December 2020 / United Arab Emirates

December 31 2020

Economic Substance filing deadline extended to 31 January 2021

Companies and certain other UAE business forms that undertake a Relevant Activity must comply with the Economic Substance Regulations, which includes the annual submission of a Notification and Economic Substance Report.

To support businesses that may have been impacted by COVID-19 and temporary inaccessibility of the MoF Economic Substance Filing Portal, the Ministry of Finance has extended the deadline for businesses to submit their Notification and Economic Substance Report to 31 January 2021.

The revised filing deadlines for the 2019 Reportable Period are as follows:

  • Notification: The later of six months after the financial year end, or 31 January 2021
  • Economic Substance Report: The later of 12 months after the financial year end, or 31 January 2021

This is an exceptional, one-off extension of the filing deadline for businesses with a 2019 Reportable Period and businesses with a 2020 Reportable Period that are required to file their Notification by 31 December 2020. No further extensions will be granted, so businesses should make every effort to file as soon as possible and not wait until the end of the extended deadline.

Failure to submit your Notification and Economic Substance Report on time will result in the application of penalties.

As a reminder, businesses should submit their Notifications and Economic Substance Reports on the MoF Portal that is accessible on the following webpage:

December 30 2020

COVID-19 Pandemic: Dubai Customs Offers 80% Discount on Fines

As part of the economic stimulus package, the Dubai Customs provides an 80% discount on fines for customs cases and violation detected or committed before 31 March 2020.

To avail of the discount, businesses and individuals must settle their customs cases and pay any charges due, including customs duties resulting from the cases, if any is due, before 31 December 2021. Eligible businesses are required to submit an online application with all relevant information specified in the Customs Notice No. 07/2020.

The fine reduction initiative applies to the following:

  • uncollected customs fines imposed by the judicial judgement;
  • remaining unpaid instalments where the customs fines are paid in instalments to Dubai Customs; and
  • remaining payable amounts for the cases under execution at the Dubai Courts.

The initiative was announced by the Dubai Customs on 25 November 2020.

December 23 2020

COVID-19 Pandemic: Temporary Zero-Rated VAT Granted for Imported Medical Equipment

The UAE Federal Tax Authority (FTA) has announced a temporary zero-rated VAT applicable to specific medical equipment imported and used for COVID-19 protection purposes.

The medical equipment imports to which the temporary zero-rated rules apply are personal protective equipment used for the protection from COVID-19, which contain the features and meet the specifications determined and specified by Ministerial Decision. The medical equipment is limited to:

  • medical face masks that are not included in Cabinet Decision No. 56 of 2017 on Medications and Medical Equipment Subject to Tax at Zero Rate (under approved standards 14683 and UAE.S ASTM F2100);
  • half-filtered face masks (UAE.S EN 149);
  • non-medical "community" face masks made from textile (UAE.S 1956);
  • single-use gloves (UAE.S ISO 374-2); and
  • chemical disinfectants and antiseptics intended for use on the human body, excluding detergents, cosmetics and personal care products (UAE.S EN 1276, EN 1650, and EN 14476:2013+A2).

The application of the zero-rated VAT is limited to medical equipment imported or made at the disposal of suppliers during the period between 1 September 2020 and 28 February 2021. However, the FTA provided that where a supplier has charged a 5% VAT on a supply which was eligible for zero-rating and the supplier is aware of the identity of the recipient, the supplier will issue and deliver a tax credit note to the recipient in order to refund the VAT overcharged on the supply.

The FTA published the public clarification VATP023 regarding the zero-rated VAT on imported medical equipment on 20 December 2020. It is available on FTA's official website.