Country by Country Reporting
Country by Country (CbC) Reporting is part of Action 13 of the Base Erosion and Profit Shifting (BEPS) initiative led by the Organization for Economic Co-operation and Development (OECD) and the Group of Twenty (G20) industrialized nations.
BEPS Action 13 requires large Multinational Groups of Entities (MNEs) to file a CbC Report that should provide a breakdown of the Multinational Group’s global revenue, profit before tax, income tax accrued, and some other indicators of economic activities for each jurisdiction in which the MNE operates.
CbC Reporting requirements came into effect for financial years starting on or after January 1st 2019 through CABINET RESOLUTION NO (44) OF 2020 in UAE. In the UAE, CbCR requirements are applicable to the UAE-headquartered MNE Groups with ‘financial reporting years’ starting on or after January 1st 2019. Accordingly, for the financial reporting year starting on January 1st 2019, the CbC report must be submitted by December 31st 2020 at the latest.
UAE-headquartered Groups of companies which meet the following criteria should comply with CbC Reporting legislation in the UAE:
a) If the entity is an Ultimate Parent Company of the MNE group who is tax resident in the UAE &
b) If the consolidated revenue of the MNE is equal to or more than AED 3,150,000,000 in the preceding financial year.
CbCR Notification filing with the competent authority
When to file the notification?
Every Ultimate Parent Company (UPC) with tax residence in the UAE shall notify the Competent Authority that it is the Reporting Entity no later than the last day of the financial reporting year of the group. Accordingly, for the MNE Group’s financial year starting on January 1st 2019, CbCR notification should be submitted in the UAE by no later than December 31st 2019.
Penalty for not notifying the authority within due date
- AED 1000,000 % AED 10,000/day for which failure is continues up to max of AED 250,000/-.
CbCR Report filing with the competent authority
When to file the report?
The CbC report should be filed within 12 months from the end of the reporting year of the MNE Group. E.g. With respect to the financial year commencing on January 1st 2019 and ending by December 31st 2019, the CbC Report should be filed no later than December 31, 2020.
Contents of the report
The Report shall include the following elements:
- Aggregate information related to the amount of revenue, profits (losses) before income tax, income tax paid,income tax accrued, stated capital, accumulated earnings, number of employees,non-monetary or cash equivalent tangible assets in respect of each country in which the MNE Group carries out its activities.
- An identification of each Constituent Company of the MNE Group indicating the jurisdiction of tax residence of such Constituent Company and where different from such jurisdiction of tax residence, the jurisdiction under the laws of which such Constituent Company is established and the nature of the main business activity or activities for each such Companies.
What sources of information should be used for preparation of the CbC report?
The entity filing the CbC Report should consistently use the same sources of data from year to year in completing the CbC Report. The data can be obtained from the following sources:
- Consolidation reporting packages; or
- Separate entity statutory financial statements; or
- Regulatory financial statements; or
- Internal management accounts.
The reporting entity should provide a brief description of the sources of data used and reasons for any changes in sources of information used from year to year in the Additional Information section (Table III) of the CbC Report.
Penalty for not filing the report with the authority within due date
- AED 1000,000 & AED 10,000/day for which failure is continues up to max of AED 250,000/-.
Failure to maintain relevant information and documents for a minimum period of five years from the date of reporting: AED 1, 00,000
Failure to provide any information as required by the competent authority: AED 100,000
Providing inaccurate or incomplete information: AED 50,000 – AED 500,000.