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CFC reporting in 2026 for the UAE

CFC reporting in 2026 for the UAE - Makebiz

Starting in 2026, Russian tax residents with businesses in the UAE will be required to comply with new rules regarding controlled foreign companies. Important legislative changes that have entered into force since 2025 affect not only the procedure for notifying tax authorities, but also the calculation of taxes, which requires increased attention from taxpayers. Let’s take a closer look at the key aspects related to income tax exemption for CFC, as well as the notification process.

A controlled foreign company is a foreign organization that is controlled by Russian residents. Russian legislation recognizes control if more than 50% of the voting shares or stakes in the company belong to Russian residents. The CFC does not fall under the exceptions provided for by the Tax Code (NC RF), which makes it an object of taxation.

The regulatory framework governing these issues includes:

1. The Tax Code of the Russian Federation is the fundamental document defining the rules of taxation.

2. Federal Law 176-FZ of 07/12/2024 – amendments concerning the control of CFC and the procedure for their taxation.

3. Clarifications from the Ministry of Finance and letters from the Federal Tax Service are additional clarifications that help taxpayers correctly interpret the legislation.

Every year, supervisors are required to notify regulatory authorities of the presence of foreign organizations. It is important to note that the obligation to notify remains even if there is no profit on it. To do this, it is necessary:

— Submit a notification in accordance with the established form of the Federal Tax Service.

— If there is an exempt profit, attach a confirmation.

— Reflect profits in declarations (for example, personal income tax or income tax).

It can be submitted either through the taxpayer’s «Personal Account» or electronically through a telecom operator.

The profit of a CFC is defined as retained earnings calculated according to the rules of the Tax Code of the Russian Federation. The date of receipt of income is fixed on December 31 of the year following the period in which the organization operated. At the same time, currency recalculation is applied, which also requires attention from the owners.

Starting in 2025, business owners must take into account changes in the fixed tax regime. Now it is not static, but depends on the number of controlled companies. For owners of five or more structures, the workload increases significantly. This innovation requires careful planning and analysis of its strategy.

It is worth highlighting the conditions of tax exemption separately:

1. The actual conduct of business in the jurisdiction. Enterprises registered in the Emirates must demonstrate real economic activity in the country. This may include having offices, employees, and running business processes.

2. Availability of an economic justification for the activity.

3. The absence of avoidance schemes aimed at minimizing tax liabilities. 

To be released, you will have to prepare and provide:

  • Founding documents: the company’s charter documents confirming its registration and compliance with the law.
  • Financial statements: accounting reports that demonstrate the state of an organization and its activities.
  • Evidence of economic activity: contracts, invoices, acts of completed work, etc.
  • Bank account statements that show financial transactions.
  • Documents confirming the fulfillment of tax obligations.

All documents must be translated into Russian and certified in accordance with the requirements of the Federal Tax Service. The deadline for their provision is at the same time as the notification or at the request of the Federal Tax Service.

Failure to comply with the conditions of release can lead to serious consequences. If violations are detected, additional taxes may be charged, as well as penalties may be applied. 

Thus, in order to file a notification in 2026, the following steps must be completed:

1. Make sure that your companies fall under the definition of a CFC.

2. Prepare information about each organization, including name, jurisdiction, ownership and profit.

3. Collect all the necessary documents, translate them into Russian and certify them.

4. Use the «Personal Account» on the FTS website or contact the operator to form an application.

5. Make sure that the notification is sent on time. For individuals, the deadline for submission is April 30th.

6. Familiarize yourself with the new rules regarding fixed profits in order to correctly reflect the necessary data.

Taking into account all the changes that will come into force in 2025, Russian residents controlling foreign companies should be extremely attentive to the new requirements. Notification of the CFC and the correct calculation of the tax become key aspects that must be taken into account in order to comply with the law and minimize risks. We recommend that you consult with Makebiz specialists for a more detailed understanding of all the nuances and compliance with the law.

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