On 5 December, EU finance ministers published a tax haven blacklist of 17 jurisdictions plus an additional grey list naming 47 countries and territories that have promised to address certain tax deficiencies by the end of 2018.
The UAE was one of the 17 to land on the blacklist, as the EU assessed the jurisdiction as not having a fair taxation system.
According to a report by local newspaper The National, Khaled Sifri, chief executive of Emirates Investment Bank, said the list seemed to be a political exercise.
“The biggest offenders are not on the list. Switzerland, Jersey and the US are some of the biggest offenders around,” Sifri told the paper.
“This is the kind of thing that may attract attention in the short term, but it will have no implications in the longer term. I think the EU missed the target on this altogether,” he said.
James Walker, head of the Buzzacott private client team, said while he has not assessed the credibility of the list, in his opinion, it is worth pointing out that the US has been left off.
Grey list dismissed
A spokesman for Jersey’s External Relations Department has also questioned the EU “grey list”, dismissing it as an annex, The Jersey Evening Post has reported.
Chief minister Ian Gorst said the government would put steps in place to meet the one area of concern raised by the EU.
While some critics have said the grey list is a way of letting non-compliant tax jurisdictions off the hook, Walker says the additional list actually highlights cooperation.
“The reason for the ‘grey list’ is to show that these jurisdictions are cooperating to help ensure that the global system provides fairness for all,” Walker said.
“Having worked with many firms in these jurisdictions for over 20 years, I know how diligent they are when it comes to knowing who they deal with, why the structure is being implemented and deciding whether they want to be involved,” he said.
Walker says he has only ever come across someone who had used a structure to evade UK tax once.
“He was identified, reported to the appropriate channels and ultimately fired as a client.”
Despite this low level of offenders, Walker said a relentless focus has been placed on offshore evasion.
“The focus on offshore evasion was right in the early days and has produced a host of changes that has helped jurisdictions reduce the ability for anyone to evade their local taxes.
“However, there seems to be a relentless focus on this sector, while ignoring the other forms of tax evasion such as paying for things in cash to get a lower price,” he said.
Ellen Zimiles, managing director and head of Navigant Consulting and its global investigations and compliance practice, told International Adviser the biggest problem with the EU’s blacklist criteria is not fully aligned with the US approach to tackling evasion.
“The US Government has developed its own focus on certain alleged tax havens from its experience with the Offshore Voluntary Disclosure Programme and the Swiss Bank Program,” Zimiles said.
“Though this is not a public list, some recent US enforcement efforts have focused on countries that do not appear on this [EU blacklist], such as Israel, Singapore, India and island nations in the Caribbean,” she said.
Zimiles also highlighted South Korea’s inclusion on the list, when the country has not historically been known for facilitating tax evasion.