On October 10, the United Arab Emirates has been removed from the European Union's list of non-cooperative jurisdictions for tax purposes, together with Switzerland.
After a regular review of its bloc's lists of countries, the EU finance ministers decided to remove the UAE, given it has adopted new rules on offshore structures in September and passed necessary reforms to improve its tax policy framework and implement economic substance requirements for companies domiciled in the emirates.
The UAE was included on the list in March this year as "it failed to cooperate with the EU on tax matters". This tax haven blacklist was first drawn up in 2017 to prevent tax avoidance and stop harmful tax practices.
What does this mean moving forward?
Overall, this announcement is outstanding 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.
Critics argued that the list drawn at first was incomplete, as it left out a number of jurisdictions seen to be tax evasion facilitators.
UAE committed to display OECD and EU standards of transparency and cooperation
The UAE, will continue to comply with 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.
The implementation of the Economic Substance Regulations in April enhanced the requirements for entities registered in the UAE to substantiate their presence and economic activity in the country, through varying criteria enforced as per global standards.
What is the expected outcome of this?
After removing from the EU blacklist, the UAE market shall see more business from the European states during this last quarter of 2019. This also proves that the UAE is now compliant with the highest international standards on taxation as a mature and stable financial center.
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