Economic Substance Notifications

Economic Substance Notification Fast Approaching Deadline

6/13/2022
Economic Substance Notifications

The Economic Substance Regulations (“ESR”) require all UAE companies and certain other business forms that undertake one or more “Relevant Activity” to maintain and demonstrate an adequate economic presence in the UAE relative to the activities they undertake.

The ESR impose annual compliance requirements including, inter-alia, the filing of an Economic Substance (“ES”) Notification within six months from the end of the relevant financial year.

  • Who?
    • Any entity that is a juridical person, or an unincorporated partnership registered in the UAE and undertaking a Relevant Activity irrespective of earning income or not.
    • Any entity qualifying as an exempted licensee under the ESR.
  • What?
    • As part of this filing, entities must disclose which relevant activities were conducted, whether any income was earned therefrom and whether such income was subject to tax outside the UAE.
    • An ES Notification submitted by an Exempted Licensee must be accompanied by sufficient evidence to substantiate the Exempted Licensee’s status for each category in which it claims to be exempt.
    • File a notification within six months of the end of the relevant financial year.
  • Why?
    • Non-filing of ES Notification within the applicable due date will lead to an administrative penalty amounting to AED 20,000.
  • Next Steps
    • Entities must re-examine the facts and assess whether they are subject to the ESR and are required to file an ESR Notification.
    • Any entity whose financial year ends on 31 December 2021 must file ESR Notification on or before 30 June 2022.
    • Maintain adequate documents required to substantiate the position taken in respect of ESR.
  • How can Crowe help?
  • Assessing whether the business activities conducted fall within any of the Relevant Activities and whether any exemption can be availed.
  • Assistance in filing the ES Notification.
  • Advising on documentation to be maintained to support any future inquiries from the authorities.

Contact Us

Markus Susilo
Markus Susilo
Partner, Tax Advisory
Alessandro Valente
Alessandro Valente
Manager - International Tax Service & Transfer Pricing