On 10th and 19th August 2020 respectively, the Ministry of Finance (“MoF”) issued Resolution No. 57 of 2020 (“Resolution”) and Ministerial Decision No. 100 of 2020 (“Ministerial Decision”) on Economic Substance Regulations (“ESR”).
The Resolution effectively combines the most updated ESR related provisions into one single document and repeals:
- Cabinet of Ministers Resolution No. 31 of 2019, which introduced ESR in the UAE.
- Ministerial Decision No. 215 of 2019, which amended the latter.
- Cabinet Resolution No. 58 of 2019, which identified ‘Relevant Authorities’ for each Relevant Activity.
On 3rd November 2020, the MoF published on its website a Notice regarding ESR Filing Requirements and Deadlines (“Notice”). Below are the main take-aways from the MoF Notice:
- New submission method: All Notifications and Economic Substance Reports must from now on only be submitted electronically on the MoF Portal;
- Deadline: The MoF Portal is expected to go live within the 1st week of December 2020, and the first official deadline for Notifications and Reports submission will fall on 31st December 2020;
- Notifications re/submission! All Licensees’ and Exempted Licensee’s Notifications must be submitted within six months from the end of the Financial Year. Notifications that fell due before the MoF Portal was available; and/or Notifications that have been previously submitted with Regulatory Authorities must be reviewed according to the Resolution (if needed) and submitted/re-submitted through the MoF Portal by 31st December 2020;
- Penalty for failing to submit Notifications: Licensees and/or Exempted Licensees with Financial Year ending on or before 30th June 2020 that fail to submit their Notifications along with the required supporting documents by 31st December 2020 will be issued a penalty of AED 20,000;
- Substance Reports: All Economic Substance Reports must be submitted within twelve months from the end of the Financial Year. Economic Substance Reports that fell due before the MoF Portal was available will be extended to31st December 2020;
- Penalty for failing to submit Substance Report: Licensees and/or Exempted Licensees (where applicable) with Financial Year ending on or before 31st December 2019 that fail to submit their Economic Substance Report along with the required supporting documents by 31st December 2020 will be issued a penalty of AED 50,000.
What’s next?
In light of the Resolution, all Licensees and Exempt Licensees must re-file the Notification and file the Economic Substance Report via the MoF Portal.
We therefore strongly recommend that all Licensees and Exempt Licensees reassess their scope vis-à-vis the new ESR regime to be ready to re-submit the Notification and submit the Economic Substance Report within the time-frame applicable for each entity.
All UAE entities falling within the scope of ESR must review their governance arrangement and put in place all necessary measures to comply with the ESR requirements from now on. Non-compliant practices should be remediated without further delay.
For further information on how M/HQ can assist your entity to comply with ESR requirements, please see below our previous publications:
Corporate Secretarial Services: [UPDATED]
Keeping on top of the administrative and statutory compliance responsibilities associated with managing a company can be challenging and time-consuming. The time and energy spent attending to these onerous yet necessary tasks could be focused on running and growing your business.
NEDs in the context of Economic Substance Regulations
ESR took effect on 30 April 2019. There are a number of actions in which relevant Licensees must undertake to ensure compliance with ESR, chiefly the management of the Licensee from the UAE.
See our Mail Alert Get in touch – To get the latest Mail Alerts
![UAE ESR Update: ESR Notification Deadline Tracker [3.0]](https://m-hq.com/wp-content/uploads/2017/12/Tax-1-300x300.png)
UAE ESR Update: ESR Notification Deadline Tracker [3.0]
DDA has issued a notification template to be followed by all member firms who carry out a Relevant Activity to…
Read More
UAE ESR Update: ESR Notification Deadline Tracker [2.0]
With ESR deadlines fast approaching, many Free zones have provided updates on the applicability of the ESR Guidelines. These guidelines…
Read More
UAE ESR Update: DMCC issues Economic Substance Notification template
DMCC, the UAE’s largest free zone, has issued a notification template to be followed by all member firms to comply…
Read More
UAE ESR Update: ESR Notification Deadline Tracker
Following the introduction of the Economic Substance Regulations (ESR), there have been many notifications and updates issued by certain Regulatory…
Read More
UAE ESR Update: Ministry of Finance (MoF) publishes Relevant Activity Guide
What’s new? The Ministry of Finance (MoF) has published its Relevant Activity Guide in order to support UAE Licensees in understanding the…
Read More
UAE ESR Update: Notification procedure and deadline for DIFC Licensees
What’s new? The DIFC Authority issued further statements updating its Licensees on the ESR notification deadline. What does this mean?…
Read More
Economic Substance Notification procedure and deadline for DIFC Licensees
What’s new? The DIFC Authority issued an announcement updating its Licensees on the ESR notification procedure and deadline. What does…
Read More
UAE ESR Update: Economic Substance Notification procedure and deadline for RAK ICC Licensees
What’s new? RAK ICC has announced a deadline to 30th June 2020 for all Licensees for making ESR submissions in relation to…
Read More
UAE ESR Update: With less than a month to go – Are you Ready?
What’s new? As detailed in our previous alerts, the UAE introduced Economic Substance Regulations (“ESR” or “Regulations”) by the enactment…
Read More
