As a member of Organization for Economic Development and Cooperation (OECD), and in response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group, the UAE has committed to ensuring standards related to Base Erosion and Profit Shifting (BEPS) are implemented.
During 2019, UAE introduced various Federal Legislation including:
The above legislations apply across the whole of the UAE, including all Free Zones and Financial Free Zones (such as the Dubai Multi Commodities Centre).
DMCC advises the following information in respect to Economic Substance Reporting;
Whilst DMCC is continuing to seek further guidance and direction from Ministry of Finance and Free Zone Council especially in respect to the effect on member companies during the COVID-19 pandemic, it is currently understanding the requirement for each DMCC member company is to provide an annual declaration of whether they have conducted any Relevant Activities in the preceding financial year by latest 30th June, 2020.
The Economic Substance Resolution is issued pursuant to the global standard set by the OECD Forum on Harmful Tax Practices (FHTP) which requires companies to have substantial activities in a jurisdiction.
The Regulations require entities holding a trade license in the UAE onshore or in a free zone to:
The report will need to be submitted:
A number of significant sanctions may be imposed by the authorities against a business that fails to comply with the Regulations framework, e.g.:
Since we understand that UAE businesses will be required to advise the Relevant Authority of their economic substance in respect of their financial year commencing on or after 1 January 2019 and will need to file the report within 12 months of the end of the financial year, you should:
As the best Auditors & Accounting firm in the Middle East and with our strong corporate structuring and tax expertise and experience across all industry sectors in the Middle East, Alya Auditor’s experts will be delighted to assist you as follows:
(b) Ongoing Compliance
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