The UAE Ministry of Finance (“MoF”) has provided an update under its FAQ section on clarifications of the requirements to file a Notification to Relevant Authorities under the UAE Economic Substance Regulations (“ESR”) by 30 June 2020. These clarifications confirm that businesses with fiscal years ended after 31 December 2019 are not required to file a Notification by 30 June 2020, until further notice. Further guidance with respect to the Notification requirements has been provided.
The clarification summarized as follows:
- Only businesses with a financial year commencing on or after 1 January 2019 and ending on or before 31 December 2019 are required to submit a Notification
- by 30 June 2020.
- There is no requirement for businesses with financial years ending after 31 December 2019 to file a Notification by 30 June 2020.
- While your Regulatory Authority may allow or request to file a Notification for fiscal periods ending after 31 December 2019 (for example, 31 March 2020 or 30 June 2020, 30 September 2020) by 30 June 2020, this is not a requirement under the ESR.
- The statutory deadline for businesses with different financial year-end will be communicated in due course.
- No administrative penalties prescribed by ESR will apply to businesses with a reportable period ending after 31 December 2019 for Notifications not submitted by 30 June 2020.
- Businesses with a long first accounting period started in 2018 and ended during 2019 (e.g. 1 June 2018 to 31 December 2019) are not required to file a notification by 30 June 2020, with the first reportable period for such entities being 1 January 2020 to 31 December 2020 and the early Notification would be due in 2021.
- Under the ESR, only businesses that undertake a Relevant Activity are required to submit a Notification. However, certain Regulatory Authorities may request all companies to provide a Notification, regardless of their activity. Please refer to the below schedule:
| Licensing authority | Who is required to file | How to file | When to file | Form released |
| Ministry of Economy | Only entities/ licensees that are carrying out the relevant activity | Online form here | By 30 June 2020 | Yes |
| DIFC | All entities/ licensees, including those who do not undertake the relevant activity | Via DIFC portal | By 30 June 2020 (extended from 12 June 2020) | Yes |
| ADGM | Only entities/ licensees that are carrying out the relevant activity |
Via email to economicsubstance@adgm.com |
By 30 June 2020 | Yes |
| DAFZ | All entities/ licensees, including those who do not undertake the relevant activity | Via DAFZ portal | By 15 June 2020 (extended from 31 May 2020) | Yes |
| DMCC | All entities/ licensees, including those who do not undertake the relevant activity | Via DMCC portal | By 30 June 2020 | Yes |
| RAK ICC | All entities/ licensees, including those who do not undertake the relevant activity | Via RAK ICC portal by a registered agent only (online form) | By 30 June 2020 | Yes |
| Securities and Commodities Authority (SCA) | SCA have contacted via email all Investment Management Firms, Management Companies Firms regulated by SCA requesting submission of the notification form | Via email to fms@sca.ae | By 30 June 2020 (extended from 31 March 2020) | Yes |
| AJMAN FZ | All entities/ licensees, including those who do not undertake the relevant activity | Via email to info@afz.ae | By 30 June 2020 | Yes |
| RAK EZ | All entities/ licensees, including those who do not undertake the relevant activity | Via RAK EZ portal (online form) | By 30 June 2020 | Yes |
| Dubai World Trade Centre | Only entities/ licensees that are carrying out the relevant activity | Via email to info@dwtcauthority.com | By 30 June 2020 | Yes |
| Dubai Aviation City Corporation | All entities/ licensees, including those who do not undertake the relevant activity | Via email to economic.substance@dacc.ae | By 23 June 2020 (extended from 7 June 2020) | Yes |
| Dubai Healthcare City (DHCC) | Only entities/ licensees that are carrying out the relevant activity | Via DHCC portal (online form) | By 7 June 2020 (extended from 31 May 2020) | Yes |
| Hamriyah Free Zone Authority (HFZA) | Only entities/ licensees that are carrying out the relevant activity | TBC | By 30 June 2020 | TBC |
| Sharjah Airport International Free Zone (SAIF) | Only entities/ licensees that are carrying out the relevant activity | TBC by SAIF during week started 7 June 2020 | By 30 June 2020 | No, TBC by SAIF during week started 7 June 2020 |
| International Free Zone Authorities (IFZA) | Only entities/ licensees that are carrying out the relevant activity | Online form here | By 30 June 2020 | Yes |
| Dubai Silicon Oasis (DSO) | All entities/ licensees, including those who do not undertake the relevant activity | Via email to lic_section@dso.ae | By 9 June 2020 (extended from 31 May 2020) | Yes |
| Dubai Development Authority (DDA) | Only entities/ licensees that are carrying out the relevant activity | Via portal link here (excel form to be downloaded and uploaded once completed) | By 25 June 2020 | Yes |
| Abu Dhabi Media Zone Authority | All entities/ licensees, including those who do not undertake the relevant activity | Online form here | By 30 June 2020 | Yes |
| Umm Al Quwain Free Trade Zone (UAQ) | All entities/ licensees, including those who do not undertake the relevant activity | Via UAQ portal | By 30 June 2020 | Yes |
| Fujairah Freezone | All entities/ licensees, including those who do not undertake the relevant activity | Via email to marketing@fujairahfreezone.ae | By 15 June 2020 | Yes |
| KIZAD | All entities/ licensees, including those who do not undertake the relevant activity | Via email to esr@adports.ae | By 20 June 2020 | Yes |
| Jebel Ali Freezone (JAFZA) | Only entities/ licensees that are carrying out the relevant activity | Via email to Jafza.Lease-License@Jafza.ae | By 30 June 2020 | Yes |
| Central Bank | All banks and other licenses financial institutions | Via CBUAEIRR – CBUAE Integrated Regulatory Reporting System hosted in Central Bank Service Portal (online form) | By 30 June 2020 | Yes |
In addition to the above MoF also has clarified a few other points, being:
- What income should be considered for ESR purposes (i.e. gross income);
- How the income earned from a Relevant Activity can be subject to tax outside the UAE;
- How to determine if a Licensee is a High-Risk IP Licensee;
- Definitions of a “Parent Company”, “Ultimate Parent Company” and “Ultimate Beneficial Owner”; and
- In what cases a Licensee can be tax resident outside the UAE.
How can we help?
If you need any help on the assessment of the impact of the UAE’s ESR on your company, do not hesitate to contact us. We have an experienced ESR designated professional team and program that can determine whether you are within the scope of the regulations and guide you as to what actions are required to ensure full compliance.
