As countries have increasingly resorted to improved
and broadened cooperation in tax matters, this also reflects the basic
principle that participation in the global economy carries both benefits and
responsibilities. Taxpayers who have access to cross-border transactions may
also have access to greater tax evasion and avoidance possibilities.
Exchange of information (“EOI”) is one way for countries
to maintain sovereignty over their own tax bases and to ensure the correct
allocation of taxing rights between tax treaty partners.
ESR and Exchange of
Circumstances where the Competent
Authority will exchange information with the relevant Foreign Competent
Authority under the ESR:
1. Licensee fails to meet the ES tests
2. Licensee is a high-risk IP licensee
3. Entity is a tax resident outside the UAE
4. Branch of a foreign entity is subject to tax outside
Forms of Exchange of Information
1. EOI on request - The request for a particular piece of information by
one competent authority to another.
2. Automatic EOI - The systematic and periodic transmission of “bulk”
taxpayer information by the source country to the residence country concerning various
categories of income.
3. Spontaneous EOI - The provision of information to another contracting
foreseeably relevant to that other party and that has not been previously
Scope of Exchange of
Request for information includes but is not limited to:
1. Fiscal residence and tax status
2. Nature of income
3. Income and expense as per tax return
4. Business records and formation documents
5. Name and address of directors, managers, and other
6. Banking records
7. Invoices and commercial contracts
How can Crowe help?
1. Identify gaps between the existing substance and the
level of substance required under the ESR and advise on the remedial measures
to ensure fulfillment of the ES Test in the future.
2. Advising on the documentation to be maintained to
support any future inquiries from the authorities.
3. Assisting in liaising with the authorities during
audits or requests for information.