Non-fulfilment of Economic Substance tests – Impact on Parent Company
More often than not, business overlook the broader challenges and the tax implications that may result due to failure in meeting the requirements of the Economic Substance (“ES”) Tests covered under the UAE ES Regulations.
We have provided below an overview of the potential tax challenges that may trigger for the parent company of a subsidiary incorporated in the UAE for failing to meet the ES Tests.
Three ES tests to be met:
In order for a Licensee to demonstrate that it has adequate substance in the UAE in a given Financial Year, it must meet the following:
Impact on parent company if ES Tests are failed to be met
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