The UAE's tax free status has made it a popular destination with professionals from around the world but could things be on the cusp of change?
HSBC sent a circular to clients on Thursday alerting them to the new measures that are being ordered by the Organisation for Economic Co-Operation and Development (OECD), a 35-member grouping of mostly European nations. The measures will make it more difficult for people to avoid paying taxes and will start taking effect next month.
"These local laws will mean that from the beginning of January 2017, governments will start requiring all banks and other financial institutions to ask customers for information with a view to determining where they are resident for tax purposes," HSBC said. "Therefore, from the beginning of 2017 onwards, we will be contacting some of our customers to collect information related to their tax status."
The move follows the United States push in the past couple of years to collect money from its citizens abroad. Unlike most countries, the US requires that its citizens pay tax above a certain salary threshold even if they live abroad. And banks across the Middle East have been helping Washington with the implementation of the US Foreign Account Tax Compliance Act (FATCA) for individuals subject to these tax laws.
The UAE is a big hub for private banks catering to wealthy clients, many of whom are able to store assets in offshore accounts around the world such as Jersey, Switzerland, and Hong Kong, as well as in the UAE. In recent years however, governments have been tackling some of the world's biggest private banks such as UBS and imposing hefty fines on them for failing...