UAE businesses, including the ones that had already filed ESR notification.

1. Economic Substance Reassessment in
UAE
UAE businesses, including the ones that had already filed ESR notification,
are required to file or re-file ESR notification through MoF’s dedicated portal. It
is mandatory to file the ES report within 12 months following the end of the
licensee’s financial year.
The UAE Ministry of Finance (MoF) has published templates for filing
notifications and reports. According to the ES notification template, additional
details must be provided for the following;
 All branches of a licensee carrying out relevant activities
 Confirm if the licensee meets the definition of ‘exempted licensee’ under the new
ES Regulations
 Parent company, ultimate parent company, and ultimate beneficial owners of the
licensee
Below listed are certain key observations about the report;
 Licensees get the opportunity to explain why CIGAs have not been performed in
the UAE (if applicable).
 The same CIGAs are currently listed in the template for all activities, but it is
expected to be rectified later on.
 Licensees are required to provide the accounting profit/(loss), along with the
‘relevant income’ earned from the relevant activities.
 It is mandatory to attach financial statements along with the report, but there is
no clarity on whether these statements need to be audited or not.
 Licensees must determine their primary/ main regulatory authority, which
becomes difficult when the licensee is carrying on multiple relevant activities
which are governed by different regulatory authorities
 Detailed information must be provided if both the outsourcing providers are
involved.
 Details regarding the parent company, the ultimate parent company, and
the ultimate beneficial owners of the licensee must be provided.
 Differences in the information provided in the notification along with their reasons
must be provided in the report.

2.  Licensees can also include any additional documentation and information to
demonstrate substance if they want to.
The UAE introduced Economic Substance Regulations last year. The
Regulations apply to financial years commencing on or from 1 January 2019.
Entities that are within the scope of the Regulations are required to submit an
annual Notification form to their Regulatory Authority, and complete and
submit to the same Regulatory Authority an Economic Substance
Report within 12 months from the end of their financial year Failure to comply
with the Regulations can result in huge penalties.
There have been certain changes to the rules and regulations pertaining to
economic substance regulations in the UAE. The UAE Cabinet of Ministers
recently issued Cabinet Resolution No. 57 of 2020 that includes a set of
amended regulations and all licensees in the UAE are required to re-assess
their current ESR classifications and align them accordingly to the latest
regulations. Click here to know more.
Economic Substance Reassessment in
UAE
HLB HAMT
Level 18, City Tower-2,
Sheikh Zayed Road
PO Box 32665
Dubai – United Arab Emirates. Tel: +971 4 327 7775
E-mail: dubai@hlbhamt.com
www.hlbhamt.com