Tax Thursday: UAE update: Disclosure requirements relating to Economic Substance Requirements and UBO

Although the UAE does not have a corporate tax regime, it has recently introduced rules for companies to tackle profit shifting and money laundering:

1. The Economic Substance Regulations (‘ESR’) introduced in 2019 requires companies carrying on relevant activities to demonstrate economic substance in UAE.

2. The requirement for companies to submit details of their Ultimate Beneficial Owner (‘UBO’) introduced in 2020. 

ESR – Scope and upcoming deadline

• ESR applies to UAE based companies that carry out defined relevant activities and earn income from such activities.
• Companies conducting a relevant activity must submit a notification confirming if it is subject to ESR to the Ministry of Finance (‘MoF’) by June 30, 2021 if its financial year ends on 31 December 2020.
• Companies subject to ESR must submit a report demonstrating economic substance in the UAE 12 months after the end of financial year 2020 to the MoF.

UBO – Scope and deadline

• The UBO regulation requires companies in the UAE to submit a declaration with details of the ultimate beneficial ownership to their regulatory authority as per the deadlines set by the respective authorities.
• Companies based in a financial free zone (i.e. DIFC or ADGM) or entities which are directly or indirectly wholly owned by the government are not required to file a UBO declaration.
• Companies must notify the relevant authority of any change or amendment to the information provided within fifteen (15) days of such change or amendment.
• Companies are also required to maintain a register of its beneficial owners, nominee directors/managers and shareholders.

Questions

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