Insights July , 2019

UAE Issues Country-by-Country Reporting Rules

The new Country-by-Country (“CbC”) Reporting Rules were issued by the UAE Ministry of Finance (“MoF”) introducing formal regulations for demonstrating economic substance, effective 30 April 2019 in line with OECD Inclusive Framework.

The CbC Reporting Rules are effective for financial years commencing on or after 1 January 2019 (i.e., FY19 shall be the first reporting period).

The UAE CbC Reporting Rules apply to large Multinational Groups of Entities (“MNE”), as follows:

  • With consolidated revenue of at least United Arab Emirates Dirhams (AED) 3.15 billion (approximately United States Dollars (USD) 857 million) in the financial year immediately preceding the reporting period, based on the consolidated financial statements of that preceding year (i.e., FY18); and
  • If the Ultimate Parent Entity (“UPE”) of the MNE group is resident in the UAE; or
  • If a UAE-resident Constituent Entity (“CE”) of the MNE group (with its UPE outside the UAE) is nominated as the Alternate Parent Entity (“APE”); or
  • If the MNE group has a UAE-resident CE, which neither the UPE or an APE.

The purpose of CbC Reporting is to eliminate any gap in information between the taxpayers and tax administrations with regards to information on where the economic value is generated within the MNE group and whether it matches where profits are allocated and taxes are paid on a global level.

Assuming the minimum consolidated revenue threshold is met, generally, if the parent company headquartered outside the UAE is filing the CbC report in its home jurisdiction within the OECD Base Erosion and Profit Shifting (“BEPS”) project, then the UAE entities, will only be required to submit a notification to the UAE Ministry of Finance that its parent company is making the CbC filing.

Subsidiaries in the UAE that are part of a qualified multinational group and which is a UAE tax resident will need to submit a CbC notification before the last day of the financial year (and submit the first CbC report 12 months after the last day of the fiscal year end, if applicable).

The OECD disclosed exchange partners (CbC MCAA signatories) for the UAE.  They will receive CbC reports from the UAE starting from fiscal year 2020 (FY20) regarding the reporting FY19 and include the following countries:

Andorra, Argentina, Australia, Austria, Belgium, Brazil, Chile, Colombia, Croatia, Czech Republic, Denmark, Estonia, France, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Italy, Japan, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, San Marino, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, United Kingdom, Uruguay.

The information will need to be submitted to the UAE MoF which will then remit this data with other countries in the OECD BEPS.

Disclaimer on Use

The information presented is intended for general information only and is not meant to be a substitute for professional advice or to be used for decision-making.

Professional advice relies on an assessment and understanding of the specific situation for each person and, therefore, the application of changing laws and regulations in the UAE, will vary widely from case to case.

The information contained herein is based on facts available from sources we believe to be credible at the time of publication and is subject to change.