UAE has passed the following F ederal Legislation to implement the convention which applies across the UAE, including all Free Zones and Financial Free Zone:
• UAE Cabinet of Ministers Resolution No. 31 Of 2019 Concerning Economic Substance Regulations, issued on 30 April 2019.
• Ministerial Decision No. 215 for the year 2019 providing guidance on Cabinet Decision No.31 of 2019, issued on 11 September 2019;
• UAE Cabinet of Ministers Resolution No. 58 of 2019
identifying the relevant Regulatory Authorities responsible for supervision and enforcement of the
Regulations, issued on 4 September 2019.
As per the Economic Substance Regulations (ESR), all Licensees are required to notify the Regulatory Authority (typically the license issuing authority) annually on the following aspects :
• Whether or not the Licensee is carrying on a Relevant Activity
• If the Licensee is carrying on a Relevant Activity, whether or not all or any part of the Licensee’s gross income in relation to the Relevant Activity is subject to tax in a jurisdiction outside the United Arab Emirates (UAE)
• The date of the end of the Licensee’s Financial Year (Accounting Reference Period).
REQUIREMENT UNDER THE REGULATION
Meet Economic Substance Requirements and
File Economic Substance return with the ROC on an annual basis. Return is due within 12 months after the relevant ﬁnancial year end.
NAME of AUTHORITY
|NOTIFICATION TIMELINE||REVISED DUE DATE
– ESR FILING
|Dubai World Trade Centre||30-Jun-20||31-Dec-2020|
|Dubai International Financial Centre (DIFC)||12-Jun-20||31-Dec-2020|
|Dubai Airport Free Zone||03-Jun-20||31-Dec-2020|
|Dubai Multi Commodity Centre (DMCC)||30-Jun-20||31-Dec-2020|
|Dubai Aviation Corporation||07-Jun-20||31-Dec-2020|
|Abu Dhabi Global Market (ADGM)||30-Jun-20||31-Dec-2020|
|Ajman Free Zone||30-Jun-20||31-Dec-2020|
|Dubai Silicon Oasis||31-May-20||31-Dec-2020|
PENALTIES FOR NON – COMPLIANCE :
Failure to Notify: AED 10,000/- to 50,000/-
Failure to provide accurate or complete information:
Penalty of AED 10,000/- to 50,000/-; and
Deemed failure to demonstrate economic substance in the UAE Failure to
demonstrate sufficient economic substance in the UAE for the relevant Financial Year Financial Year:
First failure Penalty of AED 10,000/- to 50,000/-; and
Information exchange with foreign competent authority of:
- Parent company,
- Ultimate parent company, and
- Ultimate beneficial
Second consecutive instance of failure Penalty of AED 100, 000/- to 300,000/-;
Trade / commercial license could be: suspended, withdrawn or not renewed.