The UAE has also become one of the world’s most significant tax havens, Reuters reports, citing a study by the Tax Justice Network published Tuesday . The Arab country has thus joined such illustrious tax havens as the British Virgin Islands, the Cayman Islands or even Bermuda.
The Middle East state has become one of the fastest-growing corporate tax havens after multinational companies diverted more than $ 218 billion in foreign direct investment through the Netherlands to the UAE – to save taxes.
Incidentally, the Netherlands also ranks high in the Tax Justice Network’s ranking of ten countries, the full list can be found below. According to a Reuters article, this $ 218 billion cash flow is huge, even for a country rich in oil reserves:
- on the one hand, it is about half the annual GDP of the United Arab Emirates,
- on the other hand, it pushed the volume of financial activities by nearly 180 percent in the case of multis in the UAE.
Reuters, citing a spokesman for the Dutch Ministry of Finance, writes that the Dutch are trying to tax cash flows between countries with low corporate taxes, including the United Arab Emirates, and the Netherlands. The aim is not to use their country as a kind of channel for tax evasion. However, according to their finance ministry, this cash flow is lower.
You don’t have to be a tax expert to see why more than $ 245 billion in corporate taxes disappear in a global tax system programmed by the Club of Rich Tax Havens
– the article quotes Alex Cobhamt, CEO of the Tax Justice Network.
Incidentally, not only the Dutch but also the Cayman Islands government has responded, claiming to “support a fair tax system” and are committed to “international tax rules”.
Top 10 list of corporate tax havens (Corporate Tax Haven Index 2021):
- British Virgin Islands
- Cayman Islands
- Hong Kong
- United Arab Emirates