The integration of national economies and markets has increased substantially in recent years, putting a strain on the international tax rules, which were designed more than a century ago. Weaknesses in the current rules create opportunities for base erosion and profit shifting (BEPS), requiring bold moves by policy makers to restore confidence in the system and ensure that profits are taxed where economic activities take place and value is created.

The minimum standard on treaty shopping included in the Report on Action 6 is one of the four BEPS minimum standards. Action 6 of the BEPS Project identified treaty abuse, and in particular treaty shopping, as one of the principal sources of BEPS concerns. Owing to the seriousness of treaty shopping, jurisdictions have agreed to adopt, as a minimum standard, measures to address it, and to subject their efforts to an annual peer review (OECD, 2017[1]). (OECD, 2021[2]). The Inclusive Framework on BEPS published reports for each of the five peer review processes carried out in 2018, 2019, 2020, 2021 and 2022 (OECD, 2019[3]) (OECD, 2020[4]) (OECD, 2021[5]) (OECD, 2022[6])[(OECD, 2023)].

This section sets out the aggregate data on the implementation of the minimum standard on treaty shopping included in the Report on Action 6 (OECD, 2015[1]).

Since the provisions of the BEPS MLI first started to take effect, in 2019, the BEPS MLI has rapidly strengthened the bilateral tax treaty network of jurisdictions that ratified it. The number of agreements between members of the Inclusive Framework that became compliant with the BEPS MLI has increased steadily by the hundreds each year, exceeding 1,120 as of 31 May 2023. This number continues to increase, on an ongoing basis, as additional Signatories ratify the BEPS MLI. As in previous years, the peer review continues to reveal an important difference in the progress made on implementing the minimum standard by jurisdictions that have ratified the BEPS MLI compared with other jurisdictions.

A number of jurisdictions reported agreements, concluded with other members of the Inclusive Framework, that are not compliant, not subject to a complying instrument or to a general statement on the detailed LOB, and in respect of which no steps have been taken to implement the minimum standard. These agreements are included in the table titled ‘Other agreements’ in the jurisdictional sections.

As part of the support provided to jurisdictions in the implementation of the minimum standard under the revised peer review methodology, recommendations are issued to members in two categories of cases. First, a member that is implementing the minimum standard by signing the BEPS MLI will be recommended to complete the steps to have it take effect with respect to its tax agreements. Second, where a jurisdiction has tax agreements for which a plan for the implementation of the minimum standard needs to be developed, if the jurisdiction does not make such a plan (or provide an update on the plan), a recommendation will be made to provide a plan with respect to the concerned tax agreements.

The peer review provides jurisdictions that encounter difficulties in reaching agreement with another jurisdiction to implement the Action 6 minimum standard with an opportunity to raise concerns with the OECD Secretariat. This process, which is set out i n paragraph 35 of the Revised Peer Review Documents, has been in place since the 2017 Peer Review Documents (paragraph 19) to identify cases where a jurisdiction is facing a treaty partner that is a member of the Inclusive Framework that is unwilling to respect its commitment to implement the minimum standard.

In line with peer reviews in previous years, the 2023 peer review shows that in general, most jurisdictions that are members of the Inclusive Framework are respecting their commitment to implement the minimum standard. The 2023 peer review also highlights that the BEPS MLI, which has been the main tool used to implement the minimum standard, has continued to have a significant and increased effect and is strengthening the bilateral tax treaty network of jurisdictions that ratified it.

Over the last decades, bilateral tax agreements, concluded by nearly every jurisdiction in the world, have served to prevent harmful double taxation and remove obstacles to cross-border trade in goods and services, and movements of capital, technology and persons. This extensive network of tax agreements has, however, also given rise to so-called “treaty-shopping” arrangements.