ESR Relevant Activities Guide provides guideline that businesses carried out in UAE are expected to use a “substance over form” approach to determine whether they undertake a Relevant Activity leading to fall within the scope of the Economic Substance Regulations
Also,for every financial period, any Licensee that carries out one or more of the Relevant Activities and derives income from these“Relevant Activities” in the UAE will be required to satisfy an “economic substance test” and submit an economic substance report with the appropriate regulatory authority within 12 months from the end of the relevant financial period.
Since this was implemented on Jan 1st 2019, it’s not compulsory for the Company or individual to consider the income earned from the relevant activities from Jan 1st, 2019. They are flexible to consider and fill the details within 12 months of their financial year.For example if a Company’s financial year starts from April 2019, so they must fill the form and perform the test within 12 months that is by 31st march 2020 .
This test is to identify the licensee and the relevant activities assessing the core income generating activities.It also analysis the adequate number of employees, assets and expenses carried out by the firm in UAE
The list of the Relevant Activities:
- Banking Business
- Insurance Business
- Investment Fund management Business
- Lease – Finance Business
- Headquarters Business
- Shipping Business
- Holding Company Business
- Intellectual property Business (“IP”)
All businesses licensed onshore or in any of the free zones should analyze whether their activities fall within the scope of any Relevant Activities and, if appropriate, be prepared to file notifications in such form, manner and timing set forth by their respective regulatory authorities.Failure to comply with the Regulations can result in penalties.
Spectrum Auditing helps in Assessing, Notifying the Update and Reporting of ESR.We will continue to follow these amendments and be on hand to assist you in addressing any questions concerning compliance with the Economic Substance Regulations.