UAE Economic Substance: MoF issues Covid-19 Industry Advisory Notification

adminEconomic Substance

On 28th May, the UAE Ministry of Finance (MoF) issued a Covid-19 Industry Advisory Notification (IAN). The IAN relaxes certain requirements prescribed under the UAE Economic Substance Regulations (ESR) for the period affected by Covid-19. The measures are in line with those implemented recently by offshore jurisdictions such as Jersey, BVI, Guernsey, and Bermuda.

ESR applies to every company licensed in UAE, and requires entities who conduct certain “relevant activities” and who generate income from these activities, to meet certain economic substance tests.

The UAE MoF has recognized that businesses in the UAE might be required to adjust their operating procedures to adapt to disruptions caused by Covid-19. In particular, the pandemic might affect the mobility of individuals, either as a result of travel restrictions or due to self-isolation or quarantine.

For this reason, the deadline for ESR notification filing has been extended to 30th June 2020. There was no mention of an extension to the ESR filing due to take place later this year.

Until now, each regulatory authority had been mandated to set out its own filing deadline and reporting mechanism. It remains unclear whether such extension of the deadline for filing ESR notifications would be applied by default to regulatory authorities who had already announced earlier due dates. So far, only Dubai International Financial Centre (DIFC) have confirmed that the deadline for all DIFC entities has moved from 12th June to 30th June.

The deadline is fast approaching! Alpha Management is working closely with all clients to ensure that the ESR notification is completed in time. Guidance and instructions for the necessary forms and information needed has already been sent out. If you are interested in learning more, please contact us.