As detailed in our previous alerts, the UAE introduced Economic Substance Regulations (ESR) through the enactment of Cabinet Decision No. 31/2019 on 30 April 2019. ESR requires all relevant entities in the UAE to notify the regulatory authorities as to whether or not they carried out a relevant activity in financial years commencing on or after 1 January 2019 (ESR Notification).
In January 2020, DIFC announced 31 March 2020 as the deadline for submission of ESR Notifications for the first financial year (i.e. any financial year commencing on or after 1 January 2019). Recently, DIFC announced that this deadline is no longer applicable and also stated that the Ministry of Finance will issue a ‘Relevant Activities Guide’. Once this guide is released, DIFC will notify its licensees regarding the ESR Notification process and deadline for submission.
While more guidance is expected in the future, it is imperative that all UAE entities assess the impact of ESR in order to make sure that they are compliant.