Afridi & Angell June 18, 2020 - United Arab Emirates Economic Substance Notification – Deadlines The UAE has introduced Cabinet Resolution 31 of 2019 (as amended) (the Economic Substance Regulations) which apply to UAE onshore and free zone entities that undertake, and earn an income from, any of the Relevant Activities (listed below):
The Regulatory Authorities (as determined by Cabinet Resolution 58 of 2019) are now requesting the submission of Economic Substance Notifications in accordance with Article 8(1) of the Economic Substance Regulations on the part of entities that are required to do so under the Economic Substance Regulations. The following are the filing requirements and deadlines that are released by some of the Regulatory Authorities. (Continue reading below.)
Penalties Entities that: (a) fail to submit the Notification by the deadline set out above or (b) knowingly provide inaccurate information to the Regulatory Authority shall be subject to an administrative penalty ranging between AED 10,000 to AED 50,000 in accordance with Article 11 of the Economic Substance Regulations. Furthermore, the entities shall be deemed to have not met the requirements under the Economic Substance Regulations. With respect to DIFC entities, failure to submit the ESR notification shall also result in an additional penalty of USD 25,000 in accordance with Article 31 and Schedule 2 of the DIFC Operating Law 7 of 2018. It is therefore prudent that UAE entities take a “substance over form” approach to carefully assess their businesses and see if they undertake, and earn any income, from any Relevant Activity. The fact that the commercial license of a UAE entity does not state a Relevant Activity does not automatically mean that the UAE entity is not undertaking any Relevant Activity.
Afridi & Angell is able to assist with the business assessments and the filing of Economic Substance Notification forms. ■
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