7th July 2020
The UAE implemented the economic substance law on 30 April 2019. The objective of this law is to ensure that businesses are carrying out activities within the state that meet the economic substance interest and is to discourage the set up of companies purely to avoid paying taxes in other high tax jurisdictions. MSI's UAE audit member Alnoman & Ravi provides further information.
The OECD has mandated the UAE to introduce the regulations, in order to meet the minimum requirements to become an OECD member.
The economic substance report must be submitted to the relevant regulatory authorities within 12 months of the financial year-end. This is applicable for companies whose financial year runs from 1st January 2019. Companies that have a financial year-end of December 31st, 2019, will have to submit the report no later than December 31st, 2020. The format of this has not yet been revealed. Businesses must file a notification to their respective licensing authorities as well; most regulatory authorities in the UAE, have a deadline of June 30th 2020.
Not meeting the requirements could lead to penalties varying from 10,000 to 300,000AED, and the suspension of licenses. This is applicable to all businesses performing relevant activities within the mainland, or even within the free zones.
The following are considered to be relevant activities:
We can assist clients with:
Find out more about the Economic Substance Regulations in the UAE >>
ALNOMAN & RAVI CHARTERED ACCOUNTANTS, formed in the year 1990 is a well-established Accounting and Auditing firm with experience and expertise in Audit, Accounting & Consultancy services. The firm is registered with the Economic Development Department of the UAE government, and are also the approved auditors for the Free Zone entities in UAE.
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