Economic Substance Regulations - ESR
We would like to draw your attention to the recent introduction of the Economic Substance Regulations (‘ESR’ or ‘the Regulations’) in the UAE vide Cabinet Decision No 31 of 2019, which will be applicable to all licensees that carry on a Relevant Activity, including those operating within the Sharjah Media City (Shams) Free Zone, effective financial years starting on or after 1 January 2019. In line with the mandate from the Ministry of Finance in the UAE, you are requested to comply with these Regulations on an annual basis going forward. In the first instance, an ES notification is due by 30 June 2020, for all licensees of Shams. For Shams licensees that carry on a Relevant Activity and earn income therefrom, an Economic Substance Return (‘ES Return’) will be due within 12 months from the end of the financial year. First ES Return for the financial year ended 31 December 2019 will be due by 31 December 2020.
Given below are the links to the UAE ESR Guidance, the ES notification form, and the ES notification user guide (together referred to as the ‘Shams ESR communication’) prepared by Shams for the benefit of its member entities. Please read the Shams ESR communication documents in conjunction with ESR and other relevant Shams policies and directives.
What do Shams licensees need to do urgently?
In terms of the next steps, kindly identify whether you conduct a ‘Relevant Activity’ and submit your company’s Economic Substance Notification latest by June 30, 2020. This is to provide the Sharjah Media City (Shams) Free Zone Authority (being the Regulatory Authority for Shams companies) with certain initial information on your business entity and its activities in the UAE, which will be a prerequisite to filing an Economic Substance return for the Reportable Period (where required).
The submission of Economic Substance Notification is mandatory for all Shams licensees, regardless of whether or not conducting any Relevant Activities (pursuant to Article 4 of Cabinet Resolution No. 31 of 2019). Non-submission of notification before the due date and provision of inaccurate or incomplete information may result in penalties being imposed.
Please follow the below steps to submit your company’s Economic Substance Notification:
– Save the ES Notification template (as Macro-enabled workbook) by clicking on the link provided.
– Complete the template by filling in the mandatory fields in the form. Kindly refer to the ES notification user guide for additional guidance on how to complete the form.
– Ensure the accuracy and completeness of the information provided in the notification template.
– Submit the completed ES notification form on or before 30 June 2020 by e-mailing it to firstname.lastname@example.org
In case you require further assistance, please contact email@example.com.