Caisse de depot et placement du Québec (CDPQ) has announced a major investment jointly with a partner from Dubai in the Jebel Ali Free Zone, where corporate taxes are zero.
La Caisse and DP World, the port operator in the United Arab Emirates, will jointly invest $6.3 billion ($3.1 billion for la Caisse) in this joint venture. And wool stocks of Quebec residents will own 22% of the industrial zone and the port of Jebel Ali.
But Caisse is also acquiring shares in the Jebel Ali Free Zone, “the largest in the Middle East” where 150 of the “Fortune 500” companies are located, said CDPQ’s press release, published today.
Companies and individuals at 0%
However, this free zone, which resembles a tax haven, has already attracted 8,700 companies with its distinct taxation and lax regulatory environment.
On the Jebel Ali website, after consulting Newspaperit’s a great process and we promise “0% corporate tax for 50 years” and “0% personal income tax”.
This investment in the UAE and especially in the free zone is surprising Frank Yovanovitch, Professor of Economics and Finance at TÉLUQ University.
It is known as a tax haven. Also, the UAE has often been flagged with money laundering issues and is opaque. The fund’s decision is surprising, and I am confused about it,” he analyzed during an interview with Newspaper.
For him, the Quebec Foundation must set a good example, and this investment sends the wrong message. “It’s as if they were saying that making money is more important than respecting morals,” he explains.
This investment also appears to go against the words of Caisse de Depot’s senior president, Charles Emond, on tax havens.
Last year, before elected officials in Quebec, Mr. Emmond said he was willing to sell investments in companies that don’t pay their fair share of taxes, even at a loss.
Respect all laws
interrogated by Newspaper, The foundation has not commented directly on the acquisition of the free zone, but it says “it respects all laws and fulfills its tax obligations.”
“Our joint venture is expected to be taxed at a rate of 15%,” said company spokeswoman Kate Monfitt.
DP World is not subject to income tax “on its activities in the UAE, but its international subsidiaries pay the tax”, assures the fund.
In general, CDPQ asserts that the port is a center of world trade. More than 150 companies from Quebec and Canada operate in Dubai, including CAE and Couche-Tard.
In collaboration with Pascal Dugas Bourdon
What is a free zone?
A free zone is a geographic area of a territory that offers tax advantages. This may include, for example, tax credits on corporate profits, tax deductions for individuals, or exemptions from customs duties. The goal is to attract investors and develop economic activity in an area that is considered a priority by the authorities. Free zones are often located at major ports or near borders.
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