UAE to start sharing financial data under CRS in 2018

Being a resident in UAE, will protect you from sharing financial data under CRS in 2018

“The Common Reporting Standard (CRS), developed in response to the G20 request and approved by the OECD Council on 15 July 2014, calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

The first reporting due date for the CRS in the UAE is 30 June 2018 and consequently by 30 June of the year following each reporting period. Reporting is an annual event.

The following are the effective dates for the implementation of the CRS in the UAE:

  • Pre-existing Accounts to be subjected to due diligence procedures are thosein existence as at 31 December 2016.
  • New Accounts to be subjected to due diligence procedures are those openedon or after 1 January 2017.
  • The first CRS reporting period ends on 31 December 2017.
  • The review of Pre-existing High Value Individual Accounts at 31 December2016 must be completed by 31 December 2017.
  • The Reportable Pre-existing High Value Accounts need to be reported by 30June 2018.
  • The review of Pre-existing Lower Value Individual Accounts at 31 December2016 must be completed by 31 December 2018.
  • First exchanges of information by the UAE Competent Authority to theReportable jurisdictions will occur on or after 30 September 2018.

The UAE along with Saudi Arabia, Bahrain Qatar and Kuwait will start collecting data on individuals and companies starting January this year and will be ready to share the data with other international jurisdictions starting 2018.

As part of the data collection, starting January 2017, banks and financial institutions could ask their customer to make self-declarations or share the data on their tax status.

Under the CRS agreement, from January 2016, financial institutions in more than 50 countries around the world have begun collecting information on their clients and their accounts. This data will be passed on to the clients’ country of residence in 2017.

A further 47 countries will be starting to collect data in 2017, ready to exchange it in 2018. The UAE and all Gulf countries except Oman are in this list. This exchange of information will be annual.

The US made the first move in its 2010 Foreign Account Tax Compliance Act (Fatca) that forced foreign banks to start handing over their clients’ data or face a 30 per cent tax. Under both Fatca and the CRS, information will be automatically transferred bringing transparency in global fund movements and tax compliance.

The CRS sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

In a typical scenario, if one lives in one country and has assets in another, under CSR his information will be shared between countries and the local tax authority in his country (where he is citizen or domiciled for tax purposes) will automatically receive information on the financial assets he owns overseas.

Reporting Financial Institutions are required to perform due diligence procedures and report information on all accounts held by an account holder who is resident for tax purposes in a jurisdiction other than the USA or the UAE jurisdiction. The USA is excluded because jurisdictions will be reporting to the USA under FATCA.

Resident Person” in the UAE means:

A. An Individual:

a) Any UAE National
b) An individual who is a resident in UAE with:

  1. a valid Emirates ID and
  2. a valid Residency Visa.

B. An Entity:

a) An entity which is incorporated, registered, managed and controlled within the territory of the UAE.

Download UAE CRS GUIDELINES NOTES

This article / these notes are designed to provide information in relation to the implementation of the Automatic Exchange of Information for tax purposes – the Common Reporting Standard – CRS in the UAE. It should be noted that the Guidance Notes do not have the force of law. If you are in any doubt as to your obligations under the law you should seek independent professional advice. Responsibility cannot be accepted for any liability incurred or loss suffered as a consequence of relying on any matter published herein.

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