchanges. However, these mechanisms are not required, and secure alternative transmission methods are permitted to be used, for jurisdictions with fewer than ten rulings subject to exchange per year or that cannot technically implement XML/CTS, and in situations where bilateral arrangements provide otherwise. Annex C to the Action 5 report is a user guide for tax administrations for the revised ETR XML Schema. The revised ETR XML Schema will be used for all exchanges from 1 January 2027. The Inclusive Framework has agreed new terms of reference for peer reviews undertaken from review year 2025. The terms of reference reflect the key elements of the transparency framework: information gathering, exchange of information, confidentiality and statistics. On information gathering, the terms of reference reflect the agreed clarifications to the scope and timelines for past and future rulings covered by the transparency framework. Jurisdictions are required to identify the rulings in scope, and which jurisdictions would be affected by each ruling (for example residence of related parties, residence of immediate and ultimate parents, head office for permanent establishment rulings, and residence of ultimate beneficial owners for conduit rulings). For past rulings where the full set of affected jurisdictions cannot be identified, jurisdictions must apply and record the best-efforts approach and report the categories of rulings where this was used. Under the best-efforts approach, tax administrations should identify affected jurisdictions by checking information already in their possession (for example, the ruling file or the wider taxpayer file, including relevant transfer pricing documentation) and, where readily accessible, public sources such as corporate registries. On exchange of information, the new terms of reference reaffirm the two-step process and clarify the principles governing the second step. The first step is a compulsory, spontaneous exchange of standardized summary information using the updated template. The second step is the exchange of the text of the ruling on request by the receiving tax administration, provided that administration demonstrates foreseeable relevance and confirms it has exhausted reasonable domestic measures to obtain the ruling from the taxpayer or explains why contacting the taxpayer would jeopardize a tax investigation. The new terms of reference require adoption of a best-efforts approach by relying on the ETR XML Schema and the CTS for exchanges. These mechanisms are not required and secure alternative transmission methods are allowed for jurisdictions with fewer than ten rulings subject to exchange per year, for jurisdictions that cannot technically implement XML/CTS, and in situations where bilateral arrangements provide otherwise. In addition, the timelines for exchanges on future rulings have been extended so that summaries are now required to be exchanged within six months of issuance, compared with the previous three-month requirement. The revised peer review methodology for 2026–2030 reflects a reduction in the frequency of peer reviews. Under the revised approach, jurisdictions that have the complete legal and administrative framework for information exchange in place will be reviewed once every three years using a simplified questionnaire focused principally on statistical data. Jurisdictions that are new to the Inclusive Framework and jurisdictions of relevance newly identified by the Forum on Harmful Tax Practices, jurisdictions that have changed their rulings regime, and jurisdictions that have received recommendations in the peer review for the previous cycle will complete the standard questionnaire. For jurisdictions that cannot legally or administratively issue relevant rulings, the simplified questionnaire will serve to certify or recertify that status. The revised methodology sets out the steps and timetable for data collection and report preparation, with self-assessment questionnaires (standard or simplified) sent in January for completion within six weeks, peer input sought in March, and draft jurisdiction sections circulated to reviewed jurisdictions in June for comment. A consolidated draft then is sent to Forum on Harmful Tax Practices delegates in July, and a revised draft is finalized in September for approval under written procedure. The first peer review under this methodology will be carried out in 2027 and will cover calendar years 2025 and 2026 The following review is scheduled in 2030 and will cover calendar years 2027, 2028 and 2029. Intermediate peer reviews continue to be available at any time if a jurisdiction requests one. The revised methodology also confirms that peer review documents are treated as confidential and that the Forum on Harmful Tax Practices relies on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes regarding confidentiality and data safeguards. The revisions to the scope and processes with respect to the exchange of information on tax rulings under the BEPS Action 5 minimum standard reflect the continued attention of the Inclusive Framework on this area. These changes may require some jurisdictions to adapt their laws and administrative processes. Businesses should monitor developments in relevant countries.
Document ID: 2025-1866 | ||||||
