Global fight against tax-evaders sets eyes on UAE
The United Arab Emirates' tax-free perks could soon come to an end as the OECD group of wealthy nations lays down the pressure to tackle global tax-evaders.
The Gulf state's hesitation to sign up to a world treaty to assist in the exchange of information on tax evaders is a "source of concern", according to an official at the group.
Dubai has “a strong culture of an ask-no-questions, see-no-evil approach to commercial or financial regulation or foreign financial crimes,” the Tax Justice Network claimed.
Its free zones, a low-tax environment, multiple secrecy facilities and lax enforcement, have allowed thousands of companies to thrive, providing a cover for those attempting to avoid international financial scrutiny - a cause of concern for the G20.
“The UAE is clearly being pointed out as people start to realise what’s been going on under the surface … and we can expect significant pressure to get up to speed,” said one tax administrator there.
The latest G20 plan to create a blacklist of "unco-operative tax havens" is the latest in a series of moves designed to crackdown on evasion since the 2008 global financial crisis, which was temporarily diverted with the release of the controversial Panama Papers in April.
While countries involved in the scandal co-operate with authorities, including Panama which signed the treaty last month, the global lens has focused on nations like the UAE which has so far seemingly run without disruption.
“There is a risk that money will move to places like Dubai," Jason Collins, head of tax at Pinsent Masons, an international law firm told the Financial Times. "This has been the fear since Switzerland began to clean up its act.”
Although the oil-rich state has agreed to comply with "common reporting standard” of automatic account information exchange from 2018, Alex Cobham, director of research at the Tax Justice Network said it has failed "to deliver any information in practice.”