UAE out of the EU blacklist!

On 23rd of January 2018, the EU finance ministers decided to amend the EU blacklist of non-cooperative jurisdictions, also known as tax havens. The initial list was made available in December 2017.In total, eight jurisdictions were removed from the list, including Barbados, Grenada, the Republic of Korea, Macao, Mongolia, Tunisia, the United Arab Emirates (UAE), and Panama. According to the statement of the EU ministers, such jurisdictions were removed from the list after following their “commitments made at a high political level to remedy EU concerns”. The decision was made in accordance with the opinion of EU tax experts in the Code of Conduct Group. For example, the UAE was listed due to a lack of implementation of base erosion and profit shifting (BEPS) measures, whereas Panama was included in the list because of its harmful preferential tax regimes.The shortening of the list is seen by the ministers as a positive sign that the jurisdictions are putting effort to comply with the EU tax transparency standards and follow the good global tax governance practices. In this regard, the finance minister of Bulgaria, a country that is currently holding the EU presidency, noted that “jurisdictions around the world have worked hard to make commitments to reform their tax policies.”The EU blacklist was introduced at the end of the last year with the aim to tackle aggressive tax evasion practices and offshore tax schemes. Simultaneously with the publishing of the list, the recorded jurisdictions were invited to fix the deficiencies in their tax systems and adhere to the global normative tax transparency standards set by the OECD. However, immediately after its publication, the list caused a brief market turmoil because such a labeling of the listed countries was seen as having a strong negative impact on the scope of investments into them by European companies.Some lawmakers and activists criticize the decision to deindex the eight countries due to the lack of transparency with regard to the commitments that were made by the delisted countries (the list of such commitments has not been presented publicly). The removal of Panama was met with particular skepticism due to the recent Panama Papers scandal that revealed the country as “one of the world’s most prolific tax havens of the blacklist”.