General UAE Legal Questions LawCabinet Resolution No. (44) of 2020 Regarding Organizing Reports Submitted by Multinational Companies

Article (1) Definitions In application of the provisions of this Resolution, the following words and phrases shall have the meanings assigned to each of them, unless the context indicates otherwise: State : United Arab Emirates. Competent Authority : Ministry of Finance. Report : The report pertaining to a Multinational Enterprises (MNE) Group which contains the data stated in Article 3 of this Resolution and which is submitted to the Competent Authority in accordance with the provisions of Article 2 of this Resolution. Group : A collection of enterprises related through ownership or control such that it is either required to prepare Consolidated Financial Statements for financial reporting…

Article (2) Notification and Reporting Obligation 1. Each Ultimate Parent Entity of an MNE Group the tax residence of which is located in the State shall notify the Competent Authority that it is the Reporting Entity on a date not exceeding the last day of the Group's Reporting Fiscal Year. 2. Each Reporting Entity shall submit a report in accordance with the requirements of Article 3 of this Resolution to the Competent Authority with respect to its Reporting Fiscal Year on or before the date specified in Article 4 of this Resolution.

Article 2 of this Resolution within the period specified in that Clause, the following shall be imposed thereon:

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Cabinet Resolution of 2020 Organizing Reports Submitted by Multinational Companies 9 1. An administrative fine of one million (1,000,000) AED, and 2. An administrative fine of ten thousand (10,000) AED for each day that the failure continues and not exceeding two hundred and fifty thousand (250,000) AED. 3. With the exception of the additional fine stipulated in Paragraph 2/A of Clause 1 and the additional fine stipulated in Paragraph 2 of Clause 2 of this Article, the total fines imposed on the Reporting Entity or the Ultimate Parent Entity (as the case may be) in…

Article (3) Contents of Report 1. The report shall include the following: a. Aggregate information relating to the amount of revenue, profit (loss) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents with regard to each country in which the MNE Group carries out its activities. b. An identification of each Constituent Entity of the MNE Group stating its country of tax residence, and the country in which such Entity is incorporated in case it is different from its country jurisdiction of tax residence, and the nature of the main business activity or activities of such Entity.…

Article (4) Date of Submission 1. The report must be submitted in a date no later than the twelve (12) month grace period subsequent to the last day of the Reporting Fiscal Year of the MNE Group. 2. The obligation referred to in Clause 1 of this Article shall take effect on 1 January 2019.

Article (5) Use and Confidentiality of Report Information 1. The Competent Authority shall use the report to achieve the any of the following purposes: a. Assessing high-level transfer pricing risks. b. Assessing other base erosion and profit shifting related risks in the State. c. Assessing the risk of non-compliance by members of the MNE Group with applicable transfer pricing rules. d. For purposes of economic and statistical analysis. Transfer pricing adjustments by the Competent Authority shall not be based on the report. 2. The Competent Authority shall preserve the confidentiality of the information contained in the report at least to the same extent that would apply if such informatio…

Article (6) Powers of the Competent Authority to Request Information and View Records 1. The Competent Authority may request information from the Reporting Entity or enter its headquarters or place of work, in the following cases: a. Determining whether the information provided thereby that is included in the report under this Resolution is correct and complete. b. Ensuring that the information that was not included in the report was for a valid

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Cabinet Resolution of 2020 Organizing Reports Submitted by Multinational Companies 7 reason. c. Examining the procedures established by the entity responsible for submitting the report for purposes of ensuring that the entity responsi…

Article (7) Maintaining and Submitting Reports 1. Each Reporting Entity under this Resolution must maintain actual records for a period of five (5) years after the date on which its report was submitted to the Competent Authority. The Reporting Entity may maintain those records electronically, provided that those records are prepared in an electronic readable form in accordance with the laws and regulations in force in the State regulating the maintenance of electronic records. 2. If the Reporting Entity maintains or creates records (as required by this Resolution) in a language other than English, it shall, upon request, provide the Competent Authority with an English translation of these r…

Article (8) Administrative Fines and Violations 1. An administrative fine shall be imposed on the Reporting Entity that violates the obligations contained in this Resolution, as follows: a. If the Reporting Entity fails to meet the deadline specified in Article 4 of this Resolution, the following shall be imposed thereon: 1. An administrative fine of one million (1,000,000) AED, and 2. An administrative fine of ten thousand (10,000) AED for each day that the failure continues and not exceeding two hundred and fifty thousand (250,000) AED. b. An administrative fine of one hundred thousand (100,000) AED shall be imposed if the Reporting Entity fails to maintain the documents and information wh…

Article 8 of this Resolution. 4. The Competent Authority shall consider the grievance and notify the Reporting Entity or the Ultimate Parent Entity (as the case may be) of its decision on the grievance within sixty (60) business days of submitting the grievance, and it shall notify it of its decision. If the Competent Authority fails to file a written notification of its decision on the grievance within the grace period specified in this Clause, the grievance shall then be considered admissible and the imposed fine shall be cancelled.

Article (9) Procedures of Imposing Administrative Fines 1. The Competent Authority may request the Reporting Entity or the Ultimate Parent Entity to take certain measures after committing any violation of any of the provisions of this Resolution in accordance with what this Authority deems appropriate to ensure that the violation is not repeated. 2. The Competent Authority shall notify the Reporting Entity or the Ultimate Parent Entity in writing of any violation of any of the provisions of this Resolution, and it shall grant the Reporting Entity or the Ultimate Parent Entity (as the case may be) a grace period of fourteen (14) business days to remedy this violation, prior to applying the fi…

Article (10) Procedures for Grievance Against the Decision to Impose Fines 1. The Reporting Entity or the Ultimate Parent Entity (as the case may be) may file a grievance against the decision to impose the fine or its value based on one of the following two reasons: a. That it did not commit any violation requiring the imposition of the fine. b. Disputing the value of the fine imposed thereon. 2. The grievant shall submit its grievance to the Competent Authority by virtue of a written document within thirty (30) business days as of the date of notification of the fine in accordance with Clause 2 of Article 9 of this Resolution, stating the reasons for the grievance submitted thereto. 3. The…

Article (11) Executive Resolutions The Minister of Finance shall issue the necessary resolutions to implement the provisions of this Resolution.

Article (12) Repeals The Cabinet Resolution No. 32 of 2019 Organizing Reports Submitted by Multinational Companies shall be repealed, as well as every provisions that violates or conflicts with this Resolution.

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Article (13) Publication and Enforcement of the Resolution This Resolution shall be published in the Official Gazette and shall come into force as of the date of its issue. Mohammed Bin Rashid Al Maktoum The Prime Minister Issued by us: Date: 12 Shawwal 1441 H Corresponding to: 4 June 2020

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