Have you set up your company in line with UAE Economic Substance Regulations? If you have not yet, do it now – because if the looming deadline passes, be prepared to pay a hefty fine!
The United Arab Emirates enacted the UAE Economic Substance Regulations on 30th April 2019, which requires companies to have substantial activities in a jurisdiction, taking into account the global standards developed by the OECD and the EU for business taxation to curb harmful tax practices and be removed from the EU’s list of non-cooperative tax nations.
The purpose of the Economic Substance Regulations is to ensure -that UAE entities which undertake certain activities are not used to artificially attract or shift profits that are not proportionate to the economic activity undertaken in the UAE– by setting up the criteria that confirm that the Licensee is carrying out an activity in the UAE that achieves economic substance interest.
The Economic Substance Regulations require UAE onshore and free zone companies, including offshore companies, branches, partnerships and other UAE business forms that carry out any of the “Relevant Activities” listed below to maintain an adequate “economic presence”in the UAE relative to the activities they undertake:
The UAE Economic Substance Regulations apply not only to UAE entities that are part of a foreign multinational group, or that are owned by a foreign shareholder but on any UAE entity which carries on a Relevant Activity, regardless of whether the UAE entity belongs to a foreign multinational group.
The Economic Substance Regulations apply to a limited liability company, a private shareholding company, a public shareholding company, a joint venture company, a partnership (a limited liability partnership, a limited partnership, a general partnership, etc.), but does not apply to a natural person, sole proprietorship, trust, and foundation.
Wincore advisory Group help families to articulate their objectives and aspirations to establish the foundation of a sound succession planning through the establishment of a DIFC Will to mitigate Sharia or foreign succession laws at the dismissal of the testator / legator.
A Licensee- any commercial company- that is directly or indirectly owned 51% or more by the UAE government is no longer specifically exempt.
Exempted Licensees for the Economic Substance Regulations in UAE are:
Wincore advisory Group help families to articulate their objectives and aspirations to establish the foundation of a sound succession planning through the establishment of a DIFC Will to mitigate Sharia or foreign succession laws at the dismissal of the testator / legator.
UAE company operating in any relevant activities must satisfy all the below economic substance requirements of the Regulations (including but not limited to) demonstrating that:
Wincore advisory Group help families to articulate their objectives and aspirations to establish the foundation of a sound succession planning through the establishment of a DIFC Will to mitigate Sharia or foreign succession laws at the dismissal of the testator / legator.
Non-compliance with the Regulations may lead to administrative fines and sanctions which include:
Contact Person:
Mohammed Rahali
Wincore Advisory Group
Managing Partner
M: +971 (0) 55 138 9591
T: +971 (0) 42 212 6 02
m.rahali@wincoreadvisory.com
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