- Keeping with United Arab Emirates (UAE) commitment to implement recommendations of Action Plan 13 - Base Erosion and Profit Shifting (BEPS), UAE issued the Cabinet Resolution No. 32 of 2019 (the Resolution) on Country-by-Country Reporting (CbCR) on 30 April 2019. The Official Gazette of Ministry of Finance of UAE recently published the resolution.
- Presently, UAE regulations do not require taxpayers to prepare master files and local file. Similarly, UAE doesn't need filing or reporting of related party transactions (such as Form Controlled Transactions Disclosure Form as prescribed in Saudi Arabia or Form No. 3CEB as prescribed in India).
- Traditionally, the Gulf Co-operation Council (GCC) isn't seen as a region where transfer pricing or taxation proposals are a priority for the Government. However, with the introduction of CbCR in Qatar, KSA, and now in UAE, multinationals in the region would need to understand the importance of transfer pricing and need to be more cautious about intra-group transactions.
- It is recommended for multinationals to proactively revisit their existing transfer pricing policy and business structure to mitigate/avoid future risk in the transfer pricing domain.
We have tabularized essential aspects of the Resolution below for easy understanding.
|1||Threshold for applicability||The consolidated turnover of group >= AED 3.15 billion (approx Euro 750 million) in preceding reporting fiscal year|
|2||Applicable from which reporting fiscal year||The reporting fiscal year starting on or after 1
|3||Filing obligation including deadline
*In certain conditions as provided in the Resolution, Constituent entity resident in UAE may also be required to submit detailed CbCR in UAE instead of Ultimate Parent Entity/Surrogate Parent Entity.
||Contents of CbCR||
Following country-wise information should be submitted wherever the group has presence/activity:
||Maintenance of records required||Records need to be maintained until five years from the date on which CbCR is submitted|
||Administrative Offences and Penalties||
* Except this penalty, total penalty for an entity for one reporting fiscal year shall not exceed AED 1,000,000.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.