ESR: Economic Substance Regulation

On April 30 2019, the UAE Cabinet issued Cabinet of Ministers Resolution No. 31 of 2019 concerning Economic Substance Regulations in the UAE (the Regulations), requiring all in-scope UAE entities which conduct certain activities (Relevant Activities mentioned below) to have demonstrable economic substance in the UAE, effective immediately.

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What is this in relation to?

The introduction of the Regulation follows the UAE’s firm commitment to comply with the EU requirements and illustrates the UAE’s ongoing efforts to reach the highest standards on taxation including the OECD’s requirements.

Sanctions for non-compliance

Failure to meet the economic substance test and/or to provide information (or providing inaccurate information) results in significant financial penalties, and ultimately, a deregistration. Additionally, the Regulation provides that the UAE authorities may exchange information about non-compliant UAE-registered companies with the tax authorities in the states where their parent companies and UBO’s are resident.

How can we help you?

RNG can help the licensed entitiesto submit the followings to Regulatory Authority to meet their annual compliance:

  • Notification: to the Regulatory Authority with the required information starting from 1st Jan 2020 onwards.
  • Report: must have all the required information to be submitted within 12 months after the end of each Financial Year.

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