Did you know there are only 137 days until New Year’s Eve? Which means there are:
That is not a long time to go. If you reported that you conducted a Relevant Activity for your Economic Substance filing, that means you should have already started working on your ESR report.
Have you ticked that Economic Substance Notification box to state that you do not perform a Relevant Activity? Your company could be at risk depending on the business activity and how your business operates; you may still need to comply with ESR filing. If your UAE company is transacting with a related company outside of the UAE it will may well be performing a Relevant Activity and you will need to prepare an ESR report for lodgement by 31 December 2020. Every hour counts and we recommend on getting in touch and starting now to prevent any potential fines.
All free zone, mainland, and offshore entities – referred to as a Licensee Entity that have a financial year-end (FYE) of 31 December 2019, were to comply and submit the Economic Substance Notification as specified in the Economic Substance Regulations (Cabinet Resolution No. 31 of 2019 or “ESR“) before its deadline. Almost all regulatory authorities set the deadline for Economic Substance Notification to be completed and submitted around 30 June 2020.
Since step 1 was completed – submission of Economic Substance Notification the Licensee Entity should ensure they are currently working towards completing the second step of Economic Substance Reporting (ESR). Step 2 is the most important and comprehensive requirement for complying with ESR and meeting the deadline of 31 December 2020.
A Licensee Entity that has a FYE 31 December 2019 must complete and submit the Economic Substance Report no later than the end of this calendar year. Ministry of Finance (MOF) authorities are yet to release the format and processes for the report. In the meantime, what is sure is that a Licensee Entity must declare and satisfy the Economic Substance Test (we have set out below). For the Licensee Entity to meet the Economic Substance Test they will need to:
Should the Licensee Entity not pass the Economic Substance Test, the concerned Regulator might impose penalties such as:
Time is of the essence and 31 December 2020 is fast approaching. If a Licensee Entity has not started preparing a timeline and working towards compliance with ESR regulations, we strongly recommend engaging services from experts to get started. The company will have less than 5 months to assess whether they have met the Economic Substance Test for 2019. We are assisting companies just like yours on populating data to support Economic Substance. We have a team of experts who are assisting companies on making amendments to their current arrangements to ensure they will pass the Economic Substance Test. Already we are identifying gaps and suggesting a road map to ensure compliance and identifying areas where outsourcing can resolve any potential issues for the current reporting year of 1 January to 31 December 2020. What to do next? Book your ESR consultation with Creation Business Consultants today email [email protected] or call +971 4 878 6240.
Creation ensures clients receive a seamless, cost effective and proficient entry to the GCC market. We provide clients with the foundations and best practices empowering them to build and control a successful business.
We continuously strive to exceed client’s expectations whilst making certain they are protected from undue risk at all times. Creation Business Consultants is the preferred and truly trusted business partners for the GCC.