UAE Law and Practice Contributed by: Amir Alkhaja, Gerry Rogers, Daria Selivanova and Danila Kriuchkov, Habib Al Mulla & Partners
mentation proving that. They must also report related-party dealings in their returns and pro - vide master and local files if meeting thresholds. The introduction of CIT made this necessary to protect the tax base and comply with global transparency norms. UAE-headquartered mul - tinationals will also have to file CbC Reports (the UAE already mandated country-by-coun - try reporting for large groups as part of BEPS Action 13, via Cabinet Resolution since 2019, for groups with global revenue greater than or equal to EUR750 million, typically filed with MoF if ultimate parent is UAE-based – companies like some big Emirates-based MNEs have complied). 5.7 Anti-Evasion Rules The UAE has put in place anti-tax-evasion and general anti-avoidance measures as part of its new tax framework. While the tax system is straightforward and low-rate, authorities are vigilant against deliberate evasion or abusive arrangements. Key anti-evasion provisions include the following. General Anti-Abuse Rule (GAAR) The UAE has adopted general anti-abuse rules (GAAR) as part of its corporate tax framework. These rules empower the Federal Tax Authority to disregard or recharacterise arrangements that are determined to be primarily tax motivated and lacking commercial substance. Criminal Tax Evasion Tax evasion is characterised as a criminal offence in the UAE, subject to monetary fines of up to 300% of the evaded taxes and/or imprisonment. Administrative Penalties The FTA can impose fines for: • late filing; • inaccurate returns; and
• failure to keep records. Global Transparency and Reporting
The UAE shares tax data under CRS and OECD rules. UAE banks report account details to for - eign tax authorities. 5.8 Tariffs The UAE is part of the Gulf Co-operation Coun - cil (GCC) Customs Union and imposes customs tariffs on imports in line with common GCC rates. The general tariff rate is 5% on most imported goods. This 5% customs duty is calculated on the CIF (cost, insurance, freight) value of goods. There are some important exceptions and spe - cifics: • alcoholic beverages – 50% import duty (addi - tionally, the UAE levies a 50% excise tax on alcohol at point of sale in many emirates, and local municipalities impose fees on alcohol sales); and • tobacco products – 100% customs duty (plus UAE imposes a 100% excise tax internally on tobacco). This extremely high tariff reflects both revenue-generation and public health intent, making imported cigarettes and shisha tobacco much pricier. Many essential or strategic imports are duty-free or 0%: • food staples – several basic food items (rice, flour, baby milk, etc) are exempt from cus - toms duty to lower living costs; • medicines and medical equipment – often 0% duty to ensure affordable healthcare; • capital machinery and parts for industry – in some cases, heavy machinery or specific parts can be exempt;
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