Economic Substance Regulation

Applicable on ALL companies in United Arab Emirates Contact Us to assist you in Notification Submission


The UAE has issued economic substance regulations (the “Regulations”) introducing a requirement for UAE entities to maintain an adequate “economic presence” in the UAE relative to the activities they undertake.


As part of the UAE’s commitment as a member of the OECD Inclusive Framework, and in response to an assessment of the UAE’s tax framework by the European Union (“EU”) Code of Conduct Group on Business Taxation, the UAE introduced a Resolution on the Economic Substance (Cabinet of Ministers Resolution No.31 of 2019, the “Regulations”) on 30 April 2019.  Guidance that provides further clarity on the application of the Regulations was issued on 11 September 2019. The Regulations require UAE onshore and free zone companies and other UAE business forms that carry out any of the “Relevant Activities” listed below to maintain an adequate “economic presence” in the UAE relative to the activities they undertake. 

Relevant Activities

  • Banking Business

  • Insurance Business

  • Investment Fund management Business

  • Lease - Finance Business

  • Headquarters Business

  • Shipping Business

  • Holding Company Business 

  • Intellectual property Business (“IP")

  • Distribution and Service Centre Business​


Penalties for non-compliance

Failure to Notify: AED 10k to 50k Failure to provide accurate or complete information: 


● Penalty of AED 10k to 50k; and 

● Deemed failure to demonstrate economic substance in the UAE Failure to demonstrate sufficient economic substance in the UAE for the relevant Financial Year: First failure 

● Penalty of AED 10k to 50k; and 

● Information exchange with foreign competent authority of: (1) parent company, (2) ultimate parent company, and (3) ultimate beneficial owner. Second consecutive instance of failure 

● Information exchange with foreign competent authority of: (1) parent company, (2) ultimate parent company, and (3) ultimate beneficial owner; and 

● Penalty of AED 100k to 300k; and 

● Trade / commercial licence could be: suspended, withdrawn or not renewed.



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