As part of the UAE’s commitment as a member of the OECD Inclusive Framework, and in response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation, the UAE issued Economic Substance Regulations (Cabinet of Ministers Resolution No. 31 of 2019), (the “Regulations”) on 30 April 2019.
The ESR Regulations apply to companies, partnerships, and other business forms (Licensee) registered in the UAE, including a Free Zone and Financial Free Zone, which carry out any Relevant Activity.
The Regulations apply to all UAE onshore and free zone companies including Offshore companies also that carry a “Relevant Activity”.
The following are considered as “Relevant Activities” under the Regulations:
Timeline Of Submission
Licensees that undertake a Relevant Activity are required to file an annual Notification within six months from the end of the relevant financial period. In addition, Licensees that earn income from their Relevant Activity(ies) are also required to file an Economic Substance Report within 12 months from the end of the relevant financial period.
Penalty For Non-compliance
Failure to file ESR notification: AED 20,000
Failure to file ESR report: AED 50,000
How Mac & Ross Can Help You
CONTACT US FOR CONSULTATION
