50.Why should a business comply with the Economic Substance requirements?
Why should a business comply with the Economic Substance requirements? If you are within the scope of the Economic Substance Regulations (see Section B), you must submit a Notification and Economic Substance Report, and meet the Economic Substance Test. Failure to do so will result in penalties (see Question 48).
51. What help can the MoF call center provide?
The MoF call center can only support businesses with questions regarding MoF account registration or login issues.
If you have any Economic Substance filing portal related technical issues (e.g. the Notification filed does not appear on the Licensee dashboard, etc.) please contact ESRsupport@cbrain.com.
For questions regarding the scope and application of the Economic Substance Regulations, please review the information on this webpage, or obtain professional advice.
52. I called a Regulatory Authority and was told they are unable to support me with my Economic Substance query, what should I do?
Please send an email to ESinfo@mof.gov.ae and include the following information:
- Details of your businesses (name, legal form, main activity)
- Nature of your query / reason for contacting the Regulatory Authority
- Name of Regulatory Authority
- Name of representative at the Regulatory Authority
We note that your Regulatory Authority and the Ministry of Finance cannot assist you in determining if and how the Economic Substance Regulations apply to your business. For such questions, you should seek professional advice.
53. The business activities that I undertake do not meet the requirements of any of the Relevant Activities listed, am I subject to the Economic Substance Regulations?
No, 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.
54. My business was just set up, if I undertake a Relevant Activity (or plan to) by when should I file?
- Notifications must be filed within six months from the end of the relevant financial period; and
- Economic Substance Reports must be filed within 12 months from the end of the relevant financial period.
55. Will the Regulatory Authorities tell businesses if they are subject to the Regulations?
No, 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.
Please refer to Schedule 1 of Ministerial Decision 100 for an explanation and examples of each Relevant Activity.
56. Should I file a Notification even if I did not earn any income during this financial period?
Yes, 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.
57. If my business carries out multiple Relevant Activities should I submit individual Notifications and Economic Substance Reports for each Relevant Activity?
No, 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.
58. Can the Ministry of Finance recommend a company to help us with Economic Substance?
No, the Ministry of Finance cannot recommend a company to assist you with Economic Substance. There are numerous professional services firms in the UAE that should be able to support you.
59. I have made a request to amend my Notification (or Economic Substance Report), when will the request be approved?
Your Regulatory Authority is responsible for approving your request for amendment, please contact them for an update on when your request will be processed.
60. If my business is subject to Country by Country Reporting, will I also be required to comply with the Economic Substance Regulations?
If your business carries out a Relevant Activity you are also required to comply with the Economic Substance Regulations.
61. Will my Notification submitted to my Regulatory Authority in June 2020 be available when I log in to the MoF filing portal, or will I be required to submit a new Notification?
You will be required to submit a new Notification on the MoF filing portal.
62. By when do you need to file your Notification?
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 six months from the end of the financial period.
63. By when do you need to file your Economic Substance Report?
Economic substance reports for the 2019 financial period are due by 31 January 2020. For subsequent financial periods, the Economic Substance Report must be filed within twelve months from the end of the financial period.
64. Can you file an Economic Substance Report immediately after filing a Notification?
Yes, the Economic Substance Filing Portal allows businesses to file an Economic Substance Report immediately after having filed their Notification.
Please note that in some cases there may be a delay in the generation of the Economic Substance Report following submission of the Notification due to high demand. Where your Economic Substance Report is not generated immediately, please do not submit another Notification. The Economic Substance Report will be generated in due course and you will be notified when it is available on your dashboard.
65. Are there cases where a business is only required to submit a Notification and not file an Economic Substance Report?
Yes, if the Licensee is an Exempted Licensee or does not earn income from its Relevant Activity. In these cases, there is no requirement to file an Economic Substance Report.
The Economic Substance Filing Portal will automatically assess whether you need to file an Economic Substance Report based on your Notification, and only create a Report if you are required to submit one.
66. Are branches subject to the Economic Substance Regulations?
Yes, but there is no separate filing requirement for UAE branches. The “parent" or “head office" of the branch will need to file a Notification and Economic Substance return to report the relevant information of its branch or branches that undertake a relevant activity in the UAE.
67. Do the Financial Statements to be submitted along with the Economic Substance Report need to be audited?
No. In the absence of audited financial statements, you can submit unaudited financial statements or management accounts.
68. Is there a minimum level of income that must be met for the Economic Substance Regulations to apply?
No, there is no minimum income requirement or threshold. If you carry out a Relevant Activity you are required to submit a Notification.
If you generate revenue from a Relevant Activity - even if that was just a single dirham - you are required to file an Economic Substance Report and demonstrate economic substance in the UAE
69. The Economic Substance Report does not require me to provide evidence regarding assets, expenditure, board meetings held in the UAE and other questions asked. Do I need to keep this information on file and if so for how long?
Yes, 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 six years.
70. Will a business face a late filing penalty if its Exempted Status is denied after the original Economic Substance Report filing deadline for the relevant financial period?
No. If you submit a Notification claiming an exemption from the Economic Substance Regulations and this exemption is denied, you will be given 30 business days to submit your Economic Substance Report from the date the exemption claim was denied. Businesses that willfully, knowingly and intentionally submit improper exemption claims may face penalties.
71. Is a company that is registered as an offshore free zone company considered tax resident outside of the UAE for ESR purposes?
No, 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.
72. Do the supporting documents for an exemption have to be notarized / certified by a public notary or relevant government authority?
No, there is no need for documents to be certified or notarised, but documents to support tax residency in a foreign country or documents to evidence that the income of the UAE branch of foreign company is taxed outside the UAE will need to be issued by the relevant foreign tax authority.
73. Will I be required to answer all the questions included in the Economic Substance Report template available on the Ministry of Finance website?
No, the Economic Substance Report is a smart form that automatically selects the relevant questions that must be completed by a Licensee based on the previous responses and information provided.
74. Do I need to file a Notification every year?
Yes, if you continue to undertake a Relevant Activity.
75.If my licensing authority is a DED, which Regulatory Authority should I select?
This depends on your Relevant Activity, but in most cases, this will be the Ministry of Economy.
If your main Relevant Activity is Banking or Lease-Finance, you will need to select the Central Bank.
If your main activity is Insurance, you will need to select the Insurance Authority, and for Investment Fund Management activities you will need to select the Securities and Commodities Authority.
76. Why can’t I select a Holding Company Business and another Relevant Activity?
A business is only considered a Holding Company Business if it does not undertake any other Relevant Activity. If you are a Holding Company Business but also undertake another Relevant Activity, you should select the other Relevant Activity when filing your Notification
77. I currently do not undertake a Relevant Activity, but this may change in 6 or 10 months’ time. Am I required to file a Notification now?
You will need to submit a Notification for the Reportable Period during which a Relevant Activity was undertaken. Notifications must be filed within six months after the relevant Financial Year end, and Economic Substance Reports must be filed twelve months after the end of the relevant financial period.
78. If the UBO of the Licensee is a UAE national or UAE resident individual, does the company still need to file a Notification?
Yes, a business that undertakes a Relevant Activity will be required to file a Notification, irrespective of the nationality or residency of its direct or ultimate owners.
79. I can’t log in because I haven’t received my activation email after creating my MoF account
Please check your junk or spam email folder as sometimes the activation email ends up being blocked by spam filters. Otherwise, please send an email to email@example.com
80. Will my Regulatory Authority receive my Notification and Economic Substance Report through the Economic Substance Filing Portal
Yes, your Regulatory Authority will have access to all your submissions made on the Economic Substance Filing Portal.
81. The Economic Substance Report template refers to the ESR Registration number - where can I find this?
The ESR Registration Number has been removed from the Economic Substance Report form and is no longer required to be included.
82. If a business previously filed a Notification in June directly with its Regulatory Authority confirming that it did not carry out a Relevant Activity as per the original Economic Substance Regulations (Cabinet Resolution No.31 of 2019), is the business required to file a Notification with the Ministry of Finance via the Economic Substance Filing Portal if it now undertakes a Relevant Activity based on the amended Economic Substance Regulations?
In most cases, the amendments to the Economic Substance Regulations have resulted in businesses no longer being within the scope of the rules.
However, in limited cases, businesses that did not need to file under the old regulations may now be within scope of the economic substance rules. In these cases, a business will need to file a Notification on the Ministry of Finance Filing Portal.
83. If a Notification in June 2020 was filed confirming that no Relevant Activity was carried out, are we required to re-file a Notification on the Economic Substance Filing Portal
No, only businesses that undertake a Relevant Activity are required to resubmit their Notification on the Ministry of Finance Filing Portal.
84. Where do I report the details of my branch?
When completing the Notification and Economic Substance Report on the Economic Substance Filing Portal, you will be able to include details of your branches that carry out a Relevant Activity in Section B of each form.