By On March 12, Financial Times reported that Italy blocked the inclusion of United Arab Emirates on a European Union blacklist of alleged tax havens. The UAE was criticized for not meeting a December 2018 deadline for being compliant with tax transparency standards.
If added to the list, UAE will have to face restrictions in accessing European Union funding programmes, while the companies from European Union, that operate in the UAE will have to compliance and anti-abuse measures.
The government of Italy wants the UAE to be grey-listed because UAE has agreed to work on the deficiencies. Italy was of the stance that the legislative process in the UAE that seeks compliance is a lengthy and time-consuming process because of which UAE could not meet the standards in December.
However, the EU added UAE to the blacklist in March 2019. Authorities in the UAE responded that the Emirates were committed to all international tax agreements and that they were working with the EU to obtain compliance of the standards.
The government of the UAE will work with the EU to get its name removed from the blacklist.
The issues at hand
The government in the UAE has provided with people with a variety of business opportunities in UAE to take advantage of and for investors to bring as much money to the UAE as they want. The business opportunities in UAE in the UAE have always been promising, however with the amount of investment and business coming in with the ease that the government has provided it was not long before the UAE was thought of as a tax haven by people who wanted to evade tax.
The government has strict laws to govern every subject whether it is business setup in UAE or it is working to achieve compliance of international standards related to taxation. Even though this might take time, the UAE will eventually deal with the issue because such issues are obstacles in the Emirates’ development and growth of business.
Such issues attract attention of the world which also means that sanctions and barriers will be imposed by other countries on access to markets and financing from the EU, which affects every business setup in Dubai. This is something that the UAE cannot take a risk with because the whole country revolves around business setup in UAE and trade. Any deterioration in relation to business setup in Dubai will hamper the plans of the government for further development of UAE.
Taxation in the UAE
Taxation is low in the UAE however changes are being brought by the government. One example is the implementation of value-added taxes. VAT in UAE was imposed in 2018 and there has been a lot of chatter about it. Business have had to adjust to VAT in UAE and the government provided a complete framework to make sure the process of including VAT in UAE’s system was smooth and flawless.
