UAE one of favourite offshore havens for rich of poor countries

ISLAMABAD: The United Arab Emirates has become a favourite offshore haven for the rich from the third world countries in Africa and Asia, including Pakistan. Around two-thirds of the Pakistanis who own offshore companies have a UAE connection.

A majority of these offshore holders have hired UAE-based service providers for registering a company while some of them are carrying out business activities through shell companies in the Gulf country.

A few UAE-resident Pakistanis also own offshore companies, revealed the recently out Pandora Papers. The International Consortium of Investigative Journalists (ICIJ) has released a new episode of Pandora Papers that confirm that the UAE has become a ‘go-to offshore haven’ for the political and business elites in Africa and South Asia who mainly invest in the real estate business there. The Papers reveals that the UAE offers shell companies that hide real owners’ identities.

"Dozens of internal free-trade zones that provide even more shadows for them to hide in; and a regulatory system known for what anti-corruption advocates call a ‘ask-no-questions, see-no-evil approach’ to dealing with money tied to gold smuggling, arms trafficking and other crimes.” The Pandora Papers contain names of over 700 Pakistanis who own or have owned an array of companies and trusts holding millions of dollars in offshore jurisdictions. Out of these 700 Pakistanis, almost two-thirds have either registered their companies in the UAE through UAE-based service providers or living in the Gulf country or have businesses in Dubai, Abu Dhabi and Sharjah.

The ICIJ, in its latest episode, has revealed that more than 11.9 million files in the Pandora Papers include some 190,000 confidential files from the SFM Corporate Services — a UAE-based firm that has billed itself as "the World's #1 Offshore Company Formation Provider." Many Pakistanis have also obtained the services of SFM for registering their offshore companies. The review has identified the owners of at least 2,977 companies in the UAE, the British Virgin Islands and other offshore financial centres that were incorporated with the SFM's help or received other services from the firm. The owners of these companies include a Belgian gold tycoon, an internet mogul, a dark web impressario and over 20 other people accused of financial crimes and other wrongdoings around the world, the ICIJ research found.

The Pandora Papers has also highlighted the proliferation of “free zones” in the Gulf state, which raises grave concerns for anti-corruption groups. These free zones offer no taxes and the regulations are minimal. These zones have their own governing bodies and regulators. The exact number of such free zones is not known. The Carnegie Endowment report last year estimated that the UAE has 47 free zones, including about 30 in Dubai, says the ICIJ report.

In addition to SFM, there are other service-providers based in the UAE who facilitate their clients in registering the companies with millions of dollars in offshore holdings. Many Pakistanis have benefited from their services and registered offshore companies in the BVI, Seychelles and other offshore havens. A large number of Pakistanis have opted for keeping their offshore companies record in the UAE or provided a UAE address for correspondence vis-à-vis their shell companies.