There are many tax-related frauds which happen all over the world. To combat this situation, Economic Substance Regulations (ESR ) have been presented all over the world in the countries which have none or very less corporate taxes. This move is a welcome one as it will help notify the business activities of the company and will prove detrimental in the reduction of tax-related frauds.
UAE introduced the Economic Substance Resolution (Cabinet of Ministers Resolution No.31 of 2019) on 30 April 2019. This regulation stated that it requires all the UAE Free Zone and Onshore companies that perform “Relevant Activities” to comply with the UAE regulations on Economic Substance. Basically companies will have to notify the authorities first whether they are doing a relevant activity and before December 31, 2020, companies who are doing relevant activity must submit the ESR return by December 31, 2020.
The Relevant Activities consist of the following:
- Banking Business
- Holding Company Business
- Insurance Business
- Headquarters Business
- Investment Fund Management Business
- Lease - Finance Business
- Distribution and Service Centre Business
- Shipping Business
- Intellectual property Business (“IP")
The provisions of the Regulations will not be applicable to those companies in which the Federal Government of UAE, Government of any of the Emirates or any of the government body own at least 51% of the share capital either in direct or indirect capacity.
This regulation has also made its way to the DMCC Free Zone, which also wishes to provide any help which can be provided to its member companies. Let us know more about the Dubai Multi Commodities Centre (DMCC) Free Zone.
Dubai Multi Commodities Centre (DMCC)
The DMCC was established in collaboration with the Dubai government with the hopes of creating the Free Zone a global market where there are easy marketing and trading of commodities. The free zone consists of the latest infrastructure and technologies which will help companies to conduct business.
Various organisations such as The Dubai Pearl Exchange(DPE), Dubai Goods Delivery Standard (DGD) for Gold, Dubai Coffee and Tea Centre, Dubai Diamond Exchange (DDE) and various other have their headquarters in the Free Zone which help in smooth movement of commodities.
Very recently, the DMCC has provided an updated relating to the Economic Substance reporting in the DMCC. Let us know more about this update.
Economic Substance Reporting in DMCC - Update
According to the latest update relating to Economic Substance reporting in the Dubai Multi Commodities Centre (DMCC), the free zone has provided some information on ESR requirements and the procedures to be followed by member companies.
Previously, the notifications mentioned that the companies should indicate if they are conducting the relevant business activities, and the update has mentioned the date by which the companies should notify the management of the activities. By the 30th of June 2020, all companies in the DMCC Free Zone must mention if they are conducting any of the relevant activities which have been mentioned earlier in the blog.
A notification guide, along with an ESR Workflow is provided by the Ministry of Finance UAE. It should be noted that the wording of the business or any of the required information may change prior to the formal request of the DMCC to its member companies. In case of any change in any of the information, updated guidance will be provided to the company management.
In today’s scenario, a business has to keep track of a lot of things which will divert the attention of the management, and the business will not be able to meet the deadlines for submitting ESR notification or returns. This is the reason companies should avail the services of a consultancy which will help the company administration in the proper management of the business functions.
JAXA Chartered Accountants is one of the most reputed business consultancy which will take care of the financial aspect of your business and will help your company achieve the maximum level of productivity. JAXA has experience of more than 13 years. With an ISO 9001:2015 certification, the management can be sure that any advice provided by them will be very beneficial for the company. To obtain details on the services provided by JAXA Chartered Accountants, Contact Us. We will be happy to help you.