Country-By-Country Reporting (CBCR)

The Organization for Economic Co-operation and Development (OECD) mandates Country-by-Country Reporting (CbCR).Large Multinational Groups of Enterprises (MNEs) are required to submit a CbC report to the Competent Authorities after each fiscal year under the Country-by-Country Reporting (CbCR) legislation.

For each such Company of the MNE Group where MNE conducts its business, it should include information on the amount of revenue, profit/(loss) before tax, income tax accrued, income tax paid, tax domicile of Constituent Company, etc.

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According to Cabinet Resolution No. 44 of According to Cabinet Resolution No. 44 of 2020, you will be subject to the Country by Country Reporting requirements.

  • if your entity is the ultimate parent company of the MNE Group and
  • if the MNE’s consolidated revenue was equal to or greater than AED 3.15 billion in the previous financial year.

Entities subject to the Regulation must adhere to the following Notification & Reporting requirements:

CbCR Notification’s Scope of Application: The Competent Authority must be notified by each MNE Group Ultimate Parent Entity whose tax residence is the Reporting Entity no later than the last day of the Group’s Reporting Fiscal Year. For instance;

  • The deadline for submitting a CbCR notification is December 31, 2019, if the MNE Group’s fiscal year runs from January 1 to December 31, 2019.
  • The deadline for submitting a CbCR Notification is March 31, 2020, if the MNE Group’s fiscal year runs from 1 April 2019 to 31 March 2020.

Penalty

The administrative will execute a fine if the CbCR (Country by Country Reporting) notification is not provided by the ultimate parent entity by the deadline. Additionally, for each day the failure continues, there is an administrative fine.

CbC (Country by Country Reporting) Reporting’s applicability

For the current fiscal year, it applies to all such Reporting Entities. Within a year of the conclusion of the current fiscal year, such a firm must submit the CbC Report to the MOF.

For instance;

  • The deadline for submitting CbCR is December 31, 2020, if MNE Group’s fiscal year runs from January 1 to December 31, 2019.
  • The deadline for filing CbCR is March 31, 2021, if MNE Group’s fiscal year runs from 1 April 2019 to 31 March 2020.

Report’s Contents

The report needs to have the following elements:

 

  • Aggregate data on the amount of revenue, profits (losses) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and non-financial or cash equivalent tangible assets, concerning each country where the MNE Group conducts its business;
  • An identification of each constituent company of the MNE Group, including the jurisdiction in which the company resides for tax purposes, the jurisdiction under the laws of which the company was established, and the nature of the principal business activity(ies) for each of the companies, if different from the jurisdiction in which the company resides for tax purposes.

Other Sanctions

An administrative fine shall be imposed if the Reporting Entity fails to maintain the documents and information required by this Resolution for a minimum of five (5) years following the date on which the Report was submitted to the Competent Authority.

An administrative fine will be applied if the necessary information is not provided to the Competent Authority & if the reporting entity provides erroneous or incomplete information.

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