The UAE has been removed from the European Union’s list of non-cooperative jurisdictions for tax purposes (also called the “EU blacklist”).
This is great news for the UAE, but before we go into what this means for the country, let’s look at what put the UAE on the blacklist in the first place.
How the UAE ended up on the EU blacklist
Following a European Council meeting on 12 March 2019, the UAE and nine other jurisdictions were added to the EU blacklist.
The UAE was included in the original EU blacklist in 2017, but was later moved to the “EU grey list” after committing to meet the standards required by the EU.
The European Council confirmed that the UAE was added back to the blacklist for not making sufficient progress in implementing economic regulations by the agreed deadline of 31 December 2018. A decision that the UAE strongly disagreed with according to a statement cited by state news agency WAM.
What does it mean to be on the EU blacklist?
EU countries can choose to apply certain defensive measures against countries that are on the blacklist. These may include:
- Increased monitoring and audits from tax authorities
- Greater scrutiny on withholding tax rates
- Special documentation requirements in respect of transactions with blacklisted countries
- Automatic information exchange with relevant tax authorities
What does it mean for the UAE to be removed from the EU blacklist?
The announcement is great news for the UAE, as it helps remove potential negative investor trust caused by the initial blacklisting. This can lead to more direct investment into the UAE as well as better access to funding for SMEs.