ABU DHABI, 26th November, 2016 (WAM) — The UAE will begin implementing the standards of joint disclosures and the exchange of information for tax purposes set out by the G20 and Organisation for Economic Cooperation and Development (OECD), in accordance with the Foreign Account Tax Compliance Act (FATCA), from 2018.
This follows the UAE Cabinet’s decision for the Ministry of Finance (MoF) to co-ordinate with various government authorities to collect financial information in order to implement exchange information for tax purposes, the ministry announced.
The UAE joined the Global Forum on Transparency and Exchange of Information for Tax Purposes following the UAE Cabinet’s decision in 2010 which approved the ministry’s membership to the OECD committees for the exchange of information. The MoF’s efforts and commitment to implementing international standards and requirements for the exchange of information led to the UAE obtaining a seat on the International Steering Committee (ISC) for the exchange of information. The UAE became the first Arab country to be elected on this position.
Obaid Humaid Al Tayer, Minister of State for Financial Affairs, stressed the country’s dedication to establishing the legal framework required to meet the standards of the OECD committees for the exchange of information for tax purposes. This comes in line with the UAE Cabinet’s authorisation for the MoF to sign and negotiate the agreement on Mutual Administrative Assistance in tax matters (MAC) and the Multilateral Competent Authority Agreement (MCAA), in accordance with the Common Reporting Standard (CRS), which in turn regulates the automatic exchange of information for tax purposes between countries within the MAC agreement.
“The ministry is continuing to oversee the signing procedures in co-ordination with OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes, as well as review the laws, regulations and administrative resolutions based on the requirements of implementing the automatic exchange of information. The ministry, in co-operation with specialised established committees, will supervise the implementation of the exchange of information for tax purposes as per the scheduled timeline prepared by the Global Forum of Transparency and Exchange of Information for Tax Purposes,” Al Tayer said.
The ministry is currently establishing the administrative and technological infrastructure required to implement an automated system to collect and exchange information, in line with the requirements of the FATCA and exchange of information for tax purposes agreements. The ministry is also working to sign Memorandums of Understanding with related authorities to enable financial institutions to submit periodic reports according to data protection laws, for the ministry to begin collecting data by 2017 and activate the exchange of information for tax purposes in 2018.
The ministry has formed a dedicated committee to oversee the implementation of the requirements, legislation and available options to apply the procedures for the effective exchange of information for tax purposes according to required timelines and international standards. This committee is headed by Younis Haji Al Khouri, Under-Secretary of the MoF, and relevant regulatory authorities in the UAE, including the UAE Central Bank, Ministry of Foreign Affairs and International Cooperation, Ministry of Justice, Ministry of Economy, Securities and Commodities Authority, Insurance Authority, Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM).
The MoF began establishing committees to oversee the implementation of regulatory and administrative commitments for the automatic exchange of tax information according to the requirements of FATCA, in order to begin implementation in January 2017.
So far, 94 countries have committed to implement the joint disclosure system by 2017 and 2018 and ensure the effective exchange of information for tax purposes between countries following G20 directives. Countries which have not committed to the automatic exchange of information and submission of their special reports to G20 have been classified. In September 2013, the G20 directed OECD to establish a joint disclosure standard, which defines the framework for the automatic exchange of information for tax purposes. In 2014, OECD requested all countries to begin collecting information from financial institutions and exchange them automatically on a yearly basis. The OECD also identified the financial information to be collected and exchanged, including the various types of financial accounts for taxpayers in relevant countries and the common procedures that must be followed by financial institutions.