Deadline approaching for UAE economic substance notifications

Out-Law News | 22 Jun 2020 | 2:50 pm | 4 min. read

Firms operating in the United Arab Emirates (UAE) should seek advice on whether they need to notify regulators that they carry out one or more relevant economic activities, an expert has warned, days ahead of the notification deadline of 30 June.

The UAE introduced economic substance regulations (ESRs) in April 2019. Under the rules, any entity licensed in the UAE to carry out a 'relevant activity' whether onshore or in a free zone and including in a financial free zone, is required to comply with the economic substance rules.

Corporate law expert Mohammad Tbaishat of Pinsent Masons, the law firm behind Out-Law, said different regulators were imposing different requirements on firms.

“Although the regulations state that only entities carrying out ‘relevant activities’ need to notify the relevant regulator, some regulators are requiring all licensees to notify whether or not they conduct relevant activities. Businesses are advised to seek legal advice if they're unsure whether or not they conduct relevant activities and fall within the economic substance regulations,” Tbaishat said.

Regulators requiring all member firms to make a notification include the Dubai International Finance Centre, Abu Dhabi Global Markets, the Dubai Multi Commodities Centre, and the Umm Al Quwain Free Trade Zone.

The Dubai Development Authority only requires a notification from entities conducting one or more ‘relevant activities’, but has set an early deadline of 25 June.

In April the UAE government confirmed that the notification deadline to the Ministry of Finance was 30 June. A number of regulators across the emirates had imposed a 31 March deadline but subsequently relaxed this. 

Firms which fail to notify the regulator they are carrying on a ‘relevant activity’ could face a fine of up to AED50,000 (£11,000).

Authority

Type of entities

Mode of notification Deadline
Ministry of Economy All licensees that conduct ‘relevant activities’  Ministry of Economy website or through this link 30 June 2020
Dubai International Financial Centre All member entities DIFC Portal 30 June 2020
Abu Dhabi Global Markets All member entities  Form to be downloaded from this link, completed and the sent to [email protected] 30 June 2020
Jebel Ali Free Zone Authority All licensees that conduct ‘relevant activities" Through the link circulated by the JAFZA authority 30 June 2020
Dubai Multi Commodities Centre All member entities DMCC Portal  30 June 2020
Dubai Development Authority  All entities that conduct one or more ‘relevant activities’ Form can be found on DDA’s website and then to be submitted through AXS portal  25 June 2020
Umm Al Quwain Free Trade Zone All member entities The form can be found using the link circulated by the authority via emails 30 June 2020