The Federal Tax Authority (FTA) has announced that businesses must complete Corporate Tax registration within 90 days from the Date of Incorporation / MOA.
The United Arab Emirates (UAE) has been actively working towards enhancing its tax framework and cooperating with international tax authorities. In line with this effort, the UAE Ministry of Finance (MoF) has implemented the Foreign Account Tax Compliance Act (FATCA ) and the Common Reporting Standard (CRS). In this blog post, we will explore the implications of these regulations for businesses in the UAE.
What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is a US law that requires financial institutions outside the US to report financial information about US citizens and residents to the US Internal Revenue Service (IRS). The UAE has signed an inter-governmental agreement (IGA) with the US to implement FATCA, which requires UAE financial institutions to identify and report US account holders to the UAE tax authorities.
What is CRS?
The Common Reporting Standard (CRS) is a global standard for the automatic exchange of financial account information between tax authorities. The UAE has adopted CRS, which requires financial institutions to collect and report financial information about non-resident account holders to the UAE tax authorities. This information is then exchanged with the tax authorities of the account holder's country of residence.
Implications for Businesses in the UAE
The implementation of FATCA and CRS has significant regulations for businesses in the UAE, particularly financial institutions. These institutions are required to:
- Identify and report US account holders under FATCA
- Collect and report financial information about non-resident account holders under CRS
- Implement due diligence procedures to identify reportable accounts
- Submit reports to the UAE tax authorities
Non-compliance with FATCA and CRS can result in significant penalties, including fines and reputational damage. Additionally, non-financial businesses, such as accounting and tax advisory firms , may also be impacted by these regulations.
Action Steps for Businesses
To ensure compliance with FATCA and CRS, businesses in the UAE should take the following steps:
1. Assess FATCA and CRS applicability to your business
2. Implement necessary procedures and systems to collect and report required information
3. Ensure compliance with reporting requirements and deadlines
4. Seek professional advice if needed to ensure compliance
Conclusion
The UAE's rollout of FATCA and CRS is important for businesses there. Getting a good grip on what these rules mean and following them can help avoid fines and harm to your reputation. At Reyson Badger , we're here to help you deal with these challenges and keep your business in line with the regulations. Stay informed about what’s going on, and let us use our expertise to help manage risks and improve your tax strategy.
