Automatic Exchange is a global network for sharing financial account information between the tax authorities of different jurisdictions. This overview explains who is affected, how the process works, and the implications of the automatic exchange exercised by the United Arab Emirates.
- The UAE currently exchanges information under MCAA CRS with 82 jurisdictions.
- Both personal and corporate UAE accounts are subject to reporting.
- Account information is transmitted to the jurisdictions where the client is a tax resident, based on the documentation provided to the bank.
- Data flows from the financial institution to the UAE competent authority, then to the jurisdiction of tax residency of the client or beneficial owner.
- Clients declare their tax residency, but banks strictly verify this through reasonableness test.
- No information is exchanged if the client is a confirmed tax resident only of the UAE.
- CRS 2.0 and CARF bring e-money and crypto-assets into the exchange framework, with reporting starting in 2028.
What is the automatic exchange?
The automatic exchange of financial account information in the UAE works as follows: local banks and other financial institutions collect data on their customers’ accounts, based on their declared country of tax residence. Once a year (typically by the end of September), the UAE Ministry of Finance transmits this dataset to the competent authority of the customer’s country of tax residence, and in certain cases, to the country of tax residence of the customer’s beneficial owner.
Tax authorities in participating jurisdictions actively use the information received for tax compliance and enforcement. Understanding the mechanics of automatic exchange is essential for both individual clients with UAE bank accounts and the beneficial owners of corporate account holders.
How many countries does the UAE exchange information with?
Currently, 126 countries and territories have signed the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (MCAA). However, this does not mean that every signatory exchanges information with every other signatory. Automatic exchange relationships must be activated between a specific pair of jurisdictions interested in receiving information from one another.
The UAE signed the MCAA in February 2017 and conducted its first automatic exchange with partner jurisdictions in 2018.
According to the OECD (Organisation for Economic Co-operation and Development), as of 2026, the UAE has activated bilateral exchange relationships with 82 jurisdictions. These include the EU member states, the United Kingdom, Israel, India, Kazakhstan, China, Russia, Türkiye, and others. The up-to-date list of jurisdictions participating in automatic exchange with the UAE can be found in the relevant section of the OECD portal by selecting the UAE in the search field.
Reporting financial institutions in the UAE
UAE financial institutions required to comply with CRS requirements include banks, brokerage firms, investment funds, asset management companies, and insurance companies (regarding insurance products with an investment or savings component). In the near future, this scope will expand to include electronic money institutions and crypto-asset service providers.
Financial institutions are mandated to identify accounts held by tax residents of the MCAA participating jurisdictions, as well as Passive Non-Financial Entities (Passive NFEs) controlled by such persons. The collected information is transmitted via the relevant regulator to the UAE Ministry of Finance — the competent authority for the purposes of automatic exchange.
Which accounts in the UAE are subject to automatic exchange?
The automatic exchange covers information on personal and corporate accounts held by tax residents of jurisdictions participating in the automatic exchange with the UAE. This information is transmitted to the client’s country (or countries) of tax residence.
If a client is classified as a Passive NFE and has a controlling person residing in a participating tax jurisdiction, their account information is shared with two locations:
- The company’s country of residence (unless it is the UAE) and
- The country where the controlling person resides.
Under the automatic exchange framework, the following account information is transmitted:
| Personal Accounts | Corporate Accounts |
|---|---|
| Client Identification Information | |
|
Regarding a legal entity or a legal arrangement:
Regarding the controlling person(s):
|
| Financial Account Information | |
|
|
Automatic exchange in the UAE: personal accounts
Banking due diligence in the context of CRS
Customer identification for CRS purposes is integrated into the general due diligence process. These procedures are conducted during initial onboarding and throughout regular profile updates. Much like Anti-Money Laundering (AML) requirements, the bank serves as a gatekeeper, ensuring that the jurisdiction’s obligations under CRS are met.
A key element in this process is the collection and analysis of information regarding the customer’s tax residency. This determines the “route” for the subsequent automatic exchange. The bank must know in which country the customer is liable for taxes to provide accurate information to its domestic tax authority, which then forwards it to the tax authority of the customer’s country of residence.
Tax residency: self-certification and verification
When opening an account (or updating your profile), the bank will request that you complete a self-certification form. Among other details, this form requires you to provide:
- Tax Residency: The country or countries where you, your company, or its controlling persons are considered taxpayers.
- Taxpayer Identification Number (TIN): Your personal tax ID or its local equivalent.
If a client claims to be a tax resident solely in the UAE, holding a residence visa and Emirates ID might not be enough. The bank is required to verify this claim through a reasonableness test. To pass this, the client must provide further proof that their tax life is truly centered in the UAE.
Furthermore, the bank must ensure there are no signs of tax residency in other countries. Common “red flags” include using a foreign phone number or IP address for online banking, making frequent transfers abroad, or granting power of attorney to someone living outside the UAE.
Evidence that can confirm UAE tax resident status to a bank includes a Tax Residency Certificate (TRC) issued by the Federal Tax Authority (FTA), long-term lease agreements or title deeds for residential property in the UAE, local utility or telecommunication bills, proof of income within the UAE, or entry/exit reports from the immigration authorities.
If the evidence for exclusive UAE residency is deemed insufficient, the bank can also treat you as a resident of your country of citizenship or any country linked to you via your documentation. Consequently, your account information will be shared with that jurisdiction through the automatic exchange.
Why is it important to provide accurate tax residency information?
Determining tax residency for CRS purposes is not a mere formality. The OECD identifies the UAE as a jurisdiction with a potential risk of CRS reporting circumvention through Residence by Investment (RBI) programs. The OECD recommends financial institutions to account for this risk during their due diligence procedures.
Since there is no personal income tax in the UAE, banks are mandated to prevent scenarios where a client claims UAE residency solely to shield assets from tax authorities in their actual country of residence. Banks verify the information provided in a client’s self-certification against their actual transaction history, often utilizing AI-driven monitoring. If discrepancies are found, the bank will request a formal clarification.
Furthermore, it is essential to promptly notify the bank of any changes to your tax residency. For corporate accounts, this obligation extends to any changes in the residency of the company’s controlling persons.
Clients who provide false information or ignore bank inquiries risk having their accounts blocked. Intentionally providing misleading data in self-certification or supporting documents carries a fine of 20,000 AED for the account holder or controlling person. For the financial institution, submitting inaccurate information to the regulator results in tiered penalties ranging from 5,000 to 100,000 AED (pursuant to Article 5 of Cabinet Decision No. 93 of 2021).
Automatic exchange in the UAE: corporate accounts
Corporate account information subject to automatic exchange
Automatic exchange applies to two categories of accounts held by legal entities with UAE financial institutions:
- Companies resident in participating jurisdictions. If the account holder is an Active NFE (such as a trading company deriving over 50% of its gross income from operating activities), only the company’s own tax residence is considered. Consequently, account information is transmitted solely to that specific jurisdiction. An account held by an Active NFE that is a tax resident of the UAE is generally not subject to outbound reporting.
- Passive NFEs with controlling persons who are tax residents of participating jurisdictions. This category may include not only foreign entities but also Emirati companies, including those registered in UAE free zones. If a company is classified as “passive,” the bank looks at the tax residency of its beneficial owners (controlling persons). If a controlling person is a tax resident of a participating jurisdiction, the company’s account information will be transmitted to that jurisdiction.
A controlling person is an individual who ultimately owns or controls a legal entity or arrangement. For a company, a controlling person is anyone who owns (directly or indirectly) at least 25% of the shares or voting rights. Additionally, an individual may be considered a controlling person if they exercise significant influence over the company through other means, even without owning any shares.
Depending on the client type, the route for automatic exchange of corporate account information will be as follows:
| Account holder in the UAE | CRS reporting route |
|---|---|
|
Active NFE (a UAE tax resident) |
Generally, not reported to any foreign jurisdiction. |
|
Active NFE (a tax resident of a participating jurisdiction) |
Reported only to the jurisdiction of the entity’s tax residence. |
|
Passive NFE (a UAE tax resident) with a controlling person who is a tax resident of a participating jurisdiction |
Reported to the jurisdiction of tax residence of the controlling person. |
|
Passive NFE (a tax resident of a participating jurisdiction) with a controlling person who is a tax resident of the same or other participating jurisdiction |
Reported to: 1) the jurisdiction of the entity’s tax residence; and 2) to the jurisdiction of tax residence of the controlling person. |
What are “active” companies for CRS purposes?
In a tax context, “active” typically refers to companies primarily engaged in operational business activities, such as manufacturing, trading, or services. In contrast, “passive” companies are those focused on holding assets and generating income from them.
According to the CRS and Ministerial Resolution No. 134 of 2021, the primary criterion for classifying an NFE as “Active” is the composition of its income and assets.
If passive income (such as dividends, interest, or rent) accounts for less than 50% of the company’s gross income, and the assets that generate such passive income represent less than 50% of its total assets, the company is classified as an Active NFE.
Which companies are considered “passive”?
All NFEs that do not qualify as “Active” are considered Passive NFEs. Primarily, these are organizations where passive income is predominant (50% or more) and where assets generating passive income account for more than 50% of total assets.
Additionally, Passive NFEs include investment entities managed by a financial institution (such as a bank, broker, or asset management company) whose income is primarily derived from investing, reinvesting, or trading in financial assets.
Examples of companies and legal arrangements most frequently classified as Passive NFEs include:
- Holding companies established solely to hold shares in other companies and receiving dividend income;
- Real estate holding companies deriving income from rentals;
- Dormant companies that do not conduct active operations but hold funds in bank accounts and receive interest income;
- Family trusts and private foundations (e.g., in the DIFC or ADGM) that hold assets for the benefit of beneficiaries and are under professional management.
Despite the above, certain entities are classified as Active NFEs:
- Companies whose shares are traded on recognized markets;
- Holding companies that own (as their primary activity) active subsidiaries engaged in non-financial activities;
- Start-up companies that have been in existence for less than 24 months and are not yet operational, but are investing capital with the intent to operate an active business, and some other entities.
What does a “passive” status mean for beneficial owners?
If a controlling person of a Passive NFE is a tax resident of a jurisdiction with which the UAE conducts automatic exchange, the account information (as of the end of the preceding year) will be transmitted to that jurisdiction.
Information on such a company’s account will only remain non-reportable if all controlling persons are verified tax residents exclusively of the UAE.
Since a company’s “active” status exempts its controlling persons from automatic exchange, banks are placing greater emphasis on verifying this classification. For example, a bank may request financial statements to confirm that both passive income and the assets generating it remain below 50% of the company’s respective totals.
CRS 2.0: New account types and enhanced due diligence
CRS 2.0 is the unofficial name for the updated version of the Common Reporting Standard adopted by the OECD in 2023. The primary goal of this reform is to close loopholes created by the development of new digital assets and to improve the accuracy of customer identification data.
The UAE joined this framework in 2025, committing to commence automatic exchanges under the new rules in 2028 (covering information for the 2027 calendar year). Relevant service providers will start collecting the required information as of 1 January 2027.
CRS 2.0 expands the definition of Financial Assets to include:
- Central Bank Digital Currencies (CBDCs): For example, the “Digital Dirham,” a UAE Central Bank project launched in late 2025.
- Electronic Money (E-money): Funds held in digital wallets that are pegged to a fiat currency and can be withdrawn as cash.
These represent digital assets that are functionally equivalent to traditional currency but had previously fallen outside the scope of automatic exchange. Additionally, the updated CRS will apply to instruments linked to crypto-assets, such as crypto-asset derivatives.
You can find more information regarding CRS 2.0 in the UAE in our newsletter.
CARF: Automatic exchange of crypto-asset transaction data
The Crypto-Asset Reporting Framework (CARF) covers transactions involving cryptocurrencies, stablecoins, and NFTs, provided they can be used for investment or payment purposes.
As a result, tax authorities will gain access to information on crypto-asset transactions that previously fell outside the scope of the CRS automatic exchange. In July 2025, the UAE signed the commitment to implement CARF along with CRS 2.0.
The CARF requires the reporting of the following transactions:
- Exchanges between crypto-assets and fiat currencies;
- Exchanges between different types of crypto-assets;
- Transfers of crypto-assets; and
- Retail payment transactions for goods or services exceeding 50,000 USD.
Reportable user information includes names, addresses, tax residencies, and tax identification numbers.
Local crypto exchanges, wallet operators, and other service providers will report this data to the UAE’s competent authority. Data transfers to partner countries will commence in 2028, following the same automatic exchange process as the CRS.
Conclusion
The UAE is bolstering its reputation as a transparent global financial hub by steadily expanding the scope of automatic exchange to cover new asset categories and financial service providers. By 2027–2028, this exchange will move beyond traditional banking and brokerage accounts to include digital wallets and crypto-asset transactions.
