What are the matters a Licensee should consider under ESR in Dubai, UAE?


As part of the Dubai’s commitment as a member of the OECD Inclusive Framework and in response to an assessment of the Dubai’s tax framework by the European Union Code of Conduct Group on Business Taxation, the Dubai introduced a Resolution on the Economic Substance (Cabinet of Ministers Resolution No.31 of 2019, the “Regulations”) on 30 April 2019. The Regulations require Dubai onshore and free zone companies and other Dubai business forms that carry out any of the Relevant Activities to maintain an adequate economic presence in the Dubai relative to the activities they undertake.

Matters to be taken into consideration by Licensee in Dubai, UAE

The following is a non-exhaustive list of matters a Licensee should consider before the end of a financial period:-

  • Assess what Relevant Activities it has performed during the financial period applying a “substance over form” approach; 
  • Assess the amount and type of income earned from the Relevant Activity during the financial period; 
  • Hold board meetings with a quorum of directors physically present in Dubai; 
  • Ensure board meeting minutes are signed and maintained in the Dubai; 
  • Identify the amount and type of expenses and Dubai based assets (incl. premises) in respect of the Relevant Activity, and ensure access to assets (incl. premises) can be demonstrated through agreements and financial records;
  • Identify the number of Dubai based full-time employees or other personnel and their qualifications responsible for carrying on the Licensee’s Relevant Activity; and 
  • Ensure control and supervision over any outsourcing arrangements can be demonstrated through contractual agreements. 

Additional actions may be required to ensure a Licensee can demonstrate sufficient economic substance in the Dubai for a relevant financial period, and the considerations above may differ where a Licensee has either a Holding Company or a High Risk IP Business. ​​​​​​

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