The United Arab Emirates expects to be taken off the European Union’s tax-haven blacklist after it meets criteria for transparency set by the EU, the UAE government said on Thursday.
“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,” the government said in a statement.
On Tuesday, EU finance ministers adopted a blacklist of 17 jurisdictions deemed to be tax havens, including the UAE and Bahrain, in a step to counter worldwide tax avoidance.
Countries on the blacklist may no longer be used by EU institutions for international financial operations, and transactions involving them could be subject to closer scrutiny. That could affect capital flows through the UAE, which is the Middle East’s main banking centre.
The UAE government said it was surprised and disappointed at being listed since it had been working with the EU since early 2017 to satisfy transparency criteria, and the sole outstanding issue was implementation of the BEPS Minimum Standard.
BEPS is an agreement signed by some OECD member countries to tackle tax avoidance strategies that allow multinational companies to shift profits artificially to low or no-tax locations.
The UAE has committed to finalizing implementation of BEPS by October 2018 and ratifying it by March 2019, a schedule which would give the country’s federal structure enough time to ratify the measure across all seven emirates, the government said.
“We stand by this realistic timeline,” it said, adding that it was confident of being recognized as an internationally compliant tax jurisdiction at the EU’s next review.
Bahrain’s government has not responded to a request for comment on the blacklist.