On 30 April 2019, the Cabinet Resolution No. 32 of 2019 (the “Resolution”) on Country-by-Country Reporting (“CbCR”) was issued in the United Arab Emirates (“UAE”).
The CbCR rules outlined under the Resolution are in line with the guidance issued by the Organization for Economic Cooperation and Development (“OECD”) on CbCR. The Resolution introduces a CbCR requirement (either filing or notification) for entities that are tax resident in the UAE, and that are part of a multinational group with consolidated revenues equal to or exceeding UAE Dirhams (“AED”) 3.15 billion (approx. EUR 764 million or USD 858 million) in the preceding financial year. According to the Resolution, CbCR requirements are applicable to ‘financial reporting years’ starting on or after January 1st 2019. Accordingly, for the financial reporting year starting on January 1st 2019, the CbC report must be submitted latest by December 31st 2020. Failure to comply with the CbCR requirements is likely to expose the UAE taxpayers concerned to stringent and varying levels of administrative penalties.
|Eligibility||Entities that are tax residents in UAE and are part of multinational group of enterprise (MNE) with consolidate revenue equal to or more than AED3.15billon in financial year preceding the ‘financial reporting year.If the Ultimate Parent Company(UPE) of the MNE is a UAE resident orIf the UAE resident Constituent Entity (CE) of the MNE group with UPE outside the UAE is nominated as Alternate Parent Entity (APE)/ Surrogate Parent Company (SPE)orIf MNE has UAE resident CE which is neither UPE or an APE|
|Filing Requirements||The CbC report must be submitted within 12 months of the end of reporting period. Eg. FY commencing from 1st January 2019, the CbC report must be submitted by 31st December 2020.|
|Notifying MOF||CbCR notifications must be submitted no later than the last day of the financial reporting year of the MNE. Accordingly, for the MNE Group’s financial year starting on January 1st 2019, CbCR notification should be submitted in the UAE by no later than December 31st 2019.|
|Filing Format||A report including quantitative and qualitative information about the MNE Group. Information such as revenues, profits, employees count, business description, etc. should be reported under three tables:Table I – This contains the quantitative information per tax jurisdiction such as third party and related party revenues, stated capital, taxes accrued and paid, employee count, etc.Table II – This contains the qualitative information per constituent entity on the main business activities undertaken during the year.Table III – This contains any additional information necessary to facilitate the understanding of Tables I and II (e.g. assumptions on exchange rates, source of data, etc.)More Information is awaited from MoF with respect to guidance on the completion and filing of the CbCReport in the UAE|
|Administrative penalties||Failure to retain the documents and information for atleast 5 years – Penalty of AED 100,000Failure to provide information to MOF – Penalty of AED 100,000Failure and delay in submission of CbC report within 12 months of the end of reporting period – Penalty of AED 1,000,000 + 10,000 per day upto a maximum of AED 250,000Failure to ensure completeness and accuracy of information in the CbC report- Penalty of AED 50,000- AED 5,00,000|
Important Notes :
|Retention of effective records||Retain Effective records for 5 years following the date on which the CbC Report is submitted to Competent Authorities. The aforementioned records may be kept electronically, provided it is a compliant and readable electronic format.|
|Language Considerations||Records to be maintained in English. If the records are maintained in any other language than English then it needs to be translated to English when requested by Competent Authority|
|Reporting Avoidance||In case a tax resident entity that is subject to CbC reporting / notification requirements, concludes any arrangements or engages in any act which could reasonably be deemed to have mainly aimed at avoiding the obligations imposed under the Resolution, such entity shall remain liable as if none of such arrangements have been concluded.|