A study by the Tax Justice Network showed that more than $ 200 billion from companies searching for tax havens has poured into the UAE.
The network said that the UAE has become one of the top 10 tax havens, including other countries including Switzerland, the Cayman Islands and Bermuda.
The British Virgin Islands, Cayman Islands and Bermuda ranked first among the places where companies resort to reducing taxes, followed by the Netherlands.
The UAE ranked tenth after companies transferred $ 218 billion of foreign direct investment through the Netherlands to reduce taxes, according to the study.
A Dutch finance ministry spokeswoman said it had introduced a withholding tax to target flows of money to low-tax countries, including the United Arab Emirates and Bermuda, and to prevent the Netherlands being used as a conduit. It, however, estimates that the money flows are lower.
The Tax Justice Network – a donated-funded group that seeks transparency – said its study covered the activities of multinational companies, as well as tax rates and loopholes.
Although there is nothing to stop companies from exploiting the vulnerabilities, such a practice is criticized.
“You don’t need to be a tax expert to see why a global tax system programmed by a club of rich tax havens is haemorrhaging over $245 billion in lost corporate tax a year,” said Alex Cobham, Tax Justice Network’s CEO.
Dubai has been hit hard by the Covid-19 pandemic, with tourism and shopping affected by measures to contain the pandemic, while lower oil prices put pressure on the public treasury.
To counter the decline in local population and revive a struggling property market, after job cuts prompted many expatriates, who make up the majority of the population, to leave, it redoubled efforts to boost the economy.
Reuters report said that the UAE has been criticized by the financial force that monitors the movement of illicit funds globally. Recently, the UAE approved the establishment of a new government office to combat money laundering and terrorist financing.
The Cayman Islands government said it “supports a fair tax system” and was committed to “international tax standards”.