UAE, has only one ‘technical point’ outstanding, and its law is now in the process of being amended, according to OECD
The latest report of the OECD Forum on Harmful Tax Practices has concluded that 11 of the 12 countries on its list of low-tax jurisdictions are compliant with its standards for ‘substantial activity’ legislation. Their tax regimes are therefore not harmful.
The OECD’s substantial activities standard for no-tax, or only nominal tax, jurisdictions was published in November 2018. All the relevant jurisdictions then embarked on a rapid legislative programme to embody the standard in their national laws by the end of 2018.
Some continued to make changes into 2019, to ensure they had satisfied the OECD, which requires that, for certain highly mobile sectors of business activity, the core income-generating activities must be conducted with qualified employees and operating expenditure located within the jurisdiction.
The 11 jurisdictions now regarded as wholly compliant are Anguilla, the Bahamas, Bahrain, Barbados, Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Isle of Man, Jersey and the Turks and Caicos Islands.
The 12th jurisdiction, the United Arab Emirates, has only one ‘technical point’ outstanding, and its law is now in the process of being amended, said the OECD.
From 2020, the Forum will start an annual monitoring process for the effectiveness of jurisdictions’ mechanisms, to ensure compliance with the standard in practice.
The OECD report also examined various ‘preferential tax regimes’ operated by some jurisdictions, and identified as potentially harmful to others. Most of these have now either been abolished, amended, are not actually operating, or are not really harmful. Only one such regime, the development zone system operated by Jordan, has been found actually harmful, while a further 21 regimes have been placed under OECD review.