The United Arab Emirates, one of the world’s top emerging tax havens, will begin collecting penalties and fines on its requirement for reporting of company beneficial ownership information, as it faces international pressure to address money laundering concerns. However, questions remain about numerous exemptions and loopholes in the new rules.
Companies may use brokers or banks as the legal owners, but the new laws that require the reporting of beneficial owners is focused on recording the true owners who reap the benefits of ownership, have 25% or more of the company’s shares and voting rights at the company or the power to dismiss and appoint directors.
“What makes the UAE attractive to illicit business is the absence of any kind of oversight, questioning [or] requirements,” Kumar said
“In a lot of other countries they may not have the technological capacity, but that is not Dubai’s problem. Look at how the UAE monitors civil society groups, people who advocate against human rights violations with migrant labor. [The UAE] does an excellent job monitoring, enforcing and prosecuting [them]. There’s a lack of interest behind this [beneficial ownership law].”
The minister of economy has yet to decide who the enforcement authorities of the law will be, according to the cabinet decision issued earlier this year.
The law applies to the entire country with the exception of the financial free zones of Dubai and Abu Dhabi. Government-owned corporations and publicly traded entities are also excluded from the ownership reporting requirement. It’s unclear how this data will be stored, and the information will not be publicly available.
Administrative penalties and fines of up to 100,000 UAE dirhams for companies that don’t comply with reporting beneficial ownership information will begin July 1.
As reported by International Consortium of Investigate Journalists