The OECD continues to update the status of jurisdictions with active CbC exchange relationships. Forty-nine bilateral exchange relationships have been activated by the UAE since September 2019, effective for fiscal years beginning on or after 1 January 2019. The first exchange of reports is expected in 2020.
In 2018, the UAE became a member of the Organisation for Economic Cooperation and Development (OECD) Inclusive Framework, Base Erosion and Profit Shifting (BEPS) Action Plan. As such, the UAE committed to implement the four BEPS minimum standards into UAE law, including BEPS Action 13 related to Transfer Pricing documentation and Country-by-Country (CbC) reporting. The automatic exchange of CbC reports is a minimum standard requirement for jurisdiction members of the Inclusive Framework.
For that purpose, in advance of issuing the CbC reporting regulation on 30 April 2019 (Cabinet of Ministers Resolution No 32), the UAE ratified relevant multilateral agreements which contribute to the implementation of automatic exchange of CbC reports.
OECD updated the status of activated exchange relationships for CbC reporting:
Forty-eight bilateral exchange relationships are activated by the UAE in September. This list was further updated in October (one more exchange relationship activated by the UAE), effective for fiscal years beginning on or after 1st January 2019 with the first exchange of reports expected in 2020.
Kindly note, the UAE appears to be a non-reciprocal jurisdiction regarding the automatic exchange of CbC reports, committed to sending CbC reports to below-mentioned listed exchange partners, but not receiving those from exchange partners.
In principle, MNE groups should only be required to file a CbC report once for each reporting fiscal year, in the jurisdiction of its UPE (or designated surrogate parent entity).
However, there may be cases where a constituent entity of a foreign MNE may be required to file the CbC report in the UAE if certain conditions are met (i.e. no CbC reporting obligations imposed in UPE jurisdiction, no qualifying competent authority agreement in effect between the UAE and the respective jurisdiction, or systematic failure in exchange of information between the UAE and the respective jurisdiction).
Based on recent OECD publications (Country-by-Country Reporting – Compilation of Peer Review Reports Phase 2, published on 3 September 2019; Action 13 Country-by-Country Reporting: Handbook on Effective Implementation, published on 29 September 2017), for jurisdictions which have activated the CbC MCAA, local filing of the CbC report in the UAE should not be necessary. We are awaiting confirmation from the UAE Ministry of Finance in the near future.
As on date, the OECD disclosed 49 exchange partners (CbC MCAA signatories) for the UAE. They will receive CbC reports from the UAE starting from fiscal year 2020 (FY20) regarding the reporting FY19:
Andorra, Argentina, Australia, Austria, Belgium, Brazil, Chile, Colombia, Croatia, Czech Republic, Denmark, Estonia, France, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Italy, Japan, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, San Marino, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, United Kingdom, Uruguay.
MNE groups should complete their CbC reporting obligations, starting with the notification (due in 2019) and the report (due in 2020). Moreover, we recommend conducting a review of CbC report data to proactively identify any potential risk areas.
This publication is of a general nature only. Specific professional advice must be obtained before making a decision. Our publication should not be considered legal advice or a substitute for seeking local legal advice. Laws and regulations in the UAE are changing constantly. The information contained within this publication is based on facts available as of 6 October 2019 and is subject to change.
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