UAE “surprised and disappointed” to be included in EU list of non-compliant tax jurisdictions

Dubai skyline (Shutterstock)
Updated 07 December 2017
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UAE “surprised and disappointed” to be included in EU list of non-compliant tax jurisdictions

DUBAI: The UAE says it is surprised and disappointed that it has been included in a European Union list of non-compliant tax jurisdictions, state news agency WAM reported.
In the statement, the UAE highlighted its full commitment to maintaining the highest international standards of financial oversight and tax regulation, saying it would continue to work with international partners to deliver this.
The UAE’s Under-Secretary of the Ministry of Finance, Younis Hajji Al-Khouri, said: “The UAE has worked to meet the European Union’s requirements in terms of exchanging tax-related information.”
“We have committed to a reform process which will be finalized by October 2018, and we are absolutely confident this will ensure the UAE is swiftly removed from the list… We look forward to moving into the next phase of cooperation with our EU partners on the important issue of tax regulation.”
The statement added: “Since early 2017, the UAE has worked transparently with European Union counterparts to ensure that we meet the criteria laid down by European Union Member States. As the European Union has itself noted, the UAE has addressed each and every issue the EU has raised. The UAE has drafted, legislated and implemented significant reforms to ensure that we remain in lock-step with our OECD partners and international best practice.”
It continued: “The sole outstanding issue is the implementation of the base erosion and profit shifting, BEPS, Minimum Standard, which we have committed to finalize by October 2018 and ratify by March 2019 – giving our federal structure sufficient time to allow for ratification across the seven Emirates. We stand by this realistic timeline.”
“The UAE will continue to work with international partners on this issue, and is confident that it will be recognized as an internationally compliant partner at the EU’s next review,” the statement concluded.


Saudi stocks receive landmark emerging markets upgrade from MSCI

Updated 21 June 2018
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Saudi stocks receive landmark emerging markets upgrade from MSCI

  • Market authorities in Saudi Arabia have introduced a series of reforms in the past 18 months
  • MSCI’s Emerging Market index is tracked by about $2 trillion in active and global funds

LONDON: Saudi Arabian equites are poised to attract up to $40 billion worth of foreign inflows, following a landmark decision by index provider MSCI to include the Kingdom’s stocks in its widely tracked Emerging Markets index.

"MSCI will include the MSCI Saudi Arabia Index in the MSCI Emerging Markets Index, representing on a pro forma basis a weight of approximately 2.6% of the index with 32 securities, following a two-step inclusion process," the MSCI said in a statement late on Wednesday night Riyadh time.

“Saudi Arabia’s inclusion in MSCI’s EM Index is a milestone achievement and will likely bring with it significant levels of foreign investment,” Salah Shamma, head of investment for MENA at Franklin Templeton Emerging Markets Equity, told Arab News. 

“It is a recognition of the progress Saudi Arabia has made in implementing its ambitious capital markets transformation agenda. The halo effect of such a move will be felt across the stock exchanges of the entire Gulf Cooperation Council (GCC).”

Market authorities in Saudi Arabia have introduced a series of reforms in the past 18 months to bring local capital markets more in line with international norms, including lower restrictions on international investors, and the introduction of short-selling and T+2 settlement cycles.

Such reforms prompted index provider FTSE Russell to upgrade the Kingdom to emerging market status in March, opening the country’s stocks up to billions worth of passive and active inflows from foreign investors.

MSCI’s Emerging Market index is tracked by about $2 trillion in active and global funds. The inclusion of Saudi stocks in the index, alongside FTSE Russell’s upgrade, is forecast to attract as much as $45 billion of foreign inflows from passive and active investors, according to estimates from Egyptian investment bank EFG Hermes. 

The upgrade announcement was widely expected by the region’s investment community, following a similar emerging markets upgrade announcement by fellow index provider FTSE Russell in March. 

“MSCI index inclusion will be a historic milestone for the Saudi market as it will allow for sticky institutional money to make an entry in 2019 which will help deepen the market,” said John Sfakianakis, director of economic research at the Gulf Research Center in Riyadh.