The UAE (United Arab Emirates) has unveiled its ESR (Economic Substance Regulations) blueprint in 2019, which was also the first year (reportable) for all entities based in the UAE (covering branches, holders of commercial licenses and companies). The first stage self-declaration and self-assessment via the Economic Substance Notification, will shortly be due for all entities based in the UAE. The due date has been notified by a few authorities in free zones as 30th June, 2020. Other authorities, however, are currently looking at more stringent deadlines. Entities in the country should comply with these deadlines and carry out self-assessment in a thorough manner while reporting via upcoming notifications for bypassing due penalties.

The Economic Substance Regulations were unveiled on the 30th of April, 2019, by the UAE owing to the country’s adherence to the OECD (Organization for Economic Cooperation and Development) and its BEPS (anti-base erosion and profit shifting) blueprint along with its aims of getting off the blacklist by the European Union. The Cabinet of Ministers passed the Resolution 31 for 2019. This was followed up by the notifying of guidelines for the regulations from the Ministry of Finance on the 11th of September last year. Additionally, on the 5th of January, 2020, the Ministry of Finance in the UAE published its FAQs or frequently asked questions pertaining to the same.

Learning more about the self-declaration and assessment practices

The ESR registration and other guidelines clearly state that entities in the UAE should get themselves self-assessed with regard to activities and issue self-declarations via the notification and whether these cover activities which are relevant. Those entities executing activities which are relevant in the country, will have to provide more thorough Economic Substance Reports to regulatory bodies/authorities later in the year.

From 2020, UAE based entities will have to provide regulatory authorities with the notification in case they are executing any activities in the UAE which are relevant. Also, they will have to declare whether any portion of income is subjected to taxation outside of the country. Activities that find a place in the relevant list include leasing, finance, managing investment funds, insurance, banking, headquarters based businesses, holding activities, shipping, distribution, service centres and businesses linked to intellectual property.

Key deadlines

The Ministry of Finance in the UAE has already issued its template forms for notifications for regulatory bodies/authorities which covers authorities in free zones. All authorities will be offering the template for notification formally to entities that come under their own jurisdictions. They will inform these entities about deadlines for filing. The entities in the UAE will be submitting notifications from 1st January, 2020 and several authorities in free zones have already acted on their own with regard to notifying the due dates.

The Dubai Airport Free Zone Authority has notified 3rd May this year as the deadline while notifications should be submitted by 12th June for the Dubai International Financial Centre. Other free zone authorities including the Dubai Multi Commodities Centre and Abu Dhabi Global Market, have released 30th June as their due dates. Several authorities including the Jebel Ali Free Zone Authority, are yet to release the official due dates. However, entities in the UAE should assume a due date of 30th June for notification submission. For help with all regulatory procedures, VAT auditing, accounting, company incorporation and taxation, GCC Filings is where you will find all the help that you need.