The OECD/G20 Inclusive Framework on BEPS has released its latest 2026 update on the review of preferential tax regimes under BEPS Action 5, marking another milestone in the international effort to combat harmful tax practices and promote greater tax transparency.
OECD Continues Review of Harmful Tax Practices
BEPS Action 5 is one of the four minimum standards that all members of the OECD/G20 Inclusive Framework have committed to implementing. Compliance is monitored through a peer review process designed to ensure consistent application of the international standard and maintain a level playing field across jurisdictions.
The work is led by the OECD Forum on Harmful Tax Practices (FHTP), which has reviewed preferential tax regimes since 1998 to identify features that could facilitate base erosion and profit shifting (BEPS).
In its latest update released in July 2026, the Inclusive Framework confirmed that 347 preferential tax regimes have now been reviewed since the BEPS Project began.
Three Core Areas of Action 5
The Forum on Harmful Tax Practices focuses on three principal areas:
- Reviewing preferential tax regimes that could facilitate base erosion and profit shifting.
- Monitoring the Action 5 transparency framework through the compulsory spontaneous exchange of taxpayer-specific tax rulings that may create BEPS concerns.
- Assessing substantial activities requirements in jurisdictions with no or only nominal taxation to ensure that preferential regimes are supported by genuine economic activity.
Together, these measures seek to discourage jurisdictions from offering tax regimes that attract profits without corresponding substantive business activities.
Peer Reviews Continue, but Process Simplified
The OECD notes that implementation of the four BEPS minimum standards has now reached a mature stage across the Inclusive Framework.
Following a report issued in July 2025, the Inclusive Framework has introduced several simplifications to the peer review process, recognising the progress already made while reducing the administrative burden on participating jurisdictions.
The streamlined approach applies across all four BEPS minimum standards, including Action 5, while maintaining ongoing monitoring and compliance.
Why Action 5 Matters
Harmful tax practices remain a central pillar of the OECD’s international tax agenda. Preferential tax regimes can influence where multinational groups report profits and may distort competition if they are not supported by genuine economic activity.
Through regular reviews, transparency requirements and substantial activity assessments, BEPS Action 5 aims to ensure that tax incentives are aligned with real business operations and do not undermine the tax bases of other jurisdictions.
The latest update demonstrates that the OECD continues to monitor existing regimes while refining the peer review process as international implementation becomes more established.