Important Update: Deadline for FATCA and CRS Reports

The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) are international tax regimes that have been implemented by the UAE as a form of Automatic Exchange of Information (AEOI). While FATCA is a US regime curated for automatic exchange of information in order to combat offshore tax evasion by US persons, CRS is a standard set for the Automatic Exchange of Financial Account Information and was developed by the Organisation for Economic Co-operation and Development (OECD). According to the FATCA and CRS regulations in the UAE, financial institutions need to provide information about certain foreign accounts maintained by the reportable account holders and/or controlling persons to the UAE Ministry of Finance. The Ministry of Finance, UAE, recently extended the submission deadline for data/nil Returns in accordance with the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) for the year 2023. The updated FATCA reporting deadline and CRS filing deadline is 15^th July 2024.

What is FATCA?

Foreign Account Tax Compliance Act (FATCA) is a US legislation under which all Foreign Financial Institutions (FFIs) are required to submit information about the financial accounts held by US persons to the US IRS. The UAE implemented FATCA in 2015 and adopted the rules to identify and report information about US accounts that meet the standards set out in the UAE-US IGA.

Under the FATCA UAE 2024 legislation, the reporting UAE Financial Institutions (FIs) are mandated to:

• Identify the financial accounts held by a specified US person or passive NFFEs with one or more controlling persons who are Specified US persons.
• Report information on certain financial accounts to their regulatory authority.

Obligations for UAE Reporting Financial Institutions under FATCA

UAE Reporting Financial Institutions are obligated to comply with the following requirements for FATCA:

• Registration:

Register with the IRS on the IRS FATCA FFI registration system and with the respective regulatory authority.

• Due Diligence:

Perform due diligence on financial accounts that the Reporting Financial Institution maintains.

• Reporting obligations:
  1. Annually report all US reportable accounts that it maintains or file a nil return in the absence of the maintenance of any US reportable accounts.
  2. Report any payments made to Non-Participating Financial Institutions

• Monitoring:

Continuously monitor for changes in circumstances that result in a change of an account holder’s FATCA status.

What is CRS?

Issued by the Organisation for Economic Co-operation and Development (OECD), the Common Reporting Standard (CRS) is the standard set for the Automatic Exchange of Financial Account Information.  The CRS enables jurisdictions to automatically exchange information obtained from their financial institutions with other jurisdictions on an annual basis. It sets out the standard for information to be exchanged, financial institutions required reporting, types of accounts and taxpayers covered, and standard due diligence procedures for financial institutions.

Obligations for UAE Reporting Financial Institutions under CRS

UAE Reporting Financial Institutions are obligated to comply with the following requirements for CRS:

• Registration:

Register with their Regulatory or UAE MoF (for unregulated entities).

• Due Diligence:

Perform Due Diligence on all accounts held by an account holder (or a controlling person for passive NFE) who is a tax resident of jurisdictions outside the USA.

• Reporting Obligations:

1. Report any reportable accounts it maintains or file a nil return if it doesn’t maintain any reportable accounts to the Regulator or UAE MoF (for an unregulated entity).
2. Report information about certain undocumented individual accounts on an annual basis to the Regulatory or MoF (for non-regulated entities).

• Monitoring:

Continuously monitor for a change in circumstances that results in the change of an Account Holder’s CRS status.

Penalties for failure to report under FATCA

In case a Reporting Financial Institution fails to submit an Annual Report or Nil Report to comply with FATCA regulations, a fine of AED 20,000 will be imposed.

Penalties for failure to report under CRS

• A Reporting Financial Institution that fails to submit the report on Reportable Account Information to the relevant regulatory authority in accordance with the form, manner, and on the date specified by the authority will be subjected to a fine of AED 50,000. A fine of AED 1000 will be applicable for each day the failure continues up to a maximum amount of AED 100,000.
• An AED 10,000 fine will be imposed on a Reporting Financial Institution in case of failure to submit the Nil Report in accordance with the timeframe specified by the authority. A fine of AED 1000 will be applicable for each day the failure continues up to a maximum amount of AED 30,000.

How can AMCA help?

The Reporting Financial Institutions of UAE are required to comply with the regulations of FATCA UAE 2024 and CRS Reporting UAE 2024. AMCA specializes in assisting businesses through the complexities of the FATCA and CRS regimes in the UAE. The experts at AMCA are experienced in facilitating registration with relevant authorities, identifying gaps in UAE tax compliance, and implementing changes in procedures. Through its proactive approach, AMCA helps you navigate regulatory requirements with ease and ensures UAE financial institutions compliance

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