At their regular session in September 2019, European Union finance ministers agreed to amend the black and gray lists of blacklist countries (offshore). Thus, according to the results of the session, the United Arab Emirates, Switzerland, and Mauritius were excluded from the black, and gray lists of tax havens.
We recall that 28 EU member states created a black and gray list of tax havens in December 2017 after they discovered a number of used tax evasion schemes that corporations and private persons used to reduce their tax burden.
The blacklist of offshore countries included countries that apply strongly reduced tax rates (most often 0% corporate tax) and restrict access to information about the beneficiaries and owners of companies registered in them. Accordingly, those countries that were included in this list have suffered damage to their reputation and come under more stringent control of all commercial and financial transactions that pass through the jurisdiction of the EU.
Earlier, the UAE leaders promised the European partners to bring their legislation into compliance to prevent possible financial manipulations and tax evasion.
As a result of reforms in the UAE to harmonize local legislation (in September 2019, new rules for offshore companies in the UAE's free zones were adopted), the requirements of the EU authorities were taken into account and, at the regular session reviewing the list of blacklisted countries, EU ministers decided to exclude the UAE, just like the Marshall Islands.
But despite the fact that the UAE made certain concessions, their main advantage, namely the 0% tax on profit of companies and individuals remained untouched, and therefore the country remains popular among investors and businesses that seek to minimize their taxes.
The zero tax rate (perhaps the main criterion for the tax haven) is not the reason for the automatic blacklisting in EU offshores, but the European authorities have demanded to limit the ability of companies to operate without real economic activity in order to reduce the risks of tax evasion. These are requirements that were met by the UAE leaders.
Now there are 9 countries left on the list of EU offshores, mainly small islands-states in the Pacific Ocean with small financial flows to the EU: Belize, Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and three US territories, American Samoa, Guam, and the US Virgin Islands.
Despite the fact that the UAE government made certain concessions to the EU, still, the conditions for doing business, mainly the zero tax rate, make the country very attractive for business.
