UAE ESR Update: Regulatory Authorities Identified

January 29, 2020M/HQ Publications

What’s new?
Further to Cabinet Resolution No. 31 of 2019, which established the economic substance requirements for business carrying out relevant activities – see UAE Economic Substance Law Briefing –, and its guidance – UAE Economic Substance Regulation Update: Guidance Released –, the Ministry of Finance (MoF) has released the Cabinet Resolution No. 58, identifying the different Regulatory Authorities responsible for overseeing each Relevant Activity.

Relevant Activity Regulatory Authority
Banking Business
  • UAE Central Bank for banking activities regulated by the Bank
  • Competent authority in Financial Free Zones for banking activities carried out therein
Insurance Business
  • Insurance Authority for insurance business regulated by the Insurance Authority
  • Competent authority in Free Zones (financial or note) for insurance activities carried out therein
Investment Funds Management Business
  • Securities and Commodities Authority (SCA) for investment funds management regulated by the SCA
  • Competent authority in Free Zones (financial or not) for the activities of investment funds management carried out therein
Lease Finance Business
  • UAE Central Bank for financial leasing activities regulated by the Bank.
  • Competent authority in Free Zones (financial or not) for the financial leasing activities carried out therein
Headquarters Business
  • Ministry of Economy for headquarter business regulated by the Ministry
  • Competent authority in Free Zones (financial or not) for headquarters activities carried out therein
Shipping Business
  • Ministry of Economy for shipping business regulated by the Ministry
  • Competent authority in Free Zones (financial or not) for shipping activities carried out therein
Holding Company Business
  • Ministry of Economy for holding company activities regulated by the Ministry
  • Competent authority in Free Zones (financial or not) for holding company activities carried out therein
Intellectual Property Business
  • Ministry of Economy for intellectual property activities regulated by the Ministry
  • Competent authority in Free Zones (financial or not) for intellectual property activities carried out therein
Distribution and Services Centres Business
  • Ministry of Economy for distribution and services centres activities regulated by the Ministry
  • Competent authority in Free Zones (financial or not) for distribution and services centres activities exercised in the latter

 

Key take-aways
UAE entities should fast track their self-assessment to determine whether they are within or out of scope of the Economic Substance Regulations.

Every UAE establishments should undertake the following 3-step review process:

  • Does the UAE entity fall within the definition of a Relevant Entity?
  • Is the entity generating income from the Relevant Activity?
  • Is the entity able to meet the Economic Substance Requirements?

The Ministry of Finance is considering the deadline of notification filing per jurisdiction/authority. Further details and guidance with respect to the time, form and method of submission for the notifications and reports are expected to be released by the respective Regulatory Authorities in due course.

UAE entities will bear penalties for non-compliance, including monetary penalties, exchange of information with the tax authorities, and striking off the entities in extreme situations.

How can we help you?
Understanding ESR is paramount to ensure you make the right decisions for your company.

Is your entity in the scope of the new legislation? If so, is it conducting one (or more) of the listed Relevant Activities? Is it able to pass the economic substance test?

M/HQ can support you in assessing the impact of the new legislation on your business – providing preliminary assessments of your company’s current compliance obligations, and where required, help you to define a strategy and implement a bespoke plan of action.

Ensuring that your company complies with its administrative and statutory responsibilities can be cumbersome. Outsourcing this function to M/HQ enables you to comply with your obligations and to focus on what you do best – manage your operations and grow your business.

We are happy to discuss your company’s specific needs in depth in light of the new economic substance law, helping you find the most cost and time-effective solution to meet your administrative and statutory compliance responsibilities.

Still, (some) time to catch up! Register your interest now!

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