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Newsletter 02/2020

Member profile | Creation Business Consultants

 

BUSINESS GUIDE FOR ECONOMIC SUBSTANCE REPORTING

How do you know which company structure is correct for your business? More importantly, how will you ensure your business is legally compliant as it trades after setup?

 

Creation Business Consultants (Creation) not only advise on your company setup, we provide a holistic approach and roadmap to support your market entry, company structuring and business operations in the UAE and GCC, based on our professional and commercial experience managing multinational companies.  Our corporate services include:

  • Market research and intelligence
  • Pre setup consulting
  • Company set-up services
  • Post set-up and on-going support.

On-going compliance within the ever-changing UAE regulatory environment can be difficult. We work closely with our clients to minimise the risk of non-compliance, fines or worse.

One of the most topical issues at present for those doing business in the UAE are the newly introduced Economic Substance Regulations (ESR).

Scott Cairns, Creation’s Managing Director noted “this is one of the most significant changes to UAE regulations that businesses have ever seen”.

If businesses are within scope of the ESR, they must implement compliance strategies and prepare for reporting requirements.

UAE-based entities within the scope of ESR must comply with annual reporting requirements from January 2020 onwards. This will involve an annual disclosure regarding compliance.

Failure to notify the regulatory authority, submit annual reports, provide information on request or the provision of inaccurate information will attract penalties, licence suspension, license revocation, or renewals denied. 

ESR demonstrates the efforts of the UAE to fulfil both EU requirements and the highest international standards on taxation, the Organisation for Economic Co-operation and Development conditions.

UAE onshore and free zone companies must comply with ESR if they generate income conducted by “Relevant Activities” including:

  • Finance/leasing business
  • Fund management activity and business
  • Banking related business
  • Insurance businesses
  • Holding company
  • Headquarters business
  • Intellectual Property (IP)
  • Distribution/service centre business
  • Shipping business

 

WHAT ARE THE REQUIREMENTS? 

UAE onshore and free zone entities will need satisfy ESR in the UAE, by passing the relevant business activities test. A company meets the economic test if it:

  1. Conducts “core income-generating activities” in the UAE
  2. Is directed/managed in the UAE
  3. Has adequate number of full-time employees, expenses and assets for carrying out the UAE business activity.

WHAT IS THE PROCESS? 

The relevant licensee is obliged to annually submit the Economic Substance Report to the Regulatory Authority. The Report is to evidence the entity satisfies the requirements i.e.:

  • Nature and amount of revenue
  • Expenses
  • Place of business
  • Number of full-time employees with qualifications
  • Declaration on satisfaction of ESR

WHAT CREATION CAN DO

It’s important your business understands ESR and its annual reporting obligations.

We can help you understand the requirements that apply to your company, assist with reporting obligations and provide strategic advice to ensure compliance.

Contact our corporate services team for an ESR and structuring assessment on 

info@creationbc.com

www.creationbc.com

or +971 4 878 6240

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