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UAE Country by Country Reporting (CbCR)

As part of the continuing compliance requirements in the UAE and in conjunction with new shift through to taxation, reporting and compliance systems, the Ministry of Finance recently launched of a reporting system for multinational entities (MNEs). The New MNE Notification and Reporting System is in accordance with UAE’s Cabinet Resolution no. 44 of 2020 to organize the financial reports submitted by the multinational’s companies.

The reporting system is a core element of the Base Erosion and Profit Shifting (BEPS). The system enables big Multinational Groups to submit their country-by-country reporting (CbCR) separately and in an easier way, while providing a breakdown of the Multinational Group’s global revenue, profit, accrued income tax and other financial indices for each country in which the MNE group operates.

BEPS aims to prevent tax planning strategies used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying tax.

This has become a key requirement globally as tax authorities around the world obtain information with regards to where MNEs’ economic value is generated, where their profits are transferred, and where those profits’ taxes are paid globally, required greater efforts so as to lessen the gap in the lack of information exchanged.

Traditionally MNEs’ utilized transfer prices to move profits and revenues from higher tax jurisdictions to lower tax jurisdictions whilst using things such as tax stripping, tax evasion and tax avoidance strategies.

The Ministry of Finance (MoF) in conjunction with the FTA began receiving notifications through the system since November 5, 2020; and MNEs must register in the ‘MNEs Notification and Reporting System’ before December 31, 2020.

The UAE, Ministry of Finance (MoF) and the Federal Tax Authority (FTA) joined base erosion and profit shifting’s (BEPS) comprehensive framework in 2018. This initiative is being led by the OECD and G20.

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