International taxation in the UAE

International taxation in the UAE

What is global taxation?

When an entity engages in cross-border transactions, international taxation refers to adhering to various tax regulations of a separate jurisdiction.

It also entails establishing the tax liabilities of entities in the impacted jurisdictions and applying as the application of the relevant tax legislation.

In general, an entity must assess its exposure to tax liabilities in the jurisdiction where it conducts business and its tax spending in each country in which it operates.

Why has international taxation become more significant in the UAE recently?

The gateway for international trade between the Asia Pacific and Europe is the UAE, an economic powerhouse that is continuously expanding. Because of this, international tax planning is a crucial issue for most enterprises working in this area.

The UAE started moving toward a taxing system that promotes transparency and enhances economic diversification to increase its global competitiveness. In 2017 the UAE implemented an excise tax, then in 2018, they implemented a value-added tax (VAT). There have been a lot of positive and required improvements in the country’s effort to improve international tax conformity.

The UAE has approved the internationally recognized standards for the “EOIR” (Exchange of Information on Request) and “AEI” (Automatic Exchange of Information) methods of information exchange for tax reasons (from OECD)

The UAE largely adheres to the CRS (Common Reporting Standards) and FATCA regulations to enhance international tax compliance and international tax reporting.

On May 16, 2018, the United Arab Emirates became the 116th jurisdiction to join the Inclusive Framework of BEPS (Base Erosion and Profit Shifting). As a result, the UAE is dedicated to putting BEPS’s 4 basic criteria into practice. UAE implemented the two rules listed below in 2019;

  • The Cabinet Resolution No. 31 of 2019 regulates economic substance. [Action 5 of the Base Erosion and Profit Shifting] includes the regulation of economic substances.
  • legislation for “Country by Country Reporting” (CbCR) through Cabinet Resolution No. 32 of 2019. [Action 13 of the Base Erosion and Profit Shifting (BEPS)] includes CbCR.

The United Arab Emirates has now agreed to report within the deadlines to the pertinent foreign authorities.

KLOUDAC Accounting Firm Dubai, UAE

We have a group of knowledgeable tax consultants and specialists who have experience with different tax structures in the UA. KLOUDAC responds to your worries with an international perspective. We assisted numerous companies with their international growth and the installation of tax structures.Feel free to contact us.