In series:Global Forum on Transparency and Exchange of Information for Tax Purposes: Peer Reviewsview more titles
Published on July 26, 2016
This report contains the 2014 “Phase 2: Implementation of the Standards in Practice” Global Forum review of the United Arab Emirates.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 130 jurisdictions which participate in the work of the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes.
The Phase 2 review rates the United Arab Emirates (UAE) as overall Partially Compliant with the international standard. The UAE only established an EOI Unit in 2014, and there remains a significant backlog of unanswered requests. The report recommends that the UAE addresses the backlog of requests on an urgent basis, and increases its efforts to discuss and understand issues raised by its EOI partners through direct communication. The UAE’s legal framework generally ensure that ownership, accounting and banking information are available in accordance with the standard, and certain key information is in practice kept by the authorities. However, in respect of offshore companies in some of the free zones as well as partnerships, the monitoring of compliance with accounting record keeping obligations is very limited. In addition, given the many unanswered requests it is not clear that in every case where it was requested information would have been available. It is recommended that the UAE monitors the availability of information, and in particular underlying accounting documents, where this is requested by an EOI partner. Information is not always kept centrally and must be obtained through local authorities, which are not used to dealing with EOI requests for tax purposes. This has caused some practical difficulties. Although the UAE has already taken steps to improve the situation, this is still work in progress. For further information on the UAE’s exchange of information practices and to read the full report click here.