The UAE Central Bank has imposed Dh2,621,000 ($713,700) in fines on five banks and two insurance companies operating in the Emirates for not following tax compliance standards.
These financial institutions were penalised for non-compliance with the reporting procedures required by the Common Reporting Standard and Foreign Account Tax Compliance Act guidelines, the banking regulator said in a statement on Tuesday.
The Central Bank “affirms that this step enhances the quality of the UAE’s financial system, and aligns with its commitment to global initiatives promoting the integrity and transparency of tax systems and combat tax evasion”, it said.
Those banks and insurers that were fined were not named by the Central Bank.
The UAE, the Arab world’s second largest economy, introduced the federal corporate tax with a standard statutory rate of 9 per cent from the financial year beginning on or after June 1, 2023.
It brought the income of companies exceeding Dh375,000 within the taxable bracket. Taxable profits below that level are subject to a tax of zero per cent.
The Ministry of Finance also confirmed later that business owners in the country would be subject to corporate tax only if their turnover in a calendar year exceeds Dh1 million, ensuring that only business or business-related activity income is taxed.
In December, the UAE also announced that it will impose a new tax on large companies in the country as part of changes to its corporate tax law.
Large multinational enterprises are to pay a minimum of 15 per cent tax on the profits generated in the country – up from the current corporate tax rate of 9 per cent – effective for financial years starting on or after January 1, 2025, the Ministry of Finance said at the time.
The UAE also introduced 5 per cent VAT on a majority of goods and services in 2018 as part of its push to diversify the economy and reduce its dependence on oil.
In September, the Central Bank also fined a lender operating in the country Dh5 million for breaching anti-money laundering regulations, as it continues its fight against illicit financial activity in accordance with international standards.