Legislation Details
- Full Title: Cabinet Resolution Regarding Implementing the Provisions of Federal Decree Ratifying an Agreement between the Government of the United Arab Emirates and the Government of the United States of America for Improving the International Tax Compliance and the
- Law Type: Federal Decree
- Law Number: No. (63) of 2022
- Issued Date: 12 Jul 2022
- Effective Date: 12 Jul 2022
- Official Gazette: No. 731
- Sector: Tax
- Status: Active
- Number of Articles: 63
- Chapters/Parts: 0
- Amendments: 0
Summary
This Cabinet Resolution implements the provisions of the Federal Decree ratifying an agreement between the UAE and the United States for improving international tax compliance and implementing the Foreign Account Tax Compliance Act (FATCA). The Resolution establishes the regulatory authorities responsible for overseeing financial institutions' compliance, defines their duties and powers, and imposes reporting and due diligence requirements on UAE financial institutions. It also specifies administrative penalties for non-compliance. (Cabinet Resolution No. (63) of 2022, Arts. 1-14) The Resolution is significant for businesses and individuals in the UAE as it mandates extensive reporting and compliance obligations for UAE financial institutions to identify and report on U.S. taxpayers' accounts. Failure to comply can result in substantial administrative fines, making it critical for affected parties to understand and adhere to the law's requirements. (Cabinet Resolution No. (63) of 2022, Arts. 1-14)
What is the scope and purpose of this law?
The purpose of this Cabinet Resolution is to apply the provisions of the Agreement between the UAE and the United States for Improving International Tax Compliance and Implementing FATCA, which was ratified by Federal Decree No. (9) of 2016. The Resolution establishes the regulatory authorities responsible for overseeing compliance with the Agreement and imposes various obligations on UAE financial institutions. (Cabinet Resolution No. (63) of 2022, Art. 2)
What are the key definitions under this law?
The Resolution provides the following key definitions:
- The State: United Arab Emirates
- Competent Authority: Minister of Finance
- Competent Authority in the United States: The Secretary of the Treasury or his delegate
- Regulatory Authority: The authorities specified in Article 3 of the Resolution
- FTA: The Federal Tax Authority
- Financial Institution: As defined in Clause 1(G) of Article 1 of the Agreement
- Non-participating Financial Institution: As defined in Clause 1(I) of Article 1 of the Agreement
- Reporting United Arab Emirates Financial Institution: As defined in Clause 1(N) of Article 1 of the Agreement
- Financial Free Zone: A financial free zone established under Federal Law No. (8) of 2004
- Financial Free Zone Authority: The authority authorized in the concerned Financial Free Zone
- Agreement: The Agreement between the UAE and the US for Improving International Tax Compliance and Implementing FATCA
- FATCA: The U.S. Treasury Regulations issued under Sections 1471 to 1474 of the Internal Revenue Code
- Controlling Person: As defined in Clause 1(HH) of Article 1 of the Agreement
- Account Holder: As defined in Clause 1(Z) of Article 1 of the Agreement
- Financial Account: As defined in Clause 1(Q) of Article 1 of the Agreement
- New Entity Account: As defined in Clause 5 of Annex I of the Agreement
- New Individual Account: As defined in Clause 3 of Annex I of the Agreement
- U.S. Reportable Account: As defined in Clause 1(Y) of Article 1 of the Agreement
- Annual Report: The report submitted as per Clause 3(A) of Article 5
- Nil Report: The report submitted as per Clause 3(B) of Article 5
- Self-Certification Form: The form to be collected and validated as per Clause 3 of Article 5
(Cabinet Resolution No. (63) of 2022, Art. 1)
What are the main obligations and requirements?
The key obligations imposed by this Resolution include: 1. Reporting UAE financial institutions must apply due diligence procedures to identify U.S. Reportable Accounts and accounts held by Non-participating Financial Institutions. (Cabinet Resolution No. (63) of 2022, Art. 5(1)) 2. Reporting UAE financial institutions must collect and validate Self-Certification Forms for new individual and entity accounts. (Cabinet Resolution No. (63) of 2022, Art. 5(2)) 3. Reporting UAE financial institutions must submit annual reports or nil reports to the Competent Authority, providing information on U.S. Reportable Accounts and other required data. (Cabinet Resolution No. (63) of 2022, Art. 5(3)) 4. Reporting UAE financial institutions must maintain records and information collected for at least 6 years, and establish systems and procedures to identify U.S. Reportable Accounts. (Cabinet Resolution No. (63) of 2022, Art. 5(4))
Which authorities or bodies are responsible for enforcement?
The Resolution designates the following Regulatory Authorities for implementing its provisions and the underlying Agreement: - The UAE Central Bank, for financial institutions under its supervision - The Securities and Commodities Authority (SCA), for financial institutions under its supervision - The Financial Free Zone Authorities, for financial institutions in the financial free zones - The Ministry of Finance, for any financial institutions not under the supervision of the above authorities (Cabinet Resolution No. (63) of 2022, Art. 3(1)) These Regulatory Authorities are empowered to: - Issue forms for compliance, collect and review information and documents from financial institutions and account holders, and submit information to the Competent Authority - Carry out reviews, investigations, and risk assessments to ensure compliance - Impose and implement administrative fines for non-compliance - Manage grievance procedures against administrative fines (Cabinet Resolution No. (63) of 2022, Art. 3(2)) The Federal Tax Authority (FTA) is also authorized to carry out certain tasks on behalf of the Ministry of Finance as a Regulatory Authority. (Cabinet Resolution No. (63) of 2022, Art. 4)
What are the penalties for non-compliance?
The Resolution does not specify any penalties or administrative sanctions. It states that the Regulatory Authorities shall "impose and implement prescribed administrative fines under this Resolution" but does not provide the actual fine amounts or other penalties. (Cabinet Resolution No. (63) of 2022, Art. 3(2)(h))
When did this law come into effect?
This Cabinet Resolution came into effect on the date of its issuance, 12 July 2022. (Cabinet Resolution No. (63) of 2022, Art. 14)
How does this law interact with other UAE legislation?
This Cabinet Resolution is issued to implement the provisions of Federal Decree No. (9) of 2016, which ratified the Agreement between the UAE and the United States for Improving International Tax Compliance and Implementing FATCA. (Cabinet Resolution No. (63) of 2022, Preamble) The Resolution also references and draws authority from several other UAE federal laws, including: - Federal Law No. (1) of 1972 on the Competences of Ministries and Powers of Ministers - Federal Law No. (18) of 1981 on the Organisation of Trade Agencies - Federal Law No. (4) of 2000 on the Emirates Securities and Commodities Authority and Market - Federal Law No. (8) of 2004 on the Financial Free Zones - Federal Law No. (14) of 2016 on Administrative Violations and Sanctions in the Federal Government - Federal Law No. (13) of 2016 Establishing the Federal Tax Authority - Federal Decree-Law No. (14) of 2018 on the Central Bank and Regulation of Financial Institutions and Activities - Federal Decree-Law No. (15) of 2018 on the Collection of Public Revenues and Funds (Cabinet Resolution No. (63) of 2022, Preamble)
Source Documents
This article analyses Cabinet Resolution Regarding Implementing the Provisions of Federal Decree Ratifying an Agreement between the Government of the United Arab Emirates and the Government of the United States of America for Improving the International Tax Compliance and the for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.