All DIFC Registered Entities mandated to report for CRS and FATCA!

July 12, 2023 | 5 min read

In the Dubai International Financial Centre (DIFC), registered entities are subject to specific regulations and guidelines regarding FATCA and CRS reporting. The DIFC has implemented its own rules to ensure compliance with these global initiatives.

The Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA) are two global initiatives aimed at promoting tax transparency and combating tax evasion by individuals and entities with offshore financial accounts. Although they share similar objectives, they differ in terms of scope and implementation.

DIFC subsequently enacted the Common Reporting Standards Law, DIFC Law No. 2 of 2018 in relation to the information gathering and reporting obligations imposed on Reporting Financial Institutions (RFIs) under the Law and the Common Reporting Standards Regulations 2018 (the Regulations, and together, the DIFC CRS).

Here's some information on CRS and FATCA reporting in accordance with DIFC rules:

  1. FATCA Reporting in DIFC: The DIFC has incorporated FATCA regulations into its legal framework to facilitate compliance by registered entities operating within its jurisdiction. The DIFC financial entities are required to adhere to the relevant rules issued by the Dubai Financial Services Authority (DFSA), the regulatory authority for the DIFC.

    Key points about FATCA reporting in DIFC:

  • DIFC-based entities must register with the IRS and obtain a Global Intermediary Identification Number (GIIN), as per its applicability.
  • They are required to undertake due diligence procedures to identify USA account holders and report the necessary information to the IRS.
  • The DFSA issues guidelines and rules to ensure compliance with FATCA obligations.
  1. CRS Reporting in DIFC: Similar to FATCA, the DIFC has adopted the CRS framework and incorporated it into its regulatory regime. Registered entities operating in the DIFC are required to comply with CRS reporting requirements in line with the guidelines set by the DFSA.While both FATCA and CRS serve the purpose of enhancing tax transparency and reducing tax evasion, they differ in terms of their origin, reach, and specific requirements. FATCA is a U.S. law focused on U.S. taxpayers, while CRS is a global initiative aiming for multilateral information exchange among participating countries.

    Key points about CRS reporting in DIFC:

  • DIFC entities must undertake due diligence procedures to identify the tax residency of their account holders based on CRS criteria.
  • They are required to report relevant financial information, including account balances, income, and account holders' personal details, to the UAE Ministry of Finance.
  • The DFSA provides guidelines and rules to ensure compliance with CRS obligations.

    It's crucial for registered entities in the DIFC to stay up-to-date with the regulatory requirements and guidelines issued by the DFSA regarding FATCA and CRS reporting. Compliance with these regulations helps maintain transparency, avoid penalties, and uphold the reputation of the institution operating within the DIFC.

DIFC has issued a deadline for the assessment and reporting to be done before 28 July 2023.

How MBG can help?

DIFC is notifying its registered entities to conduct an assessment and report the necessary to the concerned authorities. In the light of the above, MBG’s expert lawyers can assist the entities to conduct a thorough analysis and assessment to understand the applicability for CRS and FATC to the entities and assist in filing the reports with the DIFC and UAE Ministry of Finance Portal.

Open chat
Hello 👋
How can we help you today?