Italy and Estonia are blocking the inclusion of the UAE in an EU blacklist of countries which are deemed tax havens, documents seen by Reuters show.
Foreign ministers are due to make a final decision on the issue tomorrow with the Arab Sultanate of Oman expected to appear on the expanded draft list, EU documents show.
The 28-nation EU set up the blacklist after revelations of widespread tax avoidance schemes used by corporations and wealthy individuals to lower their tax bills.
Blacklisted jurisdictions face reputational damage and stricter controls on their financial transactions with the EU, although no EU sanctions have yet been agreed by European states.
Last week EU states blocked the adoption of another blacklist of countries that show deficiencies in countering money laundering and terrorism financing, after pressure from Saudi Arabia, the United States and Panama.
READ: EU considers adding UAE, Oman on tax haven blacklist
At a closed-door meeting on Friday, the Italian representative said the UAE should be given until the end of this year to change its rules and comply with EU tax standards, a document shows.
Italy said the UAE — a federation of emirates, which include the top financial hubs of Dubai and Abu Dhabi — had “constitutional constraints” that justified its delay in changing rules.
Most of over 60 jurisdictions monitored across the world by the EU were given one year, until the end of 2018, to comply with EU standards and avoid being blacklisted.
The EU blacklist originally included 17 jurisdictions but shrank to five after some listed states changed their tax rules. The list currently comprises Samoa, Trinidad and Tobago, and three US territories: American Samoa, Guam and the US Virgin Islands.