In October 2019, the Inclusive Framework issued guidance on the framework for the spontaneous exchange of information collected from nominal or nominal-only tax jurisdictions in accordance with the standard. The guidelines address the practical modalities of the standard for the exchange of information, including timetables for exchange, the international legal framework and clarification of key definitions. The guide also includes the standard computer format to be used for the exchange, the NTJ XML Schema. Local anti-abuse laws may also require a company to disclose aggressive (cross-border) tax planning structures to tax authorities in its home country. These local regulations affect international tax regimes, such as: transfer pricing structures, remuneration of intangible assets (where is the value of intangible assets actually created) or cost contribution agreements (management fees, head office costs, etc.). A significant number of countries already apply this type of regulation. You will understand that your local tax authorities will not be really enthusiastic about a structure you have built in a foreign country with no economic purpose. These rules are important not only for companies, but also for UHNWI and their single family offices. 31/10/2019 – Under measure 5 of the BEPS project to tackle harmful tax practices, jurisdictions can only maintain preferential regimes if certain requirements relating to «core activities» are met. In order to ensure a level playing field, these requirements should also apply to countries with zero or nominal tax rates. As a result, the Inclusive Framework on Base Erosion and Profit Shifting decided in November 2018 to resume the application of the core activities requirement for zero or nominal tax jurisdictions only.

This ensures that core activities must be carried out in relation to the same types of mobile business activities, whether they take place in a preferential regime or in a tax jurisdiction with no or only nominal requirements. In order to ensure the coordination and effectiveness of this spontaneous exchange, the guide published today (also available in French) defines the practical modalities of the requirements of the standard for the exchange of information. For more information, see: www.oecd.org/tax/beps/beps-actions/action5/ In January 2019, the OECD published Harmful Tax Practices – Progress Report on Preferential Regimes 2018, endorsed by the OECD/G20 Inclusive Framework on BEPS. The progress report contains the results of the review of tax benefits carried out by the Forum on Harmful Tax Practices (FHTP) since the inception of the BEPS project under the BEPS Action 5 minimum standard. It reflects January 2019 results. While the results of the consolidated system are now included in the 2018 progress report, the 2017 progress report provides important guidance on standards for key activity requirements for regimes other than intellectual property, on timelines for amending or terminating regimes and on the monitoring of certain regimes in practice. For the first time, no nominal tax jurisdiction or only nominal tax jurisdictions exchange information on the content of companies At the end of March 2021, 12 zero or nominal tax jurisdictions (Anguilla, Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Turks and Caicos Islands, United Arab Emirates) have started the first exchange of information under the Forum on Standard Accounting Tax Practices (FHTP) on physical activities. Exchanges not only provide key data on the content and activities of companies in nominal or non-nominal tax jurisdictions for territories where the direct and ultimate parent company and beneficial owners of the companies are located, but also allow receiving tax administrations to conduct risk assessments and apply their controlled foreign enterprise. Transfer pricing and other base erosion and profit shifting provisions.

In addition, the FSEP has begun annual monitoring of FSTP compliance by the twelve non-taxable jurisdictions or only by nominal jurisdictions. Based on OECD recommendations, countries will increasingly focus on substance and transparency. This means that, under the provisions of double taxation treaties, tax authorities are increasingly (spontaneously) exchanging substantial information (and this type of exchange of information will continue to increase in the future) and also focus on tax benefits from abroad. Lawmakers in your home country are also launching more and more initiatives on this issue, as local anti-evasion laws are a fairly simple way to combat tax evasion and a good opportunity to increase local tax revenue. The Inclusive Framework for BEPS decided to resume the application of the core business requirement for zero or nominal tax jurisdictions only.