United Arab Emirates Introduces Country-By-Country Reporting Rules

United Arab Emirates Introduces Country-By-Country Reporting Rules December 27, 2019

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 the multinational group of enterprise (MNE) w revenue equal to or more than AED3.15billon in the financial year preceding the ‘financial reportin Parent Company(UPE) of the MNE is a UAE resident or If the UAE resident Constituent Entity (CE) o UPE outside the UAE is nominated as Alternate Parent Entity (APE)/ Surrogate Parent Company (SP resident CE which is neither UPE or an APE

Filing Requirements

The CbC report must be submitted within 12 months of the end of the reporting period. Eg. FY com 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 th for the MNE Group’s financial year starting on January 1st, 2019, CbCR notification should be subm later than December 31st, 2019.

Filing Format

A report including quantitative and qualitative information about the MNE Group. Information suc employees count, business description, etc. should be reported under three tables: Table I – This c quantitative information per tax jurisdiction such as third party and related party revenues, stated and paid, employee count, etc. Table II – This contains the qualitative information per constituent business activities undertaken during the year.Table III – This contains any additional information n the understanding of Tables I and II (e.g. assumptions on exchange rates, source of data, etc.)More awaited from MoF with respect to guidance on the completion and filing of the CbCReport in the U

Administrative penalties

Failure to retain the documents and information for at least 5 years – Penalty of AED 100,000Failur information to MOF – Penalty of AED 100,000Failure and delay in submission of CbC report within of reporting period – Penalty of AED 1,000,000 + 10,000 per day up to a maximum of AED 250,000 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 C The aforementioned records may be kept electronically, provided it is a compliant and readable

Language Considerations

Records to be maintained in English. If the records are maintained in any other language than En 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 engages in any act which could reasonably be deemed to have mainly aimed at avoiding the oblig the Resolution, such entity shall remain liable as if none of such arrangements have been conclud