UAE Economic Substance Regulations Update
Date Posted:Sun, 10th May 2020
Further to the introduction of the economic substance regulations (?Regulations?) last year , the UAE Ministry of Finance (?MoF?) recently issued a guide on relevant activities and core-income generating activities (?Relevant Activities Guide?).
The issuance of the Relevant Activities Guide follows the issuance of guidance on the economic substance requirements and the publication of FAQs by the MoF and the issuance of the cabinet resolution on determining regulatory authorities. Relevant Activities Guide - Highlights Further, the MoF has indicated that core income generating activities (“CIGAs”) are activities that are of central importance to the licensee for the generation of gross income from its relevant activity. The Relevant Activities Guide provided certain examples on CIGAs in respect of each relevant activity. Deadline - Notification Filing We have outlined below the status of the notification filing deadline as announced by various regulatory authorities: |
Relevant Authority |
Initial filing deadline |
New filing deadline |
Dubai Development Authority (DDA) |
No announcement to date |
No further announcement to date |
Dubai Silicon Oasis (DSO) |
31 March 2020 |
No further announcement to date |
DMCC |
30 June 2020 |
No further announcement to date |
Dubai International Financial Centre (DIFC) |
31 March 2020 |
12 June 2020 |
Abu Dhabi Global Markets (ADGM) |
31 March 2020 |
30 June 2020 |
DAFZA |
3 May 2020 |
No further announcement to date |
Ajman Free Zone |
30 June 2020 |
No further announcement to date |
RAK Economic Zone |
30 June 2020 |
No further announcement to date |
RAK ICC |
30 June 2020 |
No further announcement to date |
What should you do next? It is therefore critical for businesses in the UAE to commence preparations immediately and understand whether they are carrying out a relevant activity from a UAE economic substance perspective and consider whether any restructuring of its business operations should be undertaken to satisfy the economic substance test. The failure to comply with statutory obligations under the Regulations has serious consequences and may result in the disclosure of the licensee’s information to foreign authorities, the imposition of an administrative penalty ranging from AED 10,000 up to AED 300,000 and the revocation, suspension or non-renewal of the existing license. How can we help? Please do not hesitate to contact Al Tamimi’s Corporate Structuring Team and Tax Team if you require any assistance. Click here to follow Al Tamimi’s Tax Team’s LinkedIn page for more updates on tax developments in the Middle East. Webinar - 31st May 2020
|