On April 8, 2021, the US Treasury Department published an updated List of Countries Requiring Cooperation With An International Boycott  (the “Treasury List”). Significantly, Treasury announced that it had removed the UAE from the Treasury List following the UAE’s repeal of its law requiring participation with the Arab League Boycott of Israel and subsequent implementation of the new policy.

In connection with its establishment of full diplomatic ties with Israel last year under the UAE-Israel Abraham Accords, the UAE repealed its boycott law by issuing Federal Decree Law No. 4 of 2020, abolishing Federal Decree Law No. 15 of 1972 Concerning the Arab League Boycott of Israel.  Our blog post regarding the Arab League boycott and UAE’s repeal of the boycott law, which includes an overview of US antiboycott rules, can be found here.

The current Treasury List consists of the following countries:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • Yemen

The removal of the UAE is the only change to the Treasury List, which Treasury typically issues quarterly. Treasury had previously announced in its last publication of the Treasury List on October 13, 2020, that it was “monitoring” the UAE’s situation following its repeal of the boycott law.

As a result of the UAE’s removal from the Treasury List, taxpayers are no longer required to report their operations in the UAE pursuant to Section 999 of the Internal Revenue Code. In addition, certain clauses in agreements with UAE entities would no longer be interpreted as agreements to participate in the boycott of Israel, such as an agreement to comply with UAE laws and regulations. As a result, it will no longer be necessary for a US taxpayer to report such a clause in its tax return, and Treasury will not penalize taxpayers for agreeing to such a clause.  While this development limits the types of clauses originating from the UAE that would be considered by the Treasury Department to be boycott-related, it is important for companies to understand that boycott requests can originate from anywhere, even countries not on the Treasury List.  Companies should continue to monitor contracts and other incoming documents from the UAE for potential requests to comply with the boycott.  Treasury’s removal of the UAE from the Treasury List does not impact the anti-boycott rules administered by the US Commerce Department through Part 760 of the Export Administration Regulations.  Boycott requests that were prohibited and reportable to Commerce prior to Treasury’s update of the Treasury List remain prohibited and reportable today.  It is possible, though, that Commerce will update its regulations in the future to reflect the UAE’s repeal of the boycott law.

Author

Ms. Contini focuses her practice on export controls, trade sanctions, and anti-boycott laws. This includes advising US and multinational companies on trade compliance programs, risk assessments, licensing, review of proposed transactions and enforcement matters. Ms. Contini works regularly with companies across a wide range of industries, including the pharmaceutical/medical device, oil and gas, and nuclear sectors.

Author

Alex advises clients on compliance with US export controls, trade and economic sanctions, export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and antiboycott controls. He counsels on and prepares filings to submit to the US Government's Committee on Foreign Investment in the United States (CFIUS) with respect to the acquisition of US enterprises by non-US interests. Moreover, Alex advises US and non-US companies in the context of licensing, enforcement actions, internal investigations, compliance audits, mergers and acquisitions and other cross-border transactions, and the design, implementation, and administration of compliance programs. He has negotiated enforcement settlements related to both US sanctions and the EAR.

Author

Callie C. Lefevre is an associate in the Washington, DC office where she is a member of the International Practice Group. Her practice is focused on all aspects of International Trade law, particularly compliance with US export controls, trade and economic sanctions, and US foreign investment restrictions. *Admitted in New York only. Practice limited to matters and proceedings before US courts and federal agencies.

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Brandon advises clients on a wide variety of tax issues, ranging from large tax case litigation and administrative dispute resolution at IRS Exam and Appeals to structuring outbound and inbound IP and real estate transactions both inside and outside the M&A context. Brandon has also handled corporate tax planning for both domestic and international transactions, including implementing new supply chain structures and intercompany financing arrangements. He also advises clients on substantive and procedural challenges to IRS and Treasury guidance under the Administrative Procedure Act. Brandon has also handled a diverse array of tax issues for clients in both controversy and planning postures, including transfer pricing valuation disputes, tax treaty interpretation, real estate sale and lease transactions, FDII and BEAT planning, and conservation easement transaction planning and dispute resolution.

Author

Borys Dackiw has been a partner of Baker McKenzie since 1995. In 2008 Mr. Dackiw was appointed managing partner of the Gulf offices (including Abu Dhabi, Doha, Riyadh and Bahrain), coordinating the opening of the Abu Dhabi and Doha offices and the merger in the UAE with Habib Al Mulla in July 2013. Mr. Dackiw is head of the Compliance practice in the Gulf and also advises on mergers & acquisitions (including privatizations), private equity and general corporate and commercial law.