The UAE Ministry of Finance has issued important guidance relating to Economic Substance Regulations that companies licensed to operate in the UAE need to be aware of.

Following the issuance of the updated Economic Substance Regulations earlier this year (the Updated ESR), the UAE Ministry of Finance has issued (i) the template for the UAE Ministry of Finance economic substance notification (the Notification), (ii) the template for the economic substance report (the Report) and (iii) clarification of the approaching deadlines for the submission of Notifications and the Reports. The UAE Ministry of finance has also issued guidance on its website which provides clarifications on how the MoF Notifications and the ESR Report are to be completed.  

Filing deadlines

• The UAE Ministry of Finance portal is scheduled to go live during the first week of December 2020.
• The filing deadline for the MoF Notifications for UAE entities with a financial year starting on or after 1 January 2019 and ending on or before 30 June 2020 is 31 December 2020.
• The filing deadline for the ESR Report for UAE entities with a financial year starting on or after 1 January 2019 and ending on or before 31 December 2019 is 31 December 2020.

Next steps

• Where UAE entities have previously submitted an economic substance notification in June 2020, these entities will have to re-submit their notification via the UAE Ministry of Finance portal in December.
• The template Notification can be accessed via this link and the corresponding guidance note can be accessed via this link.
• The template Report can be accessed via this link and the corresponding guidance note can be accessed via this link.

Penalties

• In accordance with Article 13 of the Updated ESR, failure to submit a Notification will result in a penalty of AED 20,000.
• In accordance with Article 14 of the Updated ESR, failure to submit a Report will result in a penalty of AED 50,000.

Clyde & Co can advise on the application of the Updated ESR to your business. Please email EconomicSubstance@Clydeco.com for further information.