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VAT Advisory

  • Overview
  • UAE VAT Advisory
  • UAE VAT Audit
  • UAE VAT Deregistration
  • Economic Substance Regulation
  • Country by Country Reporting (CbCR)
  • Tax Residency Certificates

Overview

UAE is a signatory and a member of the Organization for Economic Co-operation and Development (OECD) Inclusive Framework. OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS) has identified 15 Action Points that members need to implement to ensure free trade and economic development.

In response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation, the UAE issued Economic Substance Regulations on 30 April 2019. These Regulations were subsequently amended by Cabinet of Ministers Resolution No. 57 of 2020 on 10 August 2020.

The Regulations requires all Licensees (both onshore and offshore/ free zone companies) that carry out any of the defined Relevant Activities to maintain and demonstrate an adequate economic substance in the UAE appropriate to the level of activities they undertake in the UAE.

Relevant Activities under Economic Substance Regulation in UAE

The Relevant Activities are:

  • Banking Business
  • Insurance Business
  • Investment Fund Management Business
  • Lease - Finance Business
  • Headquarters Business
  • Shipping Business
  • Holding Company Business
  • Intellectual Property Business
  • Distribution and Service Centre Business

These Regulations apply from financial years commencing on or from 1 January 2019. Licensees conducting any of the Relevant Activities (as above) are required to submit an annual Notification within six (6) months from the end of the financial year and an annual Economic Substance Report within twelve (12) months from the end of the financial year to their respective Regulatory Authorities. Ministry of Finance has created a separate portal for ESR filings.

The Licensees are required to conduct an Economic Substance Test each year to assess if they are carrying out any of the Relevant Activity(ies) in the reportable financial year and accordingly file the Notification and Economic Substance Report.

How KPI ESR Experts Assist You

  • Understanding business structure and Identifying whether the company’s business falls in the list of businesses/industries which the UAE ESR have prescribed
  • Analysing the economic substance requirements based on relevant activity identified, identifying gaps and providing corrective actions
  • Understanding business structure and Identifying whether the company’s business falls in the list of businesses/industries which the UAE ESR have prescribed
  • Assistance in ensuring timely compliance and reporting

Happy to Help!

KPI Tax experts will assist you in conducting the Economic Substance Test and to submit the Notification and Report

Frequently Asked Questions

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With over 30 years of hard work and commitment to making a real difference, KPI has grown to serve customers from a variety of business sectors and industries across Middle East.

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