Economic Substance Reporting (ESR) Alert

Notification & Reporting Timeline & Guidance

In continuation of Economic Substance Reporting in UAE regulatory updates, in this edition, the key highlights are announcements of various regulatory authorities in UAE on Economic Substance notification and filing. BensCA will keep you updated from time to time as and when the updates will be released from relevant authorities. This alert document also covers the latest updates from Dubai Multicommodity Centre, DAFZA, and DDA.

Summary of due dates and guidance

Annexure

DAFZA Guidelines

DAFZA has informed its licenses, and their branches to must submit economic substance notification by May 3^rd, 2020 (irrespective of whether they conduct a Relevant Activity). They also mentioned in the same circular a step-by-step guide on how to submit their economic substance notification. Follow the key points are also worth to note:

o    It is the duty and liability of the licensee to determine/assess whether they are conducting a relevant activity or not; DAFZA will not provide any indication or assessment. Licensees will have to take appropriate actions to evaluate and file the notification.

o    DAFZA advised its licensees to file the notification via their porta by the ‘Services’ tab and complete the ESR notification form in the ‘Licensing Services’ section. You need a login ID and password.

o    The ESR notification will include details of:

Ø  The licensee's financial year-end.

Ø  If any income revenued by the Relevant Activity is partially or completely subject to the taxation outside of the UAE

Ø  Whether or not get the exemption in Licensee owing to Government ownership

Ø  Whether or not the licensee undertakes a Relevant Activity.

o    If a company under DAFZA identified itself involved in one of the relevant activities, they must file the notification within 12 months from the end of the financial year. DAFZA will also inform via a notification on the availability of the relevant form on their portal.

o    All relevant records must be kept in the state and provided in English when & if required.

DMCC – Notification due date announced

DMCC member must provide an annual declaration of whether they have conducted any Relevant Activities in the preceding financial year, latest by 30 June 2020. DMCC will inform you of the availability of the relevant form and guidance on its portal soon; we advise you to keep checking with you in April/May 2020.

RAK International Corporate Centre (‘RAK ICC’)

RAK has released step by step guidance on the submission of ESR notification; the due date is June 30^th, 2020. Following key points are important to note:

o    ALL licensees (irrespective of whether they undertake a relevant activity or not) would need to submit their notification through the Registered Agent Portal by 30 June 2020.

o    The notification form will be available on the Registered Agent Portal from 29 March 2020.

o    RAK ICC is facilitating the agents holding several licensees to make the bulk filing. Contact RAK ICC at esr@rakicc.com.

o    Penalty for filing ESR as required will fetch administrative penalties AED 10,000 to AED 300,000, exchange of information with the relevant Foreign Authority and potential suspension, revocation, or non-renewal of registration.

o     Following details are required in the notification on the portal:

Ø  Company name & Financial year-end.

Ø  Reportable period & Type of Relevant Activity involved

Ø  Earned income, if any, from the Relevant Activity for the reporting period

Ø  Whether such income is subject to tax outside the UAE

Ø  Mention if the share capital of 51% directly or indirectly owned by the UAE Govt. bodies

Ø  If the entity was a tax resident outside the UAE

Ø  If any entity is categorized as a ‘High-Risk Intellectual Property’ business as mentioned in ESR law, the agent must provide additional details like a parent company, ultimate parent company, and ultimate beneficial owner (name and country) in the notification. 

Other Regulatory Authorities

We will keep updating you with the latest information as and when the other authorities and MOFA publish further information, guidelines or deadline notification, etc.

Other Information

You can refer to the relevant authority for further information or guidelines, also read the articles published by various consultants and newspapers.

https://www.khaleejtimes.com/business/local/some-free-zones-extend-esr-submission-deadline-to-june-30

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