Country-by-Country Reporting in the UAE
The UAE Ministry of Finance (MoF) vide a Cabinet of Minister’s Resolution No 32 of 2019 (“the Resolution”) issued a regulation in July 2019 with respect to submission of reports by multinational companies i.e. on Country-by-Country Reporting (CbCr) in the UAE. The introduction of this regulation is in line with the UAE’s commitment of implementing the BEPS minimum standards on Transfer Pricing documentation and country-by-country reporting.
The Resolution states that in case a multinational enterprise (MNE) group has consolidated group revenues equal to or more than AED 3.15 billion (approx. USD 855 million) during the fiscal year immediately preceding the reporting fiscal year, then the ultimate parent entity or the constituent entity of such MNE group is required to undertake specified compliances under the resolution. Accordingly, the following entities shall have an obligation to file a notification or required to report with the prescribed contents within the specified timelines:
- Each Ultimate Parent Entity of a multinational enterprise (MNE) group which is resident for tax purposes in the UAE; or
- Constituent Entity resident for tax purposes in the UAE, which is not the Ultimate Parent Entity of an MNE Group.
The Resolution requires the UAE based tax resident entity of an MNE group to notify the Competent Authority which is defined as the UAE MoF, whether it is an ultimate parent entity or will be acting as a surrogate parent entity for the purposes of undertaking the required CbC reporting; and where the constituent entity is not the ultimate parent entity or surrogate parent entity, notify MoF the identity and tax residence of the actual reporting entity and its tax jurisdiction.
The above notification is required to be sent to the MoF before the end of the financial reporting year of the MNE group. The CbC report obligation is required to be filed within 12 months from the end of the financial reporting year of the MNE group. Penal provisions are applicable on failure to retain documentation for the minimum prescribed period, providing MoF with the required information or report the necessary information within the prescribed timelines. Further details are awaited in due course.
At PKF, we have an in-house team of tax professionals and consultants that can assist clients in getting a clear understanding of the CbCr UAE requirements, conducting relevant studies on whether the client’s business(es) are covered under the regulations and assist with relevant compliance.