Are Tax Agents subject to AML Compliance in the UAE?

UAE
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1

Is a Tax Agent whose sole activity is to provide tax-related support considered DNFBP and required to comply with AML/CFT/TFS and CPF requirements?

2

Tax Agents in the UAE are registered tax consultants approved by the UAE’s Federal Tax Authority (FTA). Further, as provided under the “Tax Agents and Tax Agencies User Guide” issued by FTA, the tax agents are generally associated with tax agencies and are usually engaged in providing the following tax-related services:

  • Helping businesses register with the FTA
  • Preparing and submitting tax returns to the FTA on behalf of the businesses
  • Maintaining tax-related records and/or information
  • Enquiring about tax-related matters with the FTA

Thus, based on the definition and the activities conducted by the tax agents, they would be classified as “tax consultants.”

From AML perspective, it is important to refer to the definition of the DNFBPs, which includes independent accountants when preparing, conducting or executing financial transactions for their customers with respect to the following activities:

  1. Purchase and sale of real estate
  2. Management of funds owned by the customer
  3. Management of bank accounts, saving accounts or securities accounts
  4. Organising contributions for the establishment, operation or management of companies
  5. Creating, operating or managing legal persons or Legal Arrangements
  6. Selling and buying commercial entities

The definition specifically does not cover “tax consultants”.

However, it is important to refer to the “Supplemental Guidance for Auditors” issued by the MOE. Drawing an analogy from the ML/FT typologies identified by the FATF, the guidance provides that professional service providers may be exploited for the purposes of ML/FT. Such other professional services include “Advising on and/or creating tax structures or tax shelters.”

Further, the FATF Guidance for a Risk-Based Approach for the Accounting Profession has identified “Financial and tax advice” as one of the key areas of vulnerability for accounting services.

Additionally, the ADGM and DFSA rulebooks on AML and sanctions compliance very specifically provide that “Tax advisory business or tax consulting firms will be considered as a DNFBP.”

Accordingly, when interpreting the provision of various regulatory documents and relevant guidance material, it can be concluded that a tax agent conducting tax-related services would be subject to AML compliance.

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