UAE: ESR regime deadline

During the month of August 2020, the United Arab Emirates (“UAE”) Economic Substance Requirements (“ESR”) regime was replaced with Cabinet Decision No. 57 of 2020 concerning Economic Substance Requirements and Ministerial Decision No. 100 of 2020 on the Issuance of Directives for the Implementation of Cabinet Decision No. 57 of 2020 (“New Regulations”).

What are the main new provisions?

1. The Federal Tax Authority is now in charge of assessing whether the Licensees have met the Economic Substance Requirements and has the authority to impose administrative fines;
2. The exceptions have been expanded;
3. The Exempt Licensee must file supporting documents to confirm its exemption along with its Notification filing;
4. The definition of Licensee includes unincorporated partnerships;
5. The fines have been revised; and
6. The Notification and Return filings are required to be submitted via a portal to be created by the UAE Ministry of Finance (“MoF”).

The New Regulations also clarify when the Notification and the Return are required to be filed; the Notification must be submitted within 6 months from the end of the financial year while the Return must be submitted within 12 months from the end of the financial year.

Re-submission of the Notification. The New Regulations require that the Notification be re-submitted via the MoF portal by 31 December 2020. Failure to re-submit the Notification carries a penalty of AED 20,000.

Submission of the Return. Should you be required to submit the Return under the New Regulations, please note that it must be submitted via the MoF portal within 12 months from the 2019 financial year-end. Failure to submit the Return carries a penalty of AED 50,000. Please note that certain documents, such as the entity’s financial statements, may be required to be submitted with the Return.

Regulatory Services in the United Arab Emirates

Should you require our services to reassess an entity under the New Regulations and submit the Notification via the MoF portal, our fees start from USD 1,200 per entity.

Should you require our services to complete and submit the Return via the MoF portal, our fees also start from USD 1,200 per entity.

DO YOU NEED HELP? lecocqassociate is available to assist you with the entire process. Feel free to contact Sofiana Bird sbi@lecocqassociate.com for any questions.

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