Understanding AEOI

These initiatives involve governments obtaining information from their financial institutions and exchanging data automatically with other nations that have signed up to the applicable AEOI regime. A number of AEOI regimes have evolved over time including FATCA and the OECD’s global CRS. Each of these regimes are discussed briefly below.

FATCA

The Foreign Account Tax Compliance Act (FATCA) is legislation enacted by the US Congress to prevent offshore tax abuses by US persons. The FATCA rules are wide-ranging and force global financial institutions, investment entities, as well as national banks and other financial organizations to report details on their US clients directly.

The United Arab Emirates signed a Model 1 intergovernmental agreement (IGA) with the US on 17 June 2015.

UAE-based entities and UAE branches of foreign entities must determine whether or not they are classified as reporting UAE financial institutions under the UAE’s IGA.

FATCA in the United Arab Emirates (Click to view)

CRS

The common reporting standard (CRS) is effectively a global version of FATCA introduced by the OECD which will require financial institutions to report information on accounts held by tax residents of reportable jurisdictions and certain entities controlled by such tax residents. To date, more than 95 countries have either signed up to the CRS or publically announced their intention to implement the CRS. The scope of reporting under the CRS will be much more significant than under FATCA.

The CRS takes effect from 1 January 2017 in the United Arab Emirates. However, unlike FATCA, the CRS will be a pure reporting regime with no withholding tax. UAE tax resident entities and UAE branches of foreign entities, similar to FATCA, will need to determine whether or not they are classified as reporting UAE financial institutions under the UAE CRS provisions with reporting obligations.

How can KPMG help?

We offer a suite of services that assess the current state of your AEOI compliance program, address your most pressing issues and help you achieve full compliance.

Our solutions include:

• Entity classification
• Health checks, operational reviews and gap analysis 
• Helpdesk support and ad-hoc technical advice
• Interaction support
• A full suite of technology tools to support the end-to-end requirements of the AEOI regimes
• Live workshops