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ADGM has announced a deadline of 30 June 2020 for filing Economic Substance (ES) Notifications for licensees incorporated prior to 30 April 2019 with a fiscal year ending 31 December. An ES notification format is available online on the ADGM portal.

The ES Notification must be submitted via email to economicsubstance@adgm.com on or before the due date.

The ADGM ES Notification User Guide also provides clarifications and practical guidance as follows:

  • The reportable period is the financial period (e.g. 1 April 2019 to 31 March 2020) preceding the financial period in which the ES Notification is due (i.e., the financial period ending before 30 June 2020).
  • Licensees in the process of strike off or liquidation are required to comply with the ES Notification requirement. However, those who no longer have a commercial license are excluded from the ES Notification requirement.
  • Income from a relevant activity has been clarified as ‘gross income’ earned from a relevant activity, as recorded in the books of account, and includes income that is generated outside of the UAE. This definition appears to deviate slightly from the meaning recently provided in the Relevant Activities Guide issued by the Ministry of Finance.
  • Licensees that are 51% directly or indirectly owned by the UAE Federal Government, the government of an emirate, or any governmental authority or body of the UAE Federal or emirate-level governments must file an ES Notification in order to claim an exemption from having to file an ES Return to demonstrate economic substance in the UAE. Such licensees may be asked to provide supporting documentation to substantiate their government ownership.
Also, the ADGM ES Notification Guide clarifies that a licensee would be required to file an ES Notification with the Registration Authority only if the ADGM licensee undertakes any of the relevant activities during the reportable period.

Like ADGM, many other free zone authorities (in their capacity as ES regulatory authorities) have issued ES Notification due dates, tabulated below for your reference:

Regulatory authority

ES Notification due date

DAFZA

31 May 2020

RAKEZ

31 May 2020

DACC

7 June 2020

DIFC

12 June 2020

DMCC

30 June 2020

Ajman Free Zone

30 June 2020

RAK ICC

30 June 2020

SAIF

30 June 2020

HFZ

30 June 2020

ADGM

30 June 2020

 Above table updated as of 9 May 2020

While other regulatory authorities are yet to announce due dates for their ES Notifications, it would be prudent for UAE entities to undertake the FY19 ES assessment in order to be ready for ES compliance.