The Cabinet Resolution No. 32 of 2019 (the “Resolution”) on 30th 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).
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 1st January 2019, the CbC report should be submitted by 31st 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:
Filing Due Date of CbCR
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.
There are four types of penalties on concerned entities if they fail to comply with the CbCR requirement. They are-
Total fines imposed for any failure or non-compliance may not exceed, within any financial reporting year, the sum of AED 1,000,000.
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