What is Economic Substance Regulation for DIFC in UAE?
Dubai International Financial Centre (DIFC) is a Regulatory Authority for UAE in Economic Substance Regulation. DIFC has more than 2,584 registered companies in the free zone and boasts of a workforce of 25,600 people. Economic Substance Notification is the responsibility of the bill filed by all the licensees administering Relevant Activity in UAE.
Licensees are answerable for directing the evaluation to authenticate it carries out a Relevant Activity. DIFC Regulatory Authority’s not accountable for handling an assessment on the applicability of Economic Substance Regulations in the UAE.
Relevant activity means the Banking Business, Insurance Business, Investment Fund Management Business, Lease-Finance Business, Holding Company, Headquartered Business, Shipping Business, Intellectual Property Business, and Distribution & Service Centre Business.
What is to be notified in Economic Substance Notification?
Entities that come under the law of Economic Substance Regulations UAE should tender the Economic Substance Notification with DIFC that include the following:-
- Financial year-end;
- Whether or not handles a Relevant Activity;
- Whether or not earned any income from the Relevant Activity;
- Whether any earning generated by the Relevant Activity is totally or partially subjected to a tax outside of the UAE; and
- Whether or not exempt due to Government control.
Should all the businesses in DIFC subject to the Economic Substance Notification?
No, not all companies in DIFC require to present the Economic Substance Notification. Only corporations delivering Relevant Activity in DIFC should compulsorily file the Economic Substance Notification. The submission of the Economic Substance Notification deadline is specified in the bill.
Is the furnished deadline relevant to all entities in DMCC falling under Economic Substance Regulation in UAE?
No, the deadline concerns only those entities befalling under this rule for Economic Substance Regulation UAE in DIFC.
What occurs in the situation of Non-compliance with Economic Substance Regulations in UAE?
If any licensee in DIFC does not comply with the obligation of filing the Economic Substance Notification. Such a Licensee may have to suffer penal consequences as implemented by the law. The punishment for non-compliance of Economic Substance Regulations in UAE:
- AED 10,000 to AED 50,000 in the first year
- AED 50,000 to AED 300,000 in case of recurrence of the breach
Additional, negligence by a license holder to comply with Economic Substance Regulations UAE can end in:
- Inevitable Transference of Information with International Competent Authority
- Plausible suspension
- Disavowal of the registration
How can an Accounting firm help Economic Substance Regulations in UAE?
Accounting firms have a distinct segment for ESR to assist and oversee the Agreement with Economic Substance Regulations in UAE with the following process:
- Oversee Enterprise Ventures in particular and estimate the applicability of Economic Substance Regulation (ESR) on the ventures. It also furnishes guidance and administration on filing Economic Substance Notification with DIFC.
- Give training and advice for compliance with the rules of ESR to direct Impact Study and Gap Analysis. It judges whether the company satisfies the Compliance inspection and proffers recommendations.
- Quality-driven professionals are well-versed with operating experience in supporting organizations with the applicability of Economic Substance Regulation in the UAE. They shall support settle the applicability of this legislation and assistance with Economic Substance Notification.
For enquiries, call +971 5679 52590 / E-mail: info@aviaanaccounting.com
Related Articles:
ESR on Banking and Insurance Business
What are the matters a Licensee should consider under ESR?
Penalties for Non-Compliance with Economic Substance Regulations
Requirements to meet Economic Substance Test
What activities to be conducted for ESR?