As part of the OECD Base Erosion and Profit Shifting (BEPS) standard, the Emirates introduced two BEPS standards, on April 30, 2019:
– Economic Substance Regulation (ESR)
– Country-by-Country Reporting (CbCR).
The CbCR legislation only applies to the parent companies of multinationals whose consolidated turnover exceeds USD 857 million in the previous financial year. These companies must file a country-by-country declaration.
The content of the CbCR report
The report should indicate at country level:
– Profits / losses
– Income tax paid
– Number of employees
– Assets for each country
Country-by-country reports must be submitted to the Ministry of Finance (MoF) within 12 months of the end of the fiscal year of a group of multinational enterprises. For the first year of reporting (2019), multinational corporate groups headquartered in the United Arab Emirates and whose calendar year ends will be required to submit country-by-country reports by December 31, 2020.
Fines scheduled for non-compliance:
– Failure to file a CbC report or a CbCR notification on time: AED 1 million plus AED 10,000 per day late up to a maximum of AED 250,000
– Failure to provide complete and accurate information in the CbC report or the CbCR notification: AED 50,000 to AED 500,000
– Failure to keep documents and information for at least five years: AED 100,000
– Failure to provide any other information requested by the MoF: AED 100,000