By Courtney Trenwith
The agreement means all UAE financial institutions face penalties if they don't provide the US with information on citizens' finances
The UAE and US have signed an agreement to implement America’s new Foreign Account Tax Compliance Act (FATCA), the Ministry of Finance announced in a statement carried by state news agency WAM on Saturday.
The agreement means all US citizens in the Gulf state will now have the details of all of their finances held in the UAE provided to the American government, potentially making them liable for additional tax.
FATCA was enacted by the US Congress in 2010 to target non-compliance by US taxpayers using foreign accounts. The US law requires foreign financial institutions to provide annual reports on account information of customers who are US citizens and provides penalties for institutions that do not comply.
"The [UAE] was keen to sign this agreement to protect UAE financial institutions,” Ministry of Finance Undersecretary Younis Haji Al Khoori said.
“In the case of non-compliance with the requirements of FATCA, any non-US financial organisation could face a 30 percent penalty on certain financial returns of its operations in the US market.
“The ministry will continue to meet all necessary requirements for linking UAE government financial institution systems to the FATCA e-system. The ministry will also determine the required processes for monitoring reporting by financial institutions."
US ambassador to the UAE Barbara Leaf said FATCA was becoming the “global standard in the effort to curtail tax evasion”.
“This agreement reflects the UAE's commitment to the adoption of best practices as well as the growing strength and breadth of our bilateral relationship," she said.
Under the agreement, the UAE financial institutions must provide the US Treasury Department a report on information about financial accounts held by US citizens or by certain foreign companies with one or more US shareholders that own more than 10 percent of the company by September 30, 2015. Certain government institutions, sovereign funds and international organisations are exempt from the reporting requirements.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.