The UAE has issued a statement expressing its disappointment over the country's unfortunate inclusion in recent EU list of non-cooperative tax jurisdictions, reiterating that the UAE remains "fully committed to maintaining international standards."
The statement by the UAE's Ministry of Finance reads:
"The Government of the United Arab Emirates is surprised and disappointed that it has been included by the European Union in a list of non-compliant tax jurisdictions.
"We remain fully committed to maintaining the highest international standards of financial oversight and tax regulation, and will continue to work with our international partners to deliver this."
The EU had, on Tuesday, December 5, released its first-ever list of 'non-cooperative tax jurisdictions,' which it said had been agreed by the Finance Ministers of EU Member States during their meeting in Brussels.
In total, the list named 17 countries for 'failing to meet agreed tax good governance standards'. The UAE was named as part of that list while an additional 47 countries are said to have committed to addressing deficiencies in their tax systems and to meet the required criteria, following contacts with the EU.
The UAE's Undersecretary of the Ministry of Finance, Younis Haji Al Khouri, said: "The UAE has worked to meet the European Union's requirements in terms of exchanging tax-related information."
He added: "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. We look forward to moving into the next phase of cooperation with our EU partners on the important issue of tax regulation."
The UAE government's official statement noted that, "since early 2017, the UAE has worked transparently with our European Union counterparts to ensure that we meet the criteria laid down by European Union Member States.
So, what's EU's problem?
While releasing the list on December 5, the EU noted that "this unprecedented exercise should raise the level of tax good governance globally and help prevent the large-scale tax abuse exposed in recent scandals such as the 'Paradise Papers'.
However, the UAE has addressed every issue raised by the EU, and the latter has acknowledged the same. "As the European Union has itself noted, we have addressed each and every issue the EU has raised. We have drafted, legislated and implemented significant reforms to ensure that we remain in lock-step with our OECD partners and international best practice," the UAE government said in the statement.
"The sole outstanding issue is the implementation of the BEPS Minimum Standard, which we have committed to finalise by October 2018 and ratify by March 2019 - giving our federal structure sufficient time to allow for ratification across the seven Emirates. We stand by this realistic timeline," it noted.
BEPS, or base erosion and profit shifting, refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. Under the inclusive framework, over 100 countries and jurisdictions are collaborating on the implementation of the OECD/ G20 BEPS Package.
"We will continue to work with our international partners on this issue, and are confident that we will be recognised as an internationally compliant partner at the EU's next review," the UAE said in the statement.