Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. The KPMG logo and name are trademarks of KPMG International. 57 of 2020 that includes a set of amended regulations and all licensees in the UAE are required to re-assess their current ESR classifications and align them according to the latest regulations. Since the last time you logged in our privacy statement has been updated. You will not continue to receive KPMG subscriptions until you accept the changes. 31 of 2019), (the “Regulations”) on 30 April 2019. In addition to information required in the report, licensees can also optionally include any additional documentation and information to demonstrate substance. Read an October 2020 report prepared by the KPMG member firm in the UAE. The economic substance notification and report is required to be filed within 12 months following the end of the financial year (with the first report due by 31 December 2020 for the financial year ended 31 December 2019). Dear Respective Client, Hope this email finds you well. IN A NUTSHELL Economic Substance Regulations (“ESR”) were introduced by the UAE Government in 2019. Find out how KPMG's expertise can help you and your company. Companies need to define a reporting period when submitting a notification of the UAE’s Economic substance regulations. Please take a moment to review these changes. Some authorities across the emirates had imposed earlier deadlines, with an earlier deadline of 31 March 2020 set by the Dubai International Finance Centre (DIFC) , for example. Tax professionals expect a user guide to be released shortly on the procedures and clarification on filling the forms. As per the Economic Substance Regulations (ESR), all Licensees are required to notify the Regulatory Authority (typically the license issuing authority) annually on the following aspects: Whether or not the Licensee is carrying on a Relevant Activity Start adding content to your list by clicking on the star icon included in each card. Click anywhere on the bar, to resend verification email. The UAE introduced Economic Substance Regulations (“the Regulations”) that became effective as of 1 January 2019. The study considers various payment,... Information on corporate and individual tax rates and rules in over 150 countries worldwide. All entities/ licensees, including those who do not undertake relevant activity, Via RAK ICC portal by a registered agent only (online form), By 23 June 2020 (extended from 7 June 2020), Only entities/ licensees that are carrying out relevant activity, By 7 June 2020 (extended form 31 May 2020), Sharjah Airport International Free Zone (SAIF), International Free Zone Authorities (IFZA), By 9 June 2020 (extended from 31 May 2020), Via portal link here (excel form to be downloaded and uploaded once completed), All banks and other licenses financial institutions, Via CBUAEIRR - CBUAE Integrated Regulatory Reporting System hosted in Central Bank Service Portal (online form), 1 This information is based on the guidance issued by authorities and may be applied differently in practise. entities (both companies and branches) should assess whether they fall under the UAE Economic Substance rules (in 2019) and which of the below compliance obligations they may have (if any): also make an assessment as to whether it can satisfy the economic substance tests prescribed by the regulations. For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance. The Economic Substance Regulations are applicable to all the Licensees within the UAE’s jurisdiction and include all Licensees operating within free-zones in UAE. Such services are provided solely by member firms in their respective geographic areas. Please see www.pwc.com/structure for further details. The purpose of this Economic Substance Annual Notification (ES Notification) is to provide the Registration Authority with certain initial information on an ADGM Licensee and its activities in the United Arab Emirates (UAE), and is a prerequisite to filing an Economic Substance return for the Reportable Period (where required). Economic Substance Regulations(ESR) Dubai, UAE was brought out via Resolution 31 of 2019 in April of the same year.The Economic Substance Regulation serves as a guideline for improving the nation’s tax frameworks and will make companies more accountable for maintaining an economic presence in the UAE. The economic substance report requires licensees to provide the accounting profit/(loss), in addition to the “relevant income” earned from each of the relevant activities. The UAE Cabinet of Ministers issued Cabinet Resolution No. Additionally, while the same core-income generating activities are currently listed in the template for all activities, it is expected that this will be rectified in a later version of the template. ESR impacts all entities licensed in the UAE whether on the mainland or in the free zones. The UAE has recently introduced economic substance regulations, and as a result, all UAE businesses that may be subject to these regulations should be … The UAE Economic Substance Regulations (Cabinet of Ministers Resolution 31 of 2019) came into force on 30 April 2019, and subsequent guidance (Ministerial decision No. All rights reserved. The guidance documents include useful clarifications on the Notification and Substance Report forms You will not receive KPMG subscription messages until you agree to the new policy. Jay Krishan, Partner. UAE based entities which are covered by the Economic Substance Regulations (ESR) should take note of these changes ahead of the first ESR Report filing deadline, the 31 st of December 2020. Economic Substance Regulations (ESR) were introduced in the UAE with effect from 30 April 2019 1. The approach of the different authorities in relation to which entities should be filing the initial notification is currently inconsistent, and therefore it is important to monitor announcements/ clarifications that are made by the relevant Regulatory Authorities. The UAE introduced Economic Substance Regulations (“the Regulations”) that became effective as of 1 January 2019. Set preferences for tailored content suggestions across the site, UAE Economic Substance Regulations: Updated notification filing requirements. According to the regulations, the companies that have been dissolved, struck-off, or liquidated before the deadline for submission of the Economic Substance Notification, are not required to file the Economic Substance Regulations Notification in the UAE. Businesses in the UAE have until 30 June this year to file an economic substance regulations (ESRs) notification, the federal government has confirmed. Offshore Companies, any person or company holding a trade license or certificate of incorporation to carry out any business activity is coming under Economic Substance Regulations. On 30 April 2019 UAE introduced a Resolution on the Economic Substance and these regulations are applicable for all private sector companies. Under the ESR, all filing requirements fall under the remit of the relevant Regulatory Authority, and as such it is the Regulatory Authorities that set the requirements, deadlines and format for notification filing as they believe is appropriate and which may vary. UAE based entities which are covered by the Economic Substance Regulations (ESR) should take note of these changes ahead of the first ESR Report filing deadline, the 31st of December 2020. The UAE Ministry of Finance on 22 October 2020 published “templates” for filing notifications and reports under the UAE economic substance regulations. In addition, the UAE Economic Substance Regulations (ESR) Report is due for submission as soon as possible.. The UAE’s Finance Ministry has announced all companies in the UAE which engage in any of the relevant activities under the Economic Substance Regulations have to submit a notification to the Regulatory Authority by 31 December 2020. UAE entities that are directly or indirectly owned by the UAE government (both federal and local) are specifically excluded from the Regulations. branch in the UAE and require any of the below: the rules and guide you as to what actions are required to ensure full compliance. Detailed information is requested in case each of the outsourcing providers is involved. 57 of 2020, issued on 10 August 2020 (Resolution) and Ministerial Decision No. All UAE businesses (including those that had previously filed their economic substance notifications by 30 June 2020) are now required to file (or re-file) a notification through the Ministry of Finance’s dedicated portal. The United Arab Emirates (UAE) Cabinet of Ministers has recently issued updated Economic Substance Regulations which repeal and replace those previously announced. What companies and governments can do to make less taxing in the Middle East? The businesses in the UAE will now have to prove their Economic and Substantial existence in the UAE and have to apply the substance over form approach to such a review. The United Arab Emirates (UAE) Ministry initially enacted the Cabinet Resolution no. The deadlines for filing economic substance notifications are on the horizon (or indeed just passed). In line with this, the companies licensed by the Dubai International Financial Centre (DIFC) free zone are also required to ensure ESR compliance. Under the ESR, all filing requirements fall under the remit of the relevant Regulatory Authority, and as such it is the Regulatory Authorities that set the requirements, deadlines and format for notification filing as they believe is appropriate and which may vary. We want to make sure you're kept up to date. The updated information regarding the ESR has been published by the Ministry of Finance (MoF) on their web portal (link here ). (31) of 2019. ... All UAE entities which fall within the scope of the Updated ESR will be required to submit (or re-submit) an economic substance notification to the UAE … There are potentially two broad filing requirements under the Regulations: (i) Notification form and (ii) Annual substance return. How to define the reporting period in the economic substance notification? KPMG International and its member firms are legally distinct and separate entities. 57 of 2020, issued on 10 August 2020 (Resolution) and Ministerial Decision No. The companies that conduct the relevant activities in the UAE are mandated to notify the regulatory authorities whether or not they are conducting the relevant economic activities within the UAE. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Being a serious business owner, you must know that the Economic Substance Regulations UAE (ESR) requires all licensees to file the ESR notification form with the concerned regulatory authorities. This is only a guide and should be read together with the relevant legislation, in particular, the UAE Economic Substance Regulations as set out in the Cabinet of Ministers Resolution No. Also read: ESR Compliance: 5 Requirements for the UAE Economic Substance Test. These are: the Ministry of Finance Resolution No. © 2021 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The UAE introduced Economic Substance Regulations (“the Regulations”) that became effective as of 1 January 2019. As such, all UAE entities must self-assess whether they perform relevant activities or not, and declare their position in the notification … While attaching the financial statements is mandatory along with report, it remains unclear whether these need to be audited. The Regulations require companies and other business forms registered in the UAE that carry on one or more “Relevant Activities” (together, “Relevant Activities”), to have economic substance in the UAE in relation to these activities, and to comply with notification and return filing obligations. Does your UAE entity (company or a branch) fall under these rules? On 30 April 2019, the UAE introduced Economic Substance Regulations (ESR) under the Cabinet of Ministers Resolution No.31 of 2019. If you haven't yet considered the impact of the UAE Economic Substance Regulations on your company/ branch in the UAE and require any of the below: Our experienced team will be happy to analyse your business activities, determine whether you are within the rules and guide you as to what actions are required to ensure full compliance. The updated information regarding the ESR has been published by the Ministry of Finance (MoF) on their web portal (link here ). As per the recent Economic Substance Regulation, UAE onshore and free zone companies and other UAE business forms (referred to as “Licensees”) are required to notify to the Relevant Authorities as to whether they are conducting the relevant activity or not as per the regulation and required to file the necessary details as mentioned in the Notification form. Economic Substance Regulations are set in place to ensure that UAE entities that undertake certain activities are not used to artificially attract profits that are not commensurate with the economic activity undertaken in the UAE. This is only a guide and should be read together with the relevant legislation, in particular, the UAE Economic Substance Regulations as set out in the Cabinet of Ministers Resolution No. Contact our corporate team for assistance. The UAE Economic Substance Regulations (Cabinet of Ministers Resolution 31 of 2019) came into force on 30 April 2019, and subsequent guidance (Ministerial decision No. On 10th August 2020 New ESR was introduced via Cabinet Resolution 57/2020 which repealed and revoked Cabinet Decision no. Economic Substance Regulations (ESR) Notification Requirement for Companies Under Liquidation. Similar to the economic substance notification, the report also requires details in relation to the parent company, ultimate parent company, and ultimate beneficial owners of the licensee. The reporting period in accordance with the rules is calculated … This applies to those entities whose financial year ended on 31 December 2019. The Issuance of Directives For The Implementation of The Provisions of The Cabinet Resolution No. In this video, we will be discussing the new Economic Substance Regulations that have been implemented in the UAE. Below, we have summarised the most up to date filing requirements as released by some of the Regulatory Authorities. 31/2019 with effect from 30th April 2019 on Economic Substance Regulations in the UAE. Economic Substance Regulations (ESR) Notification in the UAE. There are potentially two broad filing requirements under the Regulations: (i) Notification form and (ii) Annual substance return. All UAE entities which fall within the scope of the Updated ESR will be required to submit (or re-submit) an economic substance notification to the UAE Ministry of … The Regulations require ALL UAE licensed entities to comply with notification and return filing obligations and those that carry out any of the ‘Relevant Activities’ to maintain an adequate ‘economic presence’ in the UAE. 27 June, 2020 Economic Substance Regulations in the UAE is applicable to legal or natural persons licensed in carrying out the relevant activities in UAE including the licensee in Free Zone and Financial free zone.Our risk advisory experts offer you with legal advice on UAE ESR.Call us +97142500251. Economic Substance Regulations Notification in UAE. The Economic Substance Regulations in UAE have come into effect and the mainland, free zone (including financial free zones) and offshore companies that carry out relevant activities are required to demonstrate economic substance. The most recent UAE Economic Substance Regulations Updates have seen substantial modifications and now require re-assessment and re-submission of notification. This might not be simple in cases where the licensee is conducting multiple relevant activities that are governed by different regulatory authorities (for instance, lease-finance and distribution and service centre activities for a mainland company are regulated by the Central Bank and Ministry of Economy, respectively). On this basis, UAE sovereign investment funds and other UAE government controlled and/or related entities would not be required to meet the UAE economic substance requirements. The UAE rules are, in part, a reaction to the UAE having been once placed on the EU’s list of non-cooperative tax jurisdictions. Please note that your account has not been verified - unverified account will be deleted 48 hours after initial registration. All rights reserved. On 30 April 2019, the UAE introduced Economic Substance Regulations (ESR) under the Cabinet of Ministers Resolution No.31 of 2019. There are also various regulatory filing requirements that need to be met in order to comply with the regulations. The Notification is a method for Regulatory Authorities to collect certain initial information in respect of Licensees and their activities in the UAE for the relevant Reportable Period. Offshore Companies, any person or company holding a trade license or certificate of incorporation to carry out any business activity is coming under Economic Substance Regulations. 31/2019. The Economic Substance Regulations UAE (ESR UAE) requires certain licensees to comply with Notification & Return filing obligations. There are two reporting requirements under ESR – (1) filing of … Continue reading Economic Substance Regulations in the UAE