Reacting to the blacklisting, the UAE’s undersecretary of the Ministry of Finance, Younis Haji Al-Khouri, pledged: “We have committed to a reform process, which will be finalised by October 2018, and we are absolutely confident this will ensure the UAE is swiftly removed from the list.”
If the minister’s statement had come earlier it might have earned the UAE a place on the EU ‘grey list’ of 47 presently non-compliant jurisdictions that have promised to clean up their acts before the end of 2018.
The EU has said the UAE is included in the blacklist because it “does not apply the Beps (base erosion and profit sharing) minimum standards and did not commit to addressing these issues by 31 December 2018”.
Beps is an agreement signed by the Organisation for Economic Cooperation and Development (OECD) member countries to tackle tax avoidance strategies that allow multinational companies to shift profits artificially to low or no-tax locations.
In total, 17 nations have been blacklisted as non-cooperative tax jurisdictions including South Korea, which has made a similar pledge to Al-Khouri’s.
‘Just a list’
However, the undersecretary should not be overly concerned about the implications of its EU blacklisting – according to private client tax lawyer James Quarmby.
The tax expert with law firm Stephenson Harwood argues that the list is “just a list” without clear sanctions.
“It seems that the publication of the blacklist is merely an exercise by the EU to set out a unified strategy in tackling tax abuse worldwide,” he said.
“The sanctions for any ‘non-cooperative’ jurisdiction remain unclear and may not materialise for some time and, hopefully, after more jurisdictions have been removed from the list.
“The EU blacklist is simply a list… and a jurisdiction within the list can be removed once it brings its tax system fully in line with the standards of good governance criteria.”
EU sanctions
However, the EU has still not agreed on the series of “defensive measures” which will be applied to blacklisted countries, although it says that these could be “tax and non-tax” based measures. Any measures require the agreement of all member states.
It is expected that a first interim progress report on the black and grey lists will be published by middle of next year.
