UAE to Be Removed From EU Blacklist of Tax Havens | World Defense

UAE to Be Removed From EU Blacklist of Tax Havens

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http://businessweekme.com/2018/01/16/uae-removed-eu-blacklist-tax-havens/?utm_source=MASTER+DATABASE&utm_campaign=032ae08b34-EMAIL_CAMPAIGN_2018_01_16&utm_medium=email&utm_term=0_ab2fce1220-032ae08b34-92455181
The European Union will probably remove the UAE and South Korea from a blacklist of tax havens later this month, lifting the threat of reputational damage and punitive economic measures.
Following “new commitment letters signed at high political level,” the EU’s Code of Conduct working group on business taxation recommended to move the two countries, as well as Barbados, Grenada, Macau, Mongolia, Panama and Tunisia, from the list of non-cooperative jurisdictions for tax purposes to a gray list of countries that will be monitored for compliance, according to a document obtained by Bloomberg News.
The recommendation, which is subject to approval by EU finance ministers meeting in Brussels on January 23, leaves Bahrain, American Samoa, Guam, the Marshall Islands and a handful of other jurisdictions on the blacklist. They could potentially face sanctions for failing to bring their standards in line with the world’s largest trading bloc.
EU finance ministers agreed in December to “name and shame” 17 countries after months of screening and negotiations, stepping up efforts to fight against opaque practices that facilitate avoidance by multinationals and individuals. The step caused a brief market turmoil because a tax-haven label could discourage European companies from investing in respective jurisdictions.
Countries including Turkey, which were included in earlier drafts of the blacklist, succumbed to EU pressure, offering commitments to increase transparency and eliminate sweetheart tax deals that will be subject to monitoring and evaluation.
Code of Conduct
“All commitments officially taken by jurisdictions, as well as the implementation of the recommendations made by the Council in order to address open issues, will be carefully monitored by the Code of Conduct,” according to the latest document dated Jan. 12.
For the moment, remaining countries on the list face few consequences beyond reputational damage. The European Commission — the EU’s executive arm — argues the threat of being on the list can act as an incentive for countries to bring their tax systems in line with EU standards. But several states, including France, are lobbying for punitive measures.
Those could include limiting access for listed jurisdictions to the European Fund for Sustainable Development, as well as national initiatives such as reinforced monitoring of transactions, increased audit risks for taxpayers benefiting from the regimes at stake, and special documentation requirements.
 

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EU to remove the UAE from tax haven blacklist, report says
Emirates among eight jurisdictions expected to be taken off list after complying with tax regulations
by Alice Haine
January 16, 2018

European Union officials have proposed removing the UAE from a blacklist of tax havens the bloc adopted in December, according to a Reuters report.

Eight of the 17 jurisdictions currently listed, including the UAE, are set to be quickly removed from the list after they offered to change their tax rules, according to EU documents seen by Reuters.

The UAE expressed surprise and disappointment at its inclusion among 17 countries designated by the EU as alleged non-compliant global tax jurisdictions. The Government said it was committed to maintaining the highest standards of financial oversight and tax regulations and expected to be removed from the list after the implementation of outstanding measures this year.

"The UAE has worked to meet the European Union's requirements in terms of exchanging tax-related information," Younis Al Khouri, Undersecretary of Finance, said last month.

The ministry said it expected to be taken off the blacklist once it had complied with Base Erosion and Profit Shifting (BEPS) Minimum Standard, a rule that seeks to limit shifting of profits to jurisdictions where there is low or no taxes

"We have committed to a reform process which will be finalised by October 2018, and we are absolutely confident that this will ensure the UAE is swiftly removed from the list. We look forward to moving into the next phase of co-operation with our EU partners on the important issue of tax regulation” Mr Al Khouri said in December.

The other jurisdictions EU officials have recommended for delisting include Panama, South Korea, Barbados, Grenada, Macao, Mongolia and Tunisia, according to Reuters.

The proposal will be discussed at a meeting of EU ambassadors on Wednesday and is expected to be adopted by EU finance ministers when they meet next week in Brussels for monthly talks.

According to Reuters, the proposal for the de-listing was made by the Code of Conduct Group, which gathers tax experts from the 28 EU member states. It monitors countries’ commitments to abide by EU standards on tax matters.

If the recommendation were confirmed by EU ministers, the eight jurisdictions will be moved to a so-called grey list which includes those who have committed to change their rules on tax transparency and co-operation. The grey list currently includes 47 jurisdictions.

Jeremy Cape, a tax lawyer at Squire Patton Boggs, which has offices in London and the UAE, said the UAE’s reaction to inclusion on the original list "was swift and unequivocal".

"It is clear the UAE was able to persuade the EU’s Code of Conduct Group in Brussels that its commitment was genuine. In doing so, it would have met the criteria set, and put itself in a position to be removed from the blacklist," said Mr Cape.

"The UAE's commitment to implement the BEPS minimum standards, alongside its commitments on the automatic exchange of information and to sign the OECD Multilateral Convention on Mutual Administrative Assistance (MAC), allows the UAE to move to the so-called 'grey list'." Mr Cape said a country that features on the grey list will have its commitments monitored and reassessed from time to time.

Failure to meet these commitments would see a country relisted. However, by following through on its commitments, implementing the minimum standards and ratifying the MAC, countries can later be removed from the grey list altogether.

The recommended removal of Panama from the blacklist may cause reaction from some commentators as it has been at the centre of one of the largest disclosures of offshore schemes, the so-called Panama Papers.

https://www.thenational.ae/business/economy/eu-to-remove-the-uae-from-tax-haven-blacklist-report-says-1.695772
 

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