Economic Substance Regulations – Extended Deadlines for notifications

Economic Substance Regulations – Dates and Deadlines

The Economic Substance Regulations are to be carried out for the relevant activities in UAE.  In this case, let us look at some of the frequent relevant activities:

1. Banking
2. Insurance
3. Fund Management
4. Finance and Leasing
5. Intellectual Property
6. Holding Company

One should meet the substance requirements at all times to ensure complete compliance with UAE Laws. This includes having sufficient employees, managing activities efficiently, and managing expenses. Furthermore, companies must ensure that the physical premises of their office is also in compliance.

What are ESR Guidelines?

The UAE is a member of the OECD Inclusive Framework. As a result, the EU assessed the UAE’s tax framework, through European Union (“EU”) Code of Conduct Group on Business Taxation. Therefore, to obtain a better rating, and improve operations, the UAE introduced a Resolution on the Economic Substance. Hence, the ESR guidelines came into force via Cabinet of Ministers Resolution No.31 of 2019, the “Regulations” on 30 April 2019. The guidance that provides further clarity on the application of the Regulations -ESR was issued on 11 September 2019. Also, the Regulations require UAE onshore and free zone companies and other UAE business forms that carry out any of the “Relevant Activities” listed below to maintain an adequate “economic presence” in the UAE relative to the activities they undertake.

Why has the UAE introduced Economic Substance Regulations?

The UAE introduced Economic Substance Regulations to honour the UAE’s commitment as a member of the OECD Inclusive Framework on BEPS. Furthermore, it was in response to a review of the UAE tax framework by the EU. As a result, UAE was a part of the EU’s list of non-cooperative jurisdictions for tax purposes (EU Blacklist). Hence, this helps cement UAE’s position as a Business superpower. Also, it helps them have a tighter control over business entities based in the UAE. Additionally, it also makes compliance norms more stringent, leading to better transparency, and efficiency. However, this means that companies will need to ensure they meet the required compliance to continue operations in the UAE. Hence, auditing and financial service providers have become more important than ever before.

ESR Deadlines

Below mentioned authorities have recently made an announcement with respect to the deadline for filing of notification form:

  1. Dubai Airport Free Zone Authority: May 31, 2020
  2. Hamriyah Free Zone Authority: June 30, 2020
  3. Dubai Aviation City Corporation: June 07, 2020
  4. Sharjah Airport International Free Zone: June 30, 2020
  5. Dubai International Financial Centre: June 12, 2020
  6. Abu Dhabi Global Market: June 30, 2020
  7. Dubai Multi Commodities Centre: June 30, 2020
  8. RAK International Corporate Centre: June 30, 2020
  9. Ajman Free Zone Authority: June 30, 2020
  10. Dubai World Trade Centre Authority: June 30, 2020

Other relevant authorities are yet to announce the due date for ESR Notification. We expect those to arrive not later than June 30, 2020.

The above dates are subjected to change respectively for different zones and regulations implied by the government of UAE or by the UAE entities.

How  KGRN Chartered Accountants Can help ?

KGRN Chartered Accountants can help you get a clear understanding of the new economic substance regulations in the UAE. Furthermore, KGRN Chartered Accountants can conduct an impact analysis – studying and analyzing the effect of the new economic substance regulations -ESR on your existing businesses in UAE. Additionally, our team can help you rectify errors to ensure complete compliance. Also, years’ worth of experience help our team efficiently and effectively manage your records.

As a result, we can identify gaps in the level of economic substance in affected entities and consider remediation options where gaps are identified. Hence, KGRN Chartered Accountants can assist in relevant compliances under the new regulations.

For more info please contact : 

Contact Person : Gopu Rama Naidu CPA FCA

Email:  Mobile : +971 50 452 0648  Phone: +971 455 70 204


More Info about ESR in UAE

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