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September 8, 2020 UAE updates Economic Substance Regulations Executive summary In April 2019, the United Arab Emirates (UAE) introduced the Economic Substance (ES) Regulations (ESR) through Cabinet of Ministers Resolution No. 31 of 2019. For background on the ESR and the UAE ES rules, see EY Global Tax Alerts, UAE issues guidance on economic substance rules, dated 18 September 2019 and UAE identifies Regulatory Authorities for Economic Substance Regulations, dated 27 November 2019. The UAE recently enacted significant changes to the ESR under Cabinet of Ministers Resolution No. 57 of 2020, dated 10 August 2020, together with guidance issued by the Ministry of Finance (MoF) under Ministerial Decision No. 100 of 2020, dated 19 August 2020. The new laws have replaced and repealed the prior ESR and guidance. This Alert summarizes the key changes to the ESR. Detailed discussion Key changes to the ESR include the following:
Given these changes, UAE businesses that fall under the definition of licensee should:
The deadline for the submission of ES reports for FY19 remains 31 December 2020. The relevant businesses are required to undertake a detailed analysis of their functions and transactions to be able to determine whether and to what extent the conditions prescribed in the ESR are appropriately met. They should initiate the necessary analysis as soon as possible to ensure timely and accurate compliance. _____________________________________________________________________________________________________________ For additional information with respect to this Alert, please contact the following: EY Consulting LLC, Dubai, UAE
Ernst & Young LLP (United States), Middle East Tax Desk, New York
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