In the United Arab Emirates, on April 30, 2019, the Cabinet Resolution No. (32) of 2019 (the “Resolution”) on Country by Country Reporting (CbCR) was released. On the one hand, it has been modified and is now covered by Cabinet Resolution No. (44) of 2020. The Organization for Economic Cooperation and Development’s (“OECD”) guidelines on Country by Country Reporting (“CbCR”) form the basis for the standards that have been established.
The CbCR requirements apply to the following:
With financial reporting years beginning on or after January 1, 2019, Multinational Enterprises (MNE) Groups with headquarters in the UAE are subject to the CbCR standards. The CbC report for the preceding financial reporting year must be provided by December 1, 2020; otherwise, various administrative fines may be levied on those worried UAE taxpayers. They won’t adhere to the CbCR criteria. Thus this will happen.
Companies with their corporate headquarters in the UAE that fulfill the qualifications mentioned earlier are subject to the CbCR regulations. The notice must be sent by the Ultimate Parent Entity of the MNE Group, a UAE tax resident, stating that the CbCR criteria apply and that the notifying business is the Ultimate Parent Entity of the MNE Group, a resident of the UAE.
The CbCR notifications must be sent by the end of the MNE’s financial reporting year. For example, the MNE Group must file its CbCR notice in the UAE no later than December 31, 2022, as its financial year begins on January 1, 2022.
Companies with headquarters in the UAE that fulfill the abovementioned requirements must adhere to local CbC Reporting laws. The CbC Report provides quantitative and qualitative data on the MNE Group, including its earnings, sales, number of employees, company description, etc.
The CbC report must be submitted within a year after the MNE Group’s reporting year’s conclusion. For the MNE Group, for instance, the CbC Report must be submitted by December 31, 2023, since its fiscal year begins on January 1, 2022, and ends on December 31, 2022.
According to the following, the Resolution imposes four different administrative fines for UAE tax-resident entities subject to the CbC reporting and notification requirements:
Failure to maintain the records necessary to comply with the Resolution for a minimum of five years after the CbCR is presented to the Competent Authority will result in an administrative fine of AED 100,000.
Failure to provide any information necessary to the Competent Authority in compliance with the CbCR and notification requirements may result in an administrative punishment of AED 100,000.
Failure to submit the CbCR by the deadline set for submission or failure to notify the Competent Authority of your intention to submit the CbCR on or before the deadline set for submission will result in an administrative fine of AED 1,000,000 (plus AED 10,000 for each day of failure up to a maximum of AED 250,000).
Failure to provide complete and correct information may result in an administrative punishment of up to 500,000 AED but not less than 50,000 AED.
Under the current legislation of the UAE and international tax treaties, a company should be regarded as a tax resident in the UAE if it was incorporated or founded there or has its place of effective management there.
Concerning Country by Country Reporting, Farahat & Co. is delighted to assist you and your company in carrying out and adhering to the process, processes, and filing of your CbCR Notification and CbC Report. Our skilled professional will thus take the following steps:
Read More : What is Corporate Tax and How does it Affect Company Owners in the GCC?