Country-by-Country Reporting (CbCR)is the requirement of the Organization for Economic Co-operation and Development (OECD) through its Action 13 of Base Erosion and Profit Shifting (BEPS). It is initially introduced in the United Arab Emirates (UAE) with effect from the year 2019 through Cabinet Resolution No. 32 of 2019, which is now replaced by Cabinet Resolution No. 44 of 2020 and will be in effect.
As per Country-by-Country Reporting in UAE(CbCR) regulation, large Multinational Groups of Enterprises (MNEs) in the UAE have to file a CbC report to the Competent Authorities at the end of every Financial year.
It should provide details of the amount of revenue, profit/(loss) before tax, income tax accrued, income tax paid, Tax residence of Constituent Company, etc. for each such Company of MNE Group where MNE carries out its activities.
As per Cabinet Resolution No 44 of 2020, Country by Country Reporting in UAE (CbCR) requirements will be applicable to you if the following two conditions are met:
UAE entities to whom the Regulation is applicable need to comply with Notification & Reporting as below:
Country by Country Reporting UAE | CbCR Reporting UAE
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Each Ultimate Parent Entity of the MNE Group whose tax residence is in the UAE shall notify the Competent Authority that it is the Reporting Entity, no later than the last day of the Group’s Reporting Fiscal Year.
If CbCR (Country by Country Reporting) notification is not submitted within the due date by Ultimate Parent Entity, the administrative penalty will be charged AED 1,000,000/-. In addition to that administrative penalty of AED 10,000/-per day for which the failure continues (maximum up to 250,000/-).
It is applicable to each such Reporting Entity in the UAE for the current financial year. Such a UAE company should submit the CbC Report to the MOF within 12 months from the end of the current financial year.
The report shall include the following elements:
If CBC Report is not submitted within the due date, the administrative penalty will be charged AED 1,000,000/-. In addition to that administrative penalty amounting to AED 10,000/-per day for which the failure continues (maximum up to 250,000/-) also will be charged.
In case where Reporting Entity fails to maintain the documents and information required under this Resolution for a minimum period of five (5) years after the date of reporting the Report to the Competent Authority, an administrative penalty of UAE Dirhams One Hundred Thousand (AED 100,000) shall be imposed.
On failure to provide the required information to the Competent authority, an administrative penalty of UAE Dirhams One Hundred Thousand (AED 100,000) shall be imposed. An administrative Penalty of minimum UAE Dirhams Fifty Thousand (AED 50,000) to maximum of Five Hundred thousand (AED 500,000) shall be imposed in case of providing inaccurate or incomplete information by the Reporting Entity.
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The purpose of CbC reporting is to eliminate any gap in information between the taxpayers and tax administration with regards to information on where the economic value is generated within the MNE Group( Multinational Group of Entities) and whether it matches where profits are allocated and taxes are paid on a global level.
• To assess high-level transfer pricing risk
• To assess other BEPS-related risks and
• For economic and statistical analysis.
• CbCR is expected to give tax administrations a global picture of where MNEs’ profits, tax and economic activities are reported
• The ability to use this information to assess transfer pricing and other BEPS risks on a high level, so they can focus audit resources where they will be most effective
• CbCR is expected to give tax administrations a global picture of where MNEs’ profits, tax, and economic activities are reported
CbCR notification to be filed - Before the end of the financial year of the UPE
CbC Report should be filed within 12 months from the end of the financial year. Eg: the CBcR report for the financial year ending 31st Dec 2020 should be file on or before 31st Dec 2021.
Penalties ranging from AED 100,000 to AED 1.25 million for non-compliance with CBcR regulations.