CbC Reporting UAE

The Cabinet Resolution No. 32 of 2019 (the “Resolution”) on 30^th April 2019 introduced a Country-by-Country Reporting (“CbCR”) in the United Arab Emirates. The Resolution was also published in the UAE Ministry of Finance’s Official Gazette.Country-by-Country Reporting (CbCR) is in context of Organization for Economic Co-operation and Development (OECD) through its Action 13 of Base Erosion and Profit Shifting (BEPS).

CbC Reporting

As per Country by Country Reporting (CbCR) in UAE, businesses that have a legal entity or branch in UAE and are members of a multinational enterprise (MNE) group with consolidated annual turnover of more than AED 3.15 billion, a country-by- country report must be submitted within 12 months of the end of the reporting period.

For example, if the financial year is commencing on 1^st January 2019, the CbC report should be submitted by 31^st December 2020.

The purpose of  UAE 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.

Businesses need to prepare and file a CbC report with following matters included in it:

• Financial information related to the amount of revenues
• Profits/losses before income tax
• Income tax paid
• Income tax accrued
• Stated capital
• Accumulated earnings
• Number of employees
• Tangible assets other than non-cash or cash-equivalent assets,
• Details about business activities conducted and other disclosures and explanations provided by the MNE, with respect to each jurisdiction in which the MNE operates

There are two deadlines for CbCR. One is for CbCR notification and other is for CbC reporting.

Both should be done to the Ministry of Finance before the end of the current financial year of a concerned entity.

Penalties

There are four types of penalties on concerned entities if they fail to comply with the CbCR requirement. They are-

• An administrative fine of AED 100,000 is applicable in case of failure to keep the documents and information required under the Resolution for a period of no less than five years from the date on which the CbCR is submitted to the Competent Authority.
• An administrative fine of AED 100,000 is applicable in case of failure to provide the Competent Authority with any information required in accordance with the CbCR and notification requirements.
• Administrative fine of AED 1,000,000 (plus AED 10,000 for each day of failure up to a maximum of AED 250,000) is applicable in case of failure to report the information required on the reporting date fixed, or in case of failure to notify the Competent Authority, on or prior to the date fixed for reporting, of the intention to submit the CbCR with respect to a particular accounting period.
• Administrative fine of no less than AED 50,000 and not exceeding AED 500,000 is applicable in case of failure to report full and accurate information.

Total fines imposed for any failure or non-compliance may not exceed, within any financial reporting year, the sum of AED 1,000,000.

We are well aware and equipped for CbC reporting UAE and thus can provide timely and accurate CbC report for your business.

For any support on UAE CbCR, contact us today!