UAE has been removed from the EU’s ‘tax haven’ blacklist has been saved
UAE has been removed from the EU’s ‘tax haven’ blacklist
On the 5th December 2017, the European Union (EU) Commission published a blacklist of 17 countries that have been failing to meet agreed good tax governance standards. Early indications suggested that those countries listed on the blacklist would no longer be able to benefit with double tax treaties with EU member states (albeit this is yet to be confirmed). A further 47 countries have been included on a “grey list” and put on notice.
Of these 17 countries, the United Arab Emirates (UAE) was named as a non-cooperative tax jurisdiction and the EU stated at the time that the UAE does not apply the base erosion and profit shifting (BEPS) minimum standards and did not commit to addressing these issues by 31 December 2018.
However, on the 23rd January 2018 a EU special counsel announced, based on recommendations by EU tax experts in the Code of Conduct Group, that eight of the initial Blacklisted countries are to be removed from the blacklist and moved them to a separate list, the grey list, where they will be subject to close monitoring. The UAE was one of the eight countries to transfer onto the grey list.
As part of the agreement that removed the UAE from the blacklist, the UAE signed 113 additional agreements to avoid double taxation and a further eight to facilitate the exchange of information for tax purposes. In addition to this the UAE has also agreed to take measures to comply with the Common Reporting Standard (CRS) to ensure transparent flow of information with international partners, including the EU.
What does this mean moving forward?
The UAE, along with 54 other countries, on the grey list will have to continue to display that they will comply with the EU standards on transparency and cooperation. The grey list will be continually reviewed moving forward and any country that is deemed to be failing to respect their promises will be moved back on to the blacklist.
Overall, this announcement is welcome news for the UAE as it would serve to dispel any potential negative investor trust that may have been created as a result of the UAE’s initial blacklisting.