Economic Substance Regulations was first launched in April 2019. Cabinet of Ministers made Amendments to the Regulations and reworked Guidance was launched in August 2020. The companies will have to maintain enough economic presence in UAE concerning the Relevant Activities undertaken.
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The Relevant Activities are Investment Fund management Business; Headquarters Business; Insurance Business; Lease – Finance Business; Intellectual property Business (“IP”); Banking Business; Holding Company Business; Shipping Business; and Distribution and Service Centre Business.
An Annual Notification form should be filed to the Regulatory Authority initially and within 12 months from the financial closing of an Economic Substance Report to the same authority. Those companies are exempted from Report submission, if it has not generated income from a Relevant Activity in a financial year or if it satisfies the exemption conditions. Notification forms need to be submitted in such cases too. Non-compliance can incur penalties, suspension, cancellation or non-renewal of trade permits, etc.
All Businesses concerning the Relevant Activities with an annual closing on September 2020, must file an Economic Substance Notification; and all Businesses with March 31, 2020, as the financial year-end should file an Economic Substance Report by March 31, 2021, unless proved exempt.
Source: https://www.mof.gov.ae/en/StrategicPartnerships/pages/esr.aspx
