The UAE Ministry of Finance has updated the Frequently Asked Questions (FAQs) section related to Economic Substance requirements (ESR FAQ) by adding a new section L - "Additional information". The new section includes the following information:
- Only businesses that undertake a relevant activity are subject to the Economic Substance Regulations and are required to file a notification and economic substance report.
- Businesses are responsible to self-assess whether they undertake a relevant activity and have a filing requirement under the Economic Substance Regulations and cannot rely on regulatory authorities to inform them of their requirements under the Economic Substance Regulations.
- Businesses that carry out a Relevant Activity during a financial period are required to submit a Notification irrespective of whether they earned income from that Relevant Activity.
- Businesses that have more than one relevant activity during a financial period should submit a single notification and economic substance report and report all their relevant activities in that single notification and economic substance report.
- If a business carries out a relevant activity and it is also subject to country by country reporting, it is also required to comply with the Economic Substance Regulations.
- Notifications for financial periods ending on or before 30 June 2020 must be submitted by 31 January 2021. Notifications for financial periods ending after 30 June 2020 must be submitted within 6 months from the end of the financial period.
- In the absence of audited financial statements, a business can submit unaudited financial statements or management accounts.
- All businesses should keep relevant supporting information and documentary evidence on file and be ready to provide this information if and when asked by their regulatory authority or the FTA.
- At a minimum, information should be kept on file for a period of 6 years.
- Offshore free zone companies are subject to the Economic Substance Regulations in the same way as regular free zone companies or as a company established in mainland UAE.
The FAQs were updated on 3 February 2021