UAE: Compliance with economic substance regulations, relief measures (COVID-19)
UAE: Compliance with economic substance regulations
The UAE Ministry of Finance in late May 2020 issued an advisory notification that provides certain relief with regard to requirements under the UAE’s economic substance regulations—relief provided in response to the coronavirus (COVID-19) pandemic.
Under economic substance regulations, there is a legal requirement for all UAE entities, including branches of local and foreign companies that carry on any of nine relevant activities, to maintain economic substance in the UAE specific to each relevant activity. The nine activities relate to banking, insurance, investment fund management, lease-finance, shipping, headquarters, holding companies, intellectual property, and distribution and service centers.
The economic substance regulations have an effective date of 30 April 2019, with reporting required from financial years ending on or after 1 January 2019. Under these rules, certain annual regulatory filing requirements (that include notification and reporting) must be met in order to comply with the regulations as well as to avoid penalties for non-compliance.
Certain “free zones” have already announced the deadline for the first economic substance notifications—such as, DIFC with a deadline of 12 June 2020; ADGM with a deadline of 30 June 2020; and DMCC with a deadline of 30 June 2020.
In general, economic substance notifications across the UAE must be filed by the deadline of 30 June 2020, and the due date for the economic substance report for FY 2019 is 31 December 2020. However, the UAE Ministry of Finance also granted certain relief concerning the economic substance reporting requirements in response to the COVID-19 situation.
Read a May 2020 report [PDF 1.9 MB] prepared by the KPMG member firm in the UAE
Read also a July 2020 report prepared by KPMG International
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