ECONOMIC SUBSTANCE – UPDATES
The Ministry of Finance (MOF) has issued templates for Economic Substance Notification and Economic Report and deadlines for submission. The below states the new updated Economic Substance regime and action plan for your UAE entity.
- New Portal Going Live – with the new guidance the notification and reports are to be submitted via electronic format under MOF portal. The new MOF portal is due to be ready and live in December 2020.
- ESR Notification Submission – for notifications that were due before the MOF live portal date the submission deadline is further extended until 31 December 2020. An example of this notification extension is to a licensee with financial year ending 31 March 2020. Whereas a licensee that has previously submitted notifications under the old Economic Substance regime will be required to further submit the notification by 31 December 2020 via the MOF portal.
- ESR Report Submission – a licensee that has a shorter financial year that ends before 31 December 2019, the cut-off date for the submission of the Economic Substance Report is extended and now due for submission on or before 31 December 2020. This extension will apply to licensees with a short financial year starting on 1 April 2019 and ending on 31 October 2019.
- New ESR Notification Template – as well as the information relating to the financial year, the relevant activity and income, the Economic Notification will require all licensees and excepted licensees to:
- Register the Ultimate Beneficial Owner (UBO) details
- Disclose a branch office’s details (if a relevant activity is conducted by a branch)
- Self-certification of the exempt status for exempted licensees
- New ESR Report Template – this template will need to be prepared in advance and licensees are to produce:
- Financial details and statements
- Evidence of Core Income Generating Activity (CIGA) details
- UBO, managed and directed information as well as proof of the suitable local employees, assets and so forth.
ECONOMIC SUBSTANCE – FAILURE TO COMPLY
Failure to comply with the new updated Economic Substance regime will have severe results such as: suspending or cancellation of your business license. Furthermore, penalties may be applied for non-compliance or incomplete reporting and the fines are ranging from AED 20,000 to AED 40,000.
ECONOMIC SUBSTANCE – NEXT STEPS FOR YOUR COMPANY
With less than 8 weeks left, time is ticking. There is still time to get your company in order, complete the requirements, identify any gaps, review compliance processes, and correct any errors. Below we have drafted the next steps to ensure your business meets the requirements and standards on time.
- Arrange your ESR consultation with a registered corporate service provider
- All UAE entities (licenses) are required to submit their Economic Substance Notification via MOF by 31 December 2020. This includes licensees that have already made the submission via another means or process.
- Start working / seeking the help of experts to work on your Economic Substance Report.
- If you have already completed your Economic Substance Report, have an expert review and ensure all is in order and to meet standards.
- Licensee must file their Economic Substance Report by 31 December 2020.
ECONOMIC SUBSTANCE – HOW CREATION BUSINESS CONSULTANTS CAN HELP
As a leading registered corporate service provider with a robust corporate structuring, compliance, and tax department team of experts, we can guide you through the complete Economic Substance formalities to assist with:
- Review of ESR compliance and identify any gaps
- Amend and work on corrections
- Outsource activities or roles to meet reporting standards
- Notification and report preparation, filing and submission
Contact on email [email protected] or call +971 4 878 6240 to arrange your expert consultation.
