FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard) require UAE financial institutions and certain businesses to report account information of foreign tax residents to the UAE Ministry of Finance, which then shares data with relevant foreign tax authorities.
What Is FATCA?
FATCA is a US law requiring non-US financial institutions worldwide to identify and report accounts held by US persons to the IRS (via local tax authorities). The UAE signed an IGA (Intergovernmental Agreement) with the US in 2015. UAE banks, brokers, and investment funds must identify US clients and report their account data annually.
What Is CRS?
CRS is the OECD’s global equivalent of FATCA, covering 100+ countries. UAE adopted CRS in 2017 under Cabinet Resolution No. 57 of 2018. UAE financial institutions must identify account holders who are tax residents of participating CRS countries and report their financial account information to the UAE Ministry of Finance annually.
Who Is Affected in the UAE?
- UAE banks and financial institutions: must identify and report foreign tax residents
- UAE investment funds: reporting entities
- UAE free zone holding companies: may be classified as financial institutions under FATCA/CRS if they hold financial assets
- UAE businesses with US shareholders: must provide FATCA documentation (W-8BEN-E) to US counterparties and banks
Penalties for Non-Compliance
UAE entities that fail to comply with FATCA/CRS reporting face administrative penalties under UAE Federal Law No. 7 of 2017. Penalties range from AED 10,000 to AED 100,000 for failure to register, report, or provide accurate information. The Central Bank also has enforcement authority for financial institutions.