FATCA & CRS Compliance Requirements for UAE Entities

About this video

• Video Title: FATCA & CRS Compliance Requirements for UAE Entities
• Channel: Andersen in the United Arab Emirates
• Speakers: Terry, Rag (host)
• Duration: 00:12:37

Overview

This video discusses the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) as they apply to entities in the UAE. It explains the origins of these regulations, who they apply to, and the compliance requirements for reporting financial institutions. The video also covers the implications for entities in financial free zones like DIFC and ADGM, potential penalties, and advice for businesses on maintaining compliance.

Key takeaways

• FATCA and CRS Explained: FATCA, originating from the US in 2010, focuses on US persons, while CRS, from the OECD and G20 in 2014, applies to non-US persons from over 100 participating countries. Both involve the automatic exchange of financial information for tax purposes.
• UAE Ratification: The UAE ratified FATCA in 2016 and CRS in 2018, making these regulations applicable to entities operating within the UAE, including those in mainland and free zones.
• Reporting Financial Institutions: Entities are classified as reporting financial institutions if they conduct activities such as being a depository institution, a custodial institution, an investment entity, or an insurance company that issues certain financial products.
• Compliance for Free Zones: Entities in financial free zones like DIFC and ADGM must self-certify their status as reporting or non-reporting financial institutions through specific portals. Failure to do so or incorrect declarations can lead to penalties.
• Penalties and Compliance Advice: Non-compliance can result in significant penalties, including a 30% withholding tax on US-sourced income for FATCA violations. Businesses are advised to maintain thorough records of transactions and activities throughout the year to assess their compliance status and engage experts for guidance and filing assistance, with annual reporting typically due by June 30th.