The UAE signed the Agreement on Mutual Administrative Assistance in Tax Matters (MAC) on 21 April 2017 thus becoming the 109th jurisdiction to do so. MAC is a multilateral agreement which provides the legal framework for the exchange of information for tax purposes between the countries which have signed to this Agreement. MAC covers all taxes except customs duties and provides for exchange of information, tax examinations and assistance in tax collection while providing safeguards for the protection of taxpayers’ rights. At the time of this article all G20, BRIC and OECD countries along with major financial centres and developing countries are participants in MAC.
The signing of MAC is another step towards the UAE’s implementation of the Common Reporting Standards (CRS) for Automatic Exchange of Information (AEOI) where jurisdictions obtain information from their financial institutions and automatically exchange this information on an annual basis with other counties. The first reporting date for CRS in the UAE is 30 June 2018. The next step is for the MAC to be ratified by the UAE Government.
According to CRS, all accounts held by an account holder who is resident for tax purposes in a jurisdiction other than the USA or the UAE will be considered reportable under CRS. US tax residents are covered under UAE FATCA. Individuals are tax resident in the UAE if they have both, a UAE residence visa and an Emirates ID. Entities are tax resident in the UAE, if, they are incorporated, registered, managed and controlled in the UAE. Tax residency certificates are issued where the UAE has a bilateral agreement to avoid double taxation. The UAE has signed such agreements with 104 jurisdictions.
Under CRS, the name, address, jurisdiction, Tax Identification Number (TIN), date and place of birth, account numbers, financial institution name and account balance of an individual will be mutually shared with the Reportable partner jurisdiction.
Whereas the UAE is a predominantly tax free jurisdiction with no federal corporate or income tax (except on oil companies and banks) it is in the process of introducing Value Added Tax (VAT) from 1 January 2018 along with other Gulf Cooperation Council Countries (GCC) at a likely rate of 5%.
Vistra UAE, based in the Dubai International Financial Centre (DIFC) in the emirate of Dubai has been in the region since 2010 and is well positioned to assist in the incorporation of entities choosing from among the 45 free zones in the country. To keep these entities in good legal standing, we provide accounting, compliance, managerial and corporate secretarial services. Our close relationships with many of the 50 plus banks in the UAE allows us to expedite the bank account opening process for our clients. To know more about our capabilities please reach out to Barbara.
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