The Cabinet Resolution No. (32) of 2019 (the “Resolution”) on Country-by-Country Reporting (“CbCR”) was issued in the United Arab Emirates on 30 April 2019. On one hand, it is amended and covered to Cabinet Resolution No. (44) of 2020.
The Country-by-Country Reporting (“CbCR”) rules are issued pursuant to the guidance issued by the Organization for Economic Cooperation and Development (“OECD”) on CbCR. CbCR is intended for the UAE-headquartered Groups of companies and that are part of a multinational group which consist of two or more enterprises that are residents for tax purposes in different jurisdictions and with consolidated revenues equal to or exceeding to UAE Dirhams (“AED”) 3,150,000,000 in the preceding financial year.
The CbCR requirements are applicable to the UAE-headquartered Multinational Enterprises (MNE) Groups with financial reporting years starting on or after 1st of January 2019. For the aforementioned financial reporting year, the CbC report must be submitted latest by 31st of December 2020.
A strict and varying levels of administrative penalties is likely to be imposed to those concerned UAE taxpayers who will fail to comply with the CbCR requirements.
Country by Country Notification and Reporting
The CbCR requirements are applicable to the UAE-headquartered Multinational Enterprises Groups of companies meeting the above-mentioned criteria.
The UAE tax resident Ultimate Parent Entity of the MNE Group is required to submit the notification confirming that the notifying company is the Ultimate Parent Entity of the MNE Group, a resident in the UAE, and that the CbCR requirements are applicable to such MNE Group.
The submission of the CbCR notifications must be done no later than the last day of the financial reporting year of the MNE. The MNE Group whose financial year commencing on the 1ST of January 2019 shall submit their CbCR notification in the UAE by no later than the 31st of December 2019.
The UAE-headquartered Groups of companies which meet the above-mentioned criteria should comply with CbC Reporting legislation in the UAE.
The CbC Report includes quantitative and qualitative information about the MNE Group such as revenues, profits, employees count, business description, etc.
The submission of the CbC report should be within 12 months from the end of the reporting year of the MNE Group. The MNE Group whose financial year commencing on the 1st of January 2019 and ending by the 31st of December 2019, the CbC Report should be filed no later than December 31, 2020.
Penalties for non-compliance
Penalties will be served to those who will fail to comply with the Country-by-Country Reporting (CbCR) requirements. Such penalties are as follows:
An administrative fine of up to AED 1,000,000 will be given to those who failed to file the CbCR on time (plus AED 10,000 for each day of failure to submit. The fine could be up to AED 250,000.)
Failure to provide full and accurate information in the CbCR/CbCR Notification
An administrative fine of no less than AED 50,000 and not exceeding AED 500,000 is applicable will be given to those who failed to provide full and accurate information in the CbCR/CbCR Notification.
Failure to maintain information and documentation for five years is subject to a fine of AED 100,000.
Failure to provide any other information requested is subject to a fine of AED 100,000
Penalty process as per the legislation
Step 1: Identification of non-compliance by Ministry of Finance (MOF).
Step 2: Notification to the entity by Ministry of Finance, providing 14 days grace period to comply
Step 3: Ministry of Finance to issue penalty notice, if entity does not comply or does not provide reasonable excuse
These steps are for the period of 6 months)
Step 4: The entity can appeal within 30 business days or pay penalty within 30 days
Step 5: MoF appeal committee to confirm or reject the appeal within 60 days
Step 6: If appeal is rejected, entity to pay penalty within 30 business days
How can we help you?
In relation with the Country-by-Country Reporting, AMCA is happy to lend our hands to you and to your business in fulfilling and complying to the process, procedures, and submission of your CbCR Notification and also CbC Report. AMCA will do the following:
CbCR Notification – We provide assistance in preparing your ESR Notification which is needed to be shared with the Authority as a part of compliance of ESR.
CbC Report – We do the preparation of the ESR Report as per the requirement of the Ministry of Finance (MOF).