IMPORTANCE OF ECONOMIC SUBSTANCE REGULATIONS UAE
The Economic Substance Regulations – ESR in UAE is effective since April 2019 and it requires all mainland and Free Zone companies established in the UAE, (“Licensees”) to notify the relevant Regulatory Authority whether their activities fall within the scope of a ‘Relevant Activity’ or not on an annual basis. The eligible companies must comply with the following laws and decrees;
- Economic Substance Regulation UAE
- Economic Substance Dubai
- Economic Substance Test
Scope of the Economic Substance Regulations UAE
The ESR report and ES test must follow the procedures laid out in Economic Substance Dubai. The Economic Substance Regulation UAE notification comes into effect from 1 January 2020. Also, a report should follow before 31 December 2020, if applicable. The ESR report and ES test must follow the procedures laid out in Economic Substance Dubai.
In line with the Regulations, the DIFC, ADGM, RAK ICC and Ajman Free Zone have also clarified their position. These entities have provided guidance regarding the notification submission to their Licensees. Other Regulatory Authorities are also expected to release guidance as well in the following months.
As per the guidance, DIFC and ADGM announced a deadline of 31 March 2020. Furthermore, RAK ICC and Ajman Free Zone announced the deadline of 30 June 2020 for the submission of the notification for Economic substance requirement.
Importance of Economic Substance Dubai, UAE
However, given the current situation due to COVID – 19, DIFC and ADGM Free Zones have postponed the deadline of 31 March 2020 and will communicate the new deadlines to their Licensees. Furthermore, the UAE is not the only country in the Gulf to implement the ESR guidelines. In fact, other countries too have brought into effect laws regarding business taxation. These include the Economic Substance Regulation Sharjah Act and the Economic Substance Regulation Abu Dhabi Act. As you can see, the ESR guidelines are now a mandatory compliance requirement throughout the GCC.
Considering the wide scope of the ESR, it is imperative for businesses to already start assessing their obligations and take proactive actions to meet the reporting requirements. Hence, companies need to ensure they hire the right people to handle their ESR obligations and compliances.
KGRN Chartered Accountants can conduct an impact analysis – studying and analyzing the effect of the new economic substance regulations on your existing businesses.
Additionally, we can help identify gaps in the level of economic substance in affected entities and consider remediation options wherever necessary. Therefore, 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: firstname.lastname@example.org Mobile : +971 50 452 0648 Phone: +971 455 70 204
Other Info about ESR in UAE
- Things To Know About Economic Substance Regulations
- Guide For UAE ESR
- What is All About Economic Substance Regulations In UAE
- Economic Substance Regulations(ESR) in UAE – Extended Deadlines For Notifications
- Economic Substance Regulations(ESR) Dubai UAE