EU drops UAE from tax blacklist, keeps US islands

Above, the Dubai International Financial Center on Sheikh Zayed Road on October 2, 2019. (AFP)
Updated 04 October 2019

EU drops UAE from tax blacklist, keeps US islands

  • The UAE adopted new rules on offshore structures in September
  • However the EU will continue to blacklist three US territories

BRUSSELS: European Union finance ministers are set to remove the United Arab Emirates next week from the bloc's lists of countries deemed to be acting as tax havens, an EU document said.

They will however continue to blacklist three US territories of American Samoa, Guam, and the U.S. Virgin Islands.

The UAE, the largest financial center still on the list, is due to be removed at a meeting on Oct. 10 because it adopted new rules on offshore structures in September, the EU document said.

The Gulf state charges no corporate taxes, making it a possible target for firms seeking to avoid paying tax in the countries where they actually operate.

The EU does not automatically add tax-free countries to its list, but to reduce the risk of tax dodging it had requested that the UAE introduce rules that would allow only companies with a real economic activity there to be incorporated.

The 28-nation EU set up a blacklist and a grey list of tax havens in December 2017 after revelations of widespread avoidance schemes used by corporations and wealthy individuals to lower their tax bills.

The lists are regularly reviewed to take account of overhauls or to add new jurisdictions.

The inclusion of US territories on the list has long been a source of friction with Washington. The tussle could escalate further after a bilateral trade war erupted this week over illegal EU aircraft subsidies.

Blacklisted states face reputational damage and stricter controls on transactions with the EU.


China exports, imports in deeper contraction as US tariffs bite

Updated 14 October 2019

China exports, imports in deeper contraction as US tariffs bite

  • Downbeat data likely to reinforce expectations that Beijing needs to introduce more stimulus measures to avert a sharper economic downturn

BEIJING: China’s exports fell at a faster pace in September while imports contracted for a fifth straight month, pointing to further weakness in the economy and underlining the need for more stimulus as the Sino-US trade war drags on.
The downbeat data is likely to reinforce expectations that Beijing needs to introduce more stimulus measures to avert a sharper economic downturn, despite tentative signs of a thaw in tense trade relations between the world’s top economies.
Following talks last week, US President Donald Trump on Friday outlined the first phase of a deal to end the trade war and suspended a threatened tariff hike set for Oct. 15. But existing tariffs remain in place and officials on both sides said much more work is needed before an accord could be agreed.
September had marked another major escalation in the dispute, with Washington imposing 15 percent tariffs on more than $125 billion in Chinese imports from Sept. 1, and Beijing hitting back with retaliatory levies.
September exports fell 3.2 percent from a year earlier, the biggest fall since February, customs data showed on Monday. Analysts had expected a 3 percent decline in a Reuters poll after August’s 1 percent drop.
“The headline figures suggest that global demand softened last month, adding to the pressure from the US tariffs that went into effect in September,” said analysts at Capital Economics.
Some economists attributed the deterioration in exports to a fading in the so-called “front-loading” effect. Some Chinese firms had rushed to ship goods to the United States ahead of the September deadline, supporting overall July and August export readings.
Total September imports fell 8.5 percent after August’s 5.6 percent decline, the lowest since May. Analysts had expected them to fall by 5.2 percent.
Despite more than a year of growth boosting measures, China’s domestic demand has remained stubbornly weak as economic uncertainty weighs on business and consumer confidence and discourages fresh investment.
China reported a trade surplus of $39.65 billion last month, compared with a $34.84 billion surplus in August. Analysts had forecast $33.3 billion.
Its trade surplus with the United States stood at $25.88 billion in September, narrowing from August’s $26.96 billion.
China’s exports to the United States fell 10.7 percent from a year earlier in dollar terms in January-September, while US imports dropped 26.4 percent during that period, the customs data showed.
Though President Trump had agreed not to proceed with a hike in tariffs set for Tuesday, US Trade Representative Robert Lighthizer said Trump had not made a decision about tariffs that were subject to go into effect in December.
Analysts believe China’s economic growth cooled further in the third quarter from a near 30-year low of 6.2 percent hit in April-June, and is threatening to breach the lower end of the government’s full-year target of 6.0-6.5 percent.
Some economists forecast growth could fall into the upper 5 percent range in 2020 due to a combination of cyclical and structural factors.