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UAE is playing by tax rules, the EU must do its bit

The European Union is playing a prominent role in fighting tax evasion and money laundering, and it has the UAE's backing.

On December 5 last year, the European Union blacklisted the UAE, labelled it a tax haven, and placed it among the 17 countries identified by the European Council. It was a preliminary list that aimed to name and shame countries that the EU believes are helping people evade taxes in their home countries. The council now plans to take the UAE off the list. It was a mistake in the first place. The UAE is committed to transparency, global cooperation, and tax reforms. And as it aims to emerge as a leading financial hub, the authorities have been addressing the shortcomings identified by Brussels and working to align the practices of its banking and financial sector with the best in the world. The ministry of finance is working to ensure compliance with the Base Erosion and Profit Shifting (BEPS), a rule that seeks to limit shifting of profits to jurisdictions with low or no taxes. The UAE is also committed to ensuring automatic exchange of information and signing the OECD Multilateral Convention on Mutual Administrative Assistance, which should leave no room for doubt in the country's commitment to reforms. But change sometimes takes time. The UAE plans to complete the procedure for BEPS by October this year and ratify it by March 2019. Besides, a slew of other significant reforms such as bankruptcy law have already been implemented to boost the credentials of financial instruments in the UAE.
The European Union is playing a prominent role in fighting tax evasion and money laundering, and it has the UAE's backing. What's intriguing is the vetting process to identify these tax havens. Arguably, some of the biggest known offenders aren't on the list. We do not intend to name and shame countries, but are simply pointing at the flawed process. Oxfam, too, had raised objections in a tweet, and pointed out that several EU countries actually fail their own criteria for blacklists. The EU needs to review its process of identification of tax havens and not use the list to undermine international cooperation.