European Union officials have proposed removing the UAE from a blacklist of tax havens the bloc adopted in December, according to a Reuters report.
Eight of the 17 jurisdictions currently listed, including the UAE, are set to be quickly removed from the list after they offered to change their tax rules, according to EU documents seen by Reuters.
The UAE expressed surprise and disappointment at its inclusion among 17 countries designated by the EU as alleged non-compliant global tax jurisdictions. The Government said it was committed to maintaining the highest standards of financial oversight and tax regulations and expected to be removed from the list after the implementation of outstanding measures this year.
"The UAE has worked to meet the European Union's requirements in terms of exchanging tax-related information," Younis Al Khouri, Undersecretary of Finance, said last month.
The ministry said it expected to be taken off the blacklist once it had complied with Base Erosion and Profit Shifting (BEPS) Minimum Standard, a rule that seeks to limit shifting of profits to jurisdictions where there is low or no taxes
"We have committed to a reform process which will be finalised by October 2018, and we are absolutely confident that this will ensure the UAE is swiftly removed from the list. We look forward to moving into the next phase of co-operation with our EU partners on the important issue of tax regulation" Mr Al Khouri said in December.
The other jurisdictions EU officials have recommended for delisting include Panama, South Korea, Barbados, Grenada, Macao, Mongolia and Tunisia, according to Reuters.
UAE surprised and disappointed by inclusion in EU tax haven blacklist
Dubai wealth managers dismiss UAE inclusion in EU tax haven blacklist
Tax haven blacklist to give EU citizens around the world a "rude shock"
The proposal will be discussed at a meeting of EU ambassadors on Wednesday and is expected to be adopted by EU finance ministers when they meet next week in Brussels for monthly talks.
According to Reuters, the proposal for the de-listing was made by the Code of Conduct Group, which gathers tax experts from the 28 EU member states. It monitors countries’ commitments to abide by EU standards on tax matters.
If the recommendation were confirmed by EU ministers, the eight jurisdictions will be moved to a so-called grey list which includes those who have committed to change their rules on tax transparency and co-operation. The grey list currently includes 47 jurisdictions.
Jeremy Cape, a tax lawyer at Squire Patton Boggs, which has offices in London and the UAE, said the UAE's reaction to inclusion on the original list "was swift and unequivocal".
"It is clear the UAE was able to persuade the EU’s Code of Conduct Group in Brussels that its commitment was genuine. In doing so, it would have met the criteria set, and put itself in a position to be removed from the blacklist," said Mr Cape.
"The UAE's commitment to implement the BEPS minimum standards, alongside its commitments on the automatic exchange of information and to sign the OECD Multilateral Convention on Mutual Administrative Assistance (MAC), allows the UAE to move to the so-called 'grey list'." Mr Cape said a country that features on the grey list will have its commitments monitored and reassessed from time to time.
Failure to meet these commitments would see a country relisted. However, by following through on its commitments, implementing the minimum standards and ratifying the MAC, countries can later be removed from the grey list altogether.
The recommended removal of Panama from the blacklist may cause reaction from some commentators as it has been at the centre of one of the largest disclosures of offshore schemes, the so-called Panama Papers.