On 31 December 2020, the UAE Ministry of Finance (MoF) extended the compliance due dates for all the licensees to submit their Economic Substance (‘ES’) notifications and reports by one month, i.e. from 31 December 2020 to 31 January 2021. The submission is required to be made online on the MoF portal within the following timelines:
- Submission (or re-submission, as the case may be) of ES notification: All licensees and exempted licensees that carried out any of the Relevant Activities, and have their financial year (FY) ending between 31 December 2019 and 31 July 2020, are required to file an ES notification by 31 January 2021. For FYs ending after 31 July 2020, the ES notification is to be filed within six months from the end of the relevant FY.
- Submission of ES report: Licensees undertaking relevant activities and deriving income therefrom for FYs ending between 31 December 2019 and 31 January 2020 are required to file an ES report by 31 January 2021. For FYs ending after 31 January 2020, the ES report is to be filed within 12 months from the end of the relevant FY.
As the extended deadline is fast approaching, this is the last opportunity for businesses to undertake a detailed analysis of their functions and transactions, and determine the extent to which the ESR law applies to them. Failure to undertake necessary compliance procedures could result in penalties ranging from AED 20,000 to AED 50,000.
Our detailed alert on the ESR law and compliance requirements can be found here.