FRANKFURT (Reuters) – The United Arab Emirates, a magnet for the world’s ultra-rich, has also emerged as one of the fastest-growing corporate tax havens, according to a study released Tuesday that found an influx of more than 200 billion dollars in the country. .
The Tax Justice Network index, which documents countries that encourage businesses to lower their tax bills, added the United Arab Emirates to its top 10, which includes Switzerland and Bermuda.
The British offshore territories, the British Virgin Islands (BVI), Cayman Islands and Bermuda, have been named as the most important jurisdictions used by businesses to minimize their taxes, followed by the Netherlands.
The United Arab Emirates joined the top spot at number 10 after multinationals rerouted more than $ 218 billion in foreign direct investment through the Netherlands to the United Arab Emirates to save taxes, the study finds, boosting financial activity by nearly 180%.
A spokeswoman for the Dutch Ministry of Finance said it had introduced a withholding tax to target cash flows to low-tax countries, including the United Arab Emirates and Bermuda, and for prevent the Netherlands from being used as a channel. He believes, however, that cash flows are lower.
The UAE did not respond to a request for comment.
The Tax Justice Network, a donation-funded group campaigning for transparency, said its study measured multinational activity, as well as tax rates and loopholes. While companies are not prohibited from using loopholes, the practice is viewed critically.
“You don’t have to be a tax expert to understand why a global tax system programmed by a club of wealthy tax havens is hemorrhaging more than $ 245 billion in corporate taxes lost per year Said Alex Cobham, CEO of Tax Justice Network.
Dubai, a party capital in the United Arab Emirates and a magnet for social media influencers, has been hit hard by the pandemic as lockdowns hurt tourism and shopping as lower oil prices weighed on markets. Gulf State revenues.
To counter the decline of the local population and revive a struggling real estate market, after job cuts prompted many expats, who constitute the majority of the population, to leave, he redoubled his efforts to revive the economy.
The government has relaxed the rules to encourage international companies to locate locally and strengthened visa programs for wealthy foreigners.
The country has come under fire from the Financial Action Task Force, the world’s dirty money watchdog. The UAE recently approved the creation of a new government office to combat money laundering and terrorist financing.
The Cayman Islands government has said it “supports a fair tax system” and is committed to “international tax standards”. The UK Department of Finance said the Overseas Territories set their own policy. Other countries did not respond or declined to comment.
Additional reporting by Davide Barbuscia in Dubai; edited by David Evans