Common Reporting Standard (CRS) in the United Arab Emirates

​published on 6 April 2020 | reading time approx. 3 minutes

The United Arab Emirates is one of around 50 countries that agreed into automatically sharing the financial data on individuals and legal entities with other countries. Taking this into consideration banks are during last year and currently requiring further tax related information of new and existing bank account holders.

• What it is and why it was implemented? »

• Who is obliged to share information? What are the consequences of not providing relevant information to the financial institutions? »

• Which information will be reported to the tax authority? »

• Duties summarized when opening/holding a bank account in the UAE »

What it is and why it was implemented?

The Common Reporting Standard (CRS) was implemented by the OECD (Organisation for Economic Co-Operation and Development) as a world-wide standard to avoid offshore tax evasion by exchanging financial information of bank account holders.

 
In 2010 the United States of America enacted already a similar system called FATCA (short for: Foreign Account Tax Compliance Act). This was meant to increase tax reporting by US taxpayers living and/or earning money abroad. CRS, also known as a “global FATCA system” is adapting this system to avoid tax evasion not only by US taxpayers and is now evolving around the whole world with over a hundred participating countries. It is used to gather information from financial institutions in participating countries and report them to the local tax authorities on an annual basis. In case of a probable cause of tax evasion, the entities are able to exchange all relevant information with other participating countries’ tax authorities they need to determine the particular tax burden. Such information relate particularly to the tax statuses (tax residency) of the account holder.

Who is obliged to share information? What are the consequences of not providing relevant information to the financial institutions?

Financial institutions in the UAE are legally obliged to gather all relevant information of their account holders regarding their tax residency status. So everyone who owns a bank account in one of the local banks has to complete the CRS Self-Certification form when the bank is approaching him. The tax administration may then request information especially regarding a tax residence abroad (in any of the participating countries).
 
Bank customers in the UAE are obliged to follow their instructions due to their own contractual relationship with the bank. If they do not adhere to the terms, the bank can refuse to uphold the contractual relationship with the customer or may send a report to the local tax authority with the information they have already acquired. The bank can even block an account as a consequence and it can only be opened again when the client provides the necessary information.

Which information will be reported to the tax authority?

Which information will be reported to the tax authority depends on whether you are a personal account holder, an entity customer or a Controlling Person.

 
Data required by the tax authorities for personal account holders include the following:

• Name and residential address
• Date and place of birth
• Taxpayer identification number (TIN)
• Account number and account balance at a defined date
• Income on this account
• Gross proceeds from any sale or redemption of an asset

Data required by the tax authorities for entity clients include the following:

• Name and address
• Taxpayer identification number (TIN)
• Account number and account balance at a defined date
• Income on this account
• Gross proceeds from any sale or redemption of an asset

Data required by the tax authorities for Controlling Persons include the following:

• Name and Address of the Controlling Person
• Date and place of birth of the Controlling Person
• Taxpayer Identification Number (TIN)
• Type of the Controlling Person

Duties summarized when opening/holding a bank account in the UAE

• Provide the necessary information as listed above in form of the CRS Self-Certification form, it may be the case that evidence concerning the tax status is required.
• Provide a list of all jurisdictions in which you are treated as tax resident and the tax identification number for each one.
• Notify the bank if changes regarding your tax status occur within a reasonable time.