MoF extends deadline for submitting ESR notifications
ABU DHABI, 31st December, 2020 (WAM) The Ministry of Finance (MoF) has announced the extension of the deadline for submitting Economic Substance Regulations (ESR)’s notifications and reports today.
All companies in the UAE that engage in any of the ESR s relevant activities must submit an annual ESR notification to its Regulatory Authority no later than January 31, 2021 - in order not to be subject to administrative penalties.
All companies that fall under this decision are required to register an account in the ministry to access the ESR Portal to submit reports, notifications and supporting documents electronically no later than January 31, 2021 – as no further extension will be given to delinquent companies.
Deadline looms: Ensure your business abides by the new UAE economic substance rules by December 31
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Standalone financial statements
ESR reports mandate submission of all financial information from relevant activities. The centralised structures of many UAE businesses may result in the preparation and audit of financials (that too consolidated) only at the headquarters level. In cases where audited standalone financial statements are not available, licensees may evaluate as to whether management-certified accounts should be submitted.
No employees
Within the UAE corporate group structure, there could be many companies formed only to hold shares and investments in others. The challenge which licensees are facing while reporting for ESR is that these holding companies may not have any employees. In such cases, the involvement of employees at the HQ may be reported under the outsourcing provider details to demonstrate that the operations of the holding company business meet the adequacy test.
The UAE’s amended ESR (Economic Substance Regulations) has classified entities into ‘licensee’ and ‘exempted licensee’ to carry out relevant activities.
The nine relevant activities are banking, insurance, shipping, lease-finance, investment fund management, intellectual property, headquarters business, holding company business, and distribution and services.
The licensees have to file ESR reports along with documents to avoid the administrative penalties. However, exempted licensees need to file notifications only, along with the documents to substantiate their exempt status to be excluded from the ESR.
Keep filing them
If an entity fails to provide sufficient evidence to substantiate its status as an exempted licensee, it will be assumed as a licensee and will have to meet the Economic Substance test and file the report.
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