Economic Substance Regulations

Resolution 57 and Ministerial Decision 100 (collectively referred to as the “Regulations”), issued by the Ministry of Finance (MOF) of the United Arab Emirates, have been developed in consultation with the Organization for Economic Cooperation and Development (OECD) and the European Union (EU).

Financial Period A Licensee’s financial period should align with the period for which financial statements (if prepared) are compiled. Newly established Licensees may have either a short or long initial financial period.

Reportable Period A Licensee’s Reportable Period is the accounting period starting on or after 1 January 2019 for which the Notification must be submitted. The end of the Reportable Period corresponds to the conclusion of the period for which financial statements (if any) are prepared. The Reportable Period always refers to the financial period preceding the period in which the Notification must be filed.

Examples For a Licensee with a financial year following the Gregorian calendar year:

• Start date: 1 January 2019
• End date: 31 December 2019

For a Licensee incorporated on 1 October 2019 with a financial year ending on 31 March 2020 (short accounting period):

• Start date: 1 October 2019
• End date: 31 March 2020

For a Licensee incorporated on 1 January 2019 with a financial year ending on 31 March 2020 (long accounting period):

• Start date: 1 January 2019
• End date: 31 March 2020

Following the initial long accounting period, the Licensee’s subsequent Notification would cover the next Reportable Period:

• Start date: 1 April 2020
• End date: 31 March 2021

A Licensee incorporated on 1 July 2018 with a financial year ending on 30 June 2019 would not need to submit a Notification for this period, as the Regulations apply to financial years starting on or after 1 January 2019. The first reportable period for such a Licensee would be:

• Start date: 1 July 2019
• End date: 30 June 2020

Frequency ESR compliance obligations must be fulfilled annually. Licensees must assess their applicability under the Regulations on an annual basis and are solely responsible for making the required filings through the Economic Substance Portal.

Submission Timeline Licensees engaged in Relevant Activities must submit an annual Notification within six months from the end of the relevant financial period. Additionally, Licensees earning income from their Relevant Activities must file an Economic Substance Report within 12 months from the end of the relevant financial period.

Financial Year End Notification Deadline (6 months) Reporting Deadline (12 months) 31-Mar-21 30-Sep-21 31-Mar-22 30-Jun-21 31-Dec-21 30-Jun-22 30-Sep-21 31-Mar-22 30-Sep-22 31-Dec-21 30-Jun-22 31-Dec-22

Professional Advice According to Ministerial Decision No. 100 of 2020, regarding the issuance of directives for implementing Cabinet Decision No. 57 of 2020 on economic substance requirements, businesses uncertain about conducting a relevant activity should seek professional advice.