The UAE has signed the Foreign Account Tax Compliance Act (FATCA) agreement with the US to fight international tax evasion.
Under the agreement, UAE financial institutions will provide their central authority with details of US account-holders, which will be passed on to the US Internal Revenue Service (IRS).
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The deal also requires financial organizations in the UAE to provide information of foreign companies with one or more US shareholders that own over 10% of the company by 30 September 2015.
However, some government institutions, sovereign funds as well as international organisations will be immune from the reporting requirements.
UAE ministry of finance undersecretary Younis Haji Al Khoori said: "The country was keen to sign this agreement to protect UAE financial institutions. In the case of non-compliance with the requirements of FATCA, any non-U.S. financial organisation could face a 30% penalty on certain financial returns of its operations in the U.S. 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."
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By GlobalDataThe FATCA law, passed in 2010, is designed to boost financial organisations share data about US account holders with tax authorities in the US.
As per the FATCA law, failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30% tax on payments of US-sourced income.
