The ESR (Economic Substance Regulation) notification due dates are steadily being declared for various regulatory bodies/authorities including free zone authorities. The RAKEZ (Ras Al Khaimah Economic Zone) has already issued its circular pertaining to the due date for filing of the ESR notification and for complying with the Economic Substance Regulations (ESR) in the United Arab Emirates (UAE).
The ESR necessitates specific licenses for adhering to the obligations pertaining to notification and return filing. The regulatory authority which is RAKEZ, has mandated all its licensees for complying with the due date for submitting the ESR notification. All licensees should be filing the notification on the 30th of June, 2020, which is the last date or before this timeline.
Some other key factors worth knowing
All licensees should be filing their notifications irrespective of the fact whether they are coming under exempt categories or whether they have earned income in the period for reporting. ESR or Economic Substance Regulation in the UAE has been made effective from last year itself via the Resolution Number 31 that was passed by the UAE Cabinet of Ministers. This regulation applies to all entities which have registration in the country’s onshore and free zones which include the financial free zone and those who are undertaking activities that are relevant. These businesses will have to offer proof of their substantial and economic existence in the country and will have to take an approach which puts substance as more important than form. According to Article 8 of the regulation, licensees have to file ESR notifications and substance regulations returns with the authority within the due dates that have been declared.
The activities that have been deemed relevant include insurance, banking, lease/finance, holding entities, investment fund management organizations, shipping, service centres and distribution, intellectual property and headquartered entities. Entities should also be notifying authorities on whether they can execute any of the relevant operations stated earlier or not. Whether licensees are executing relevant activities or not, is something that has to be assessed by RAKEZ and the licensee in question. Licensees executing activities that are not mentioned in the RAKEZ license but come under the relevant category via their activity, should be notifying RAKEZ that it is carrying out an activity which is relevant.
More on the notification
According to the RAKEZ circular, all licensees should be filing their ESR notifications with the authority in question. The details that have to be provided include the following:
- Year-end period for financial year
- Details of licensee
- Activities which are relevant
- Period that is reportable
- If the license comes under the exempt category or whether the licensee is a tax resident outside of the United Arab Emirates (UAE) during the period which is reportable
If you are grappling with notifications, licenses, VAT registration and Tax filing, taxation, Tax auditing and accounting, GCC Filings is where you should be. Reach out to the company for more advice, guidance and all related services in this regard.