July 2021 / United Arab Emirates

28 Luglio 2021

United Arab Emirates Supports Inclusive Framework Two-Pillar Approach Towards Taxing The Digital Economy

The UAE Ministry of Finance (MoF) has issued a statement supporting the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) with regard to laying the building blocks (Pillar One and Pillar Two proposals) for a new global tax framework.

The MoF stated that the UAE's policies such as the implementation of economic substance and transparency rules have been carefully designed to support the country's fiscal needs and meet international requirements. The MoF added that the UAE approach has created a business-friendly environment affirming its global position as a stable and attractive place to facilitate global investment.

The UAE is one of the 132 member countries (out of 139) that have joined the consensus. These building blocks have also been endorsed by the G20 Finance Ministers meeting on 10 July 2021.

The statement was released on 26 July 2021 by M. Saeed Rashid Al Yateem, UAE MoF Assistant Under-Secretary of the Resource and Budget Sector.

31 Luglio 2021

Dubai Customs launches Trader Export Report service to enhance compliance, abidance and revenues

Within their continuous efforts to support trade activity in Dubai to help businesses overcome the challenges and boost their revenues, Dubai Customs, in cooperation with the Federal Tax Authority (FTA), launched the Trader Export Report service. The new service will help clearance and shipping agents achieve Zero Rating of supply of goods exported within 90 days of exportation date, regardless of the Importation date. The service was launched virtually in the presence of H.E. Ahmed Mahboob Muabih, Director General of Dubai Customs and H.E. Khalid Ali Al Bustani, Director General, Federal Tax Authority (FTA), along with Dubai Customs’ executive directors and heads of customs departments and centers.

Traders have to meet all the Zero Rating requirements including having an exit certificate and commercial documents that prove exportation process, and exporting the shipment within the specified time frame. This service applies only to imported goods that will be exported later and not to goods possessed locally.

H.E. Ahmed Mahboob Musabih expressed gratitude to partners in the Federal Tax Authority for their dedication and outstanding efforts to help develop the trade sector and increase revenues.

Commenting on the launch of the new service, Khalid Ali Al Bustani, FTA Director-General said:

“The Trader Export Report service is very promising, and is a good example of fruitful cooperation between local departments and federal authorities to enhance economic development and trade facilitation following the leadership’s wise vision. The creative platform will help raise compliance and abidance. I heartily thank Dubai Customs’ team for their dedication and honest efforts in making this creative service a reality.”

H.E. Ahmed Mahboob Musabih said:

 “The (Trader Export Report) service is meant to provide best trade and customs facilities to traders and businesses to help them increase mutual trade between Dubai and the rest of the world. This will help in fulfilment of national plans and projects and support Dubai 5-year plan of increasing Dubai external trade to 2 trillion dirhams. Dubai non-oil external trade grew 10% in Q1, 2021 to AED354.4b compared to AED323b in Q1, 2020. This includes AED150m for exports and re-exports.

 “This service is one of many facilities that Dubai customs provide to help augment growth in external trade, attract more investments into the emirate, and consolidate Dubai’s global position as a preferred hub for business and tourism following the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai.

“The launching of the new service has come in the right time with the emirate preparing to launch EXPO2020; the most important economic event in the world. It will not be only an opportunity to exchange creative ideas and projects, but a vital means to help with the global recovery from the repercussions of Covid-19. We served the grand event by launching a number of initiatives including a dedicated customs channel.

In the same vein, Edris Behzad, Director of Client Happiness Department said:

“Client happiness is a priority at Dubai Customs. For that, we always develop new services that add value to the businesses and trade activity. We continuously evaluate our services and listen to our clients through different channels to ensure they are always satisfied with the services provided. The feedback on the new service was very positive. To ensure best service, an importer should submit accurate import numbers to the export agent, and add that to the export declaration. Importers can issue export report automatically by providing importer’s customs code and specify period.”

The new service will be available on Dubai Trade Portal, and it will apply to certain types of declarations including Import to Local from ROW, Import to Local from GCC (Statistical Import), Import for Re Export to Local from ROW, Import to CW from ROW, Transit (ROW to ROW) and Cargo Transfer from CTO to CH (Different Locations).

Source: Government of Dubai - Media Office

28 Luglio 2021

United Arab Emirates Issues Mutual Agreement Procedure

The UAE Ministry of Finance (MoF) has issued mutual agreement procedure (MAP) guidance for tax treaties. The MAP guidance aims at facilitating taxpayers' access to effective and expedient dispute resolution mechanisms under bilateral tax treaties and includes information on how a MAP request should be initiated, to whom it should be presented and what information should be included in the request.

The guidance is in line with the United Arab Emirates' commitment to the Base Erosion and Profit Shifting (BEPS) Action 14 minimum standard as a member of the BEPS Inclusive Framework (BEPS IF). The MAP guidance provides details as follows:

MAP description

This section explains the MAP and that it is designed to:

  • relieve double taxation typically arising from transfer pricing cases;
  • resolve treaty-related tax disputes and issues in interpreting or applying a tax treaty; and
  • provide a bilateral mechanism for MoF to engage with the competent authority of another Contracting State.

Conditions for requesting the MAP

MAP requests will only be accepted if:

  • the issue or transaction relates to a jurisdiction with which the United Arab Emirates has concluded a tax treaty;
  • it is apparent that the actions of one or both jurisdictions resulted in or will result in taxation not in accordance with the treaty; and
  • the taxpayer notifies the MoF within the time limits specified in the applicable treaty.

The MAP request should meet the following minimum requirements:

  • identity of the taxpayer(s) covered in the MAP request;
  • the basis for the request;
  • facts of the case;
  • analysis of the issue(s) requested to be resolved via MAP;
  • whether the MAP request was also submitted to the competent authority of the other treaty partner;
  • whether the MAP request was also submitted to another authority under another instrument that provides for a mechanism to resolve treaty-related disputes;
  • whether the issue(s) involved were dealt with previously; and
  • a statement confirming that all information and documentation provided in the MAP request is accurate and that the taxpayer will assist the competent authority in the resolution of the issue(s) presented in the MAP request by providing any complementary information or documentation required by the competent authority in a timely manner.

Timeline for MAP requests

MAP requests can be issued in English or Arabic to: Mr Abdalla Al Obaidli, Director of International Organizations and Financial Relation Email: aaalobaidli@mof.gov.ae.

Once the MAP request is submitted, the MoF will consider the request and may ask the taxpayer for further information if required. Then, the MoF will initiate the consultation with the treaty partner in order to reach an agreement. The timeline to resolve the MAP is provided by the following table:

No. Action Time limit
1 the MoF will notify the taxpayer of receiving the request within 30 days of the taxpayer initiating the MAP request
2 the MoF will notify the correspondent competent authority about the request
3 the MoF requests further information/documentation from the taxpayer the taxpayer will be given 30 days to provide any requested information/documentation
4 the MoF will determine the eligibility of the MAP request and notify the taxpayer, in writing setting out its reasons, if the case is accepted or rejected within 30 days after the necessary information or documentation is provided to the MOF
5 (if accepted) a proposal is sent to the other competent authority to start MAP discussions by issuing a notification letter to them
6 the MoF will regularly update the Taxpayer on the progress and the outcome of the competent authority's negotiations in general, the MoF aims to resolve MAP cases within 2 years of receiving the taxpayer's application
7 when an agreed outcome is reached between the MoF and the relevant foreign competent authority the MoF will write to inform the taxpayer within 30 days of reaching a mutual agreement and advise the taxpayer on the next course of action. The taxpayer will have to decide whether the agreed outcome is acceptable
8 taxpayer's approval of mutual agreement in writing to be submitted immediately after conclusion of mutual agreement. 30 days deadline to respond
9 confirmation of mutual agreement with terms and conditions: exchange of closing letters as soon as possible after acceptance of mutual agreement by taxpayer
10 implementation of mutual agreement no later than 90 days after exchange of closing letters

Legal basis

This section provides that the MoF relies on the direct applicability of MAP articles in its tax treaties, as tax treaties, once in force, override all other domestic laws (other than the Constitution). It explains the possible outcome of the MAP request and the role of each competent authority in case of acceptance or rejection of the MAP request.

If both competent authorities successfully resolve a MAP case, they would formalize a mutual agreement amongst themselves at the earliest time possible. However, if both competent authorities were unable to resolve a MAP case, they would close the MAP case as unresolved.

Timeframe for resolving and implementing MAP cases

This section explains that most treaties concluded by the United Arab Emirates include a MAP. A taxpayer has to request its case to be reviewed in a MAP within 3 years from receiving the first notification of an action that it considers to subject it, or is likely to subject it, to tax not in accordance with a treaty (i.e. the time limit for submitting a MAP request will usually start from the first notification of the action which gives rise to taxation not in accordance with a treaty). However, there is no time limit pursuant to the treaty concluded with Turkey.

If the taxpayer makes a MAP application to the competent authority either of the United Arab Emirates or of the treaty partners after the time period expiration specified in the article relating to the MAP of the relevant treaties, the UAE competent authority will not provide access to MAP.

The UAE Ministry of Finance (MoF) published the MAP guidance (dated 7 January 2021) on its official website on 8 June 2021.