Country by Country Reporting (CbCR) in UAE
CbCR, or Country-by-Country Reporting, is a requirement under Base Erosion and Profit Shifting (BEPS) Action 13, which is endorsed by the Organization for Economic Cooperation and Development (OECD) and implemented in various countries, including the United Arab Emirates (UAE). CbCR is aimed at enhancing transparency in the global tax landscape by requiring multinational enterprises (MNEs) to provide information on their global operations, including revenue, profit, taxes paid, and other key financial and operational data on a country-by-country basis. Here are some key considerations for CbCR in the UAE:
What is the Reporting Obligation?
MNEs that meet the CbCR threshold in the UAE are required to file a Country-by-Country Report with the UAE Federal Tax Authority (FTA) as part of their annual tax filing. The threshold for CbCR in the UAE is AED 3.15 billion (approximately USD 861 million) or equivalent in other currency. CbCR is applicable for MNE groups with headquarters in the UAE and financial reporting years beginning on or after January 1, 2019.
The ultimate parent entity of the MNE group, or a designated surrogate entity, is typically responsible for filing the CbCR in the UAE. The reporting entity should be identified based on the applicable criteria outlined in the UAE regulations.
What are the Information to be Reported?
The CbCR should provide a comprehensive overview of the global operations of the MNE group, including information on revenue, profit or loss before tax, income tax paid, income tax accrued, stated capital, accumulated earnings, tangible assets, and employees. The information should be reported on a country-by-country basis, covering all jurisdictions where the MNE group has a presence.
What are the reporting format and deadlines?
The CbCR in the UAE should be filed in the format specified by the FTA, and the deadline for filing is within 12 months from the end of the MNE group’s financial year. The reporting entity should ensure that the CbCR is filed in a timely and accurate manner to comply with the UAE regulations.
- Compliance with Confidentiality Requirements: The information provided in the CbCR is subject to confidentiality requirements under the UAE regulations. MNEs should ensure that the information is handled and disclosed in accordance with the confidentiality rules and guidelines specified by the FTA.
- Compliance with Other Reporting Requirements: In addition to CbCR, MNEs operating in the UAE may also have other reporting requirements, such as local file documentation, master file documentation, and other tax-related disclosures. It’s important to ensure compliance with all relevant reporting obligations to avoid potential penalties or sanctions.
How HLB HAMT can support?
It’s important to note that CbCR requirements may vary from country to country, and it’s crucial to comply with the specific regulations and guidelines of the respective jurisdiction where the MNE operates. Consulting with tax professionals or transfer pricing specialists is recommended to ensure compliance with the applicable regulations and to mitigate any potential risks. HLB HAMT has expert tax team who can provide professional assistance from tax experts or transfer pricing specialists to ensure that the reporting is compliant with UAE regulations and best practices.
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