By Baron Laudermilk
The Dubai Financial Services Authority (DFSA) is preparing legislative changes that will bring the city into compliance with Organization of Economic Co-operation and Development (OECD) standards on the exchange of information. This could be a good development in the city that has more and more Chinese investment.
The SFSA is saying that this is an urgent change in its amendment to the Regulatory Law 2004. The amendment relates to the definition of a rivileged communication and comes from the DFSA relationship with a United Arab Emirates (UAE) working group, which is run by the UAE Ministry of Finance.
The group is working on assessing the UAE by the OECD Global Forum on Transparency and the Exchange of Information for Tax Purposes on the availability of, access to and exchange of information. The Forum Phase 1 review report on the UAE brought up concerns over the definition of rivileged communication and the implications it has for the exchange of information.
Currently whenever the DFSA requires a lawyer to present information, produce a document or answer a question, and doing so would involve the lawyer's disclosure of a "privileged communication" made by, on behalf of, or to the lawyer, the lawyer is entitled to refuse the request.
A lawyer is only obligated to make the disclosure in certain circumstances. Specifically, this can be when the person to whom, by, or on behalf of whom, the communication was made is a corporate body under official management or is being wound up, and the official manager or liquidator consents to the lawyer's disclosure. In all other cases, the person to whom, by, or on behalf of whom, the communication was made must consent to the lawyer's disclosure.
The definition of privileged communication currently is: "a communication attracting a privilege arising from the provision of professional legal advice and any other privilege applicable as legal advice, from the relationship of lawyer and client, or other similar relationship that does not include a general duty of confidentiality."
As soon as the change occurs, the DFSA, Dubai International Finance Centre and the UAE will all comply with the standards set by the OECD Global Forum within the required times that it listed.
This is good for both Dubai and the international community, as it will let the rest of the Middle East and Chinese investors know that Dubai Tax Standards are up to international standards. There is little doubt that this amendment will bring more business into the city and will attract more Chinese investors who are looking for a safe place to park their money.
