Economic And Material Management In The United Arab Emirates
The United Arab Emirates issued the Economic and Material Regulations in accordance with Cabinet Resolution No.31 of April 30, 2019. In addition, according to Ministerial Resolution No.215 of 2019, it is also proposed to implement ESR regulations on the United Arab Emirates on September 11, 2019. On August 10, 2020, Resolution 57 of the Cabinet of Ministers amended the ESR regulations of the United Arab Emirates, and passed Resolution 100 of the Cabinet of Ministers on August 19, 2020 to help implement these amended ESR regulations. ESR maintains and accounts for the economic presence of onshore and free zone companies engaged in “related activities” related to economic material testing in the UAE.
Related activities include:
banking business
insurance
Investment fund management business
Lease financing business
Maritime business
Business of holding company
Intellectual property business
Headquarters business
Circulation and service center business
UAE Economic Material Report
The Licensee shall meet the requirements of the economic substance test and submit the economic substance report within the relevant financial year, including the information and documents mentioned in the ESR regulations.
Thereafter, the national evaluation agency shall publish its decision to prove whether the licensee has met the economic material test requirements within a period of six years after the end of the relevant financial year.
However, if NSA does not publish its decision within the 6-year period due to negligence, fraud or intentional facts and other statements on behalf of Licensee or others of Licensee, then the limitation period shall not apply.
According to the economic material reports conducted by Dubai companies, UAE companies conducting relevant activities must report.
If they have relevant activities in the United Arab Emirates.
If any income is taxable outside the UAE.
Date of the financial year
The Company must submit the corresponding annual report to the corresponding regulatory authority to show that the relevant activities are being carried out in each accounting year. According to the “Economic Material Regulations of the United Arab Emirates”, in order to determine whether it is suitable for economic material testing in the United Arab Emirates, it is necessary to submit details of relevant activities, income, expenditure and resources.
Learn more: relevant activities in the UAE Economic and Material Regulations
UAE Economic Material Reporting Requirements
According to the ESR regulations of the United Arab Emirates, the main measures of economic material reports that organizations should take before the end of each fiscal year are as follows:
First, in order to ensure that the financial statements give a comprehensive, relevant and correct description of transactions and operations, the relevant activities during the accounting year are evaluated.
The evaluation of the amount and type of income generated by relevant activities during the accounting period.
The actual board meeting was held in the United Arab Emirates.
Sign and keep the minutes of board meeting in UAE.
Evaluate the amount and type of expenditure related to the relevant activities and the resources of the UAE.
ESR regulations require companies to obtain resources through contracts and contracts. Financial records.
The UAE ESR regulation also requires the company to confirm the number of regular UAE employees related to the relevant activities.
UAE Economic Material Report Assessment:
The Economic Substantive Regulation requires enterprises registered in Dubai, United Arab Emirates, to use a more substantive method than form, which means that the financial statements will provide a comprehensive, relevant and accurate description of transactions and operations to verify whether relevant activities have been carried out. To do this, you must evaluate the events related to the certificate of registration and evaluate the events that occur each fiscal year.
According to the UAE ESR regulations, enterprises can carry out one or more related activities in the same fiscal year. Therefore, companies in Dubai, United Arab Emirates should confirm the economic substance report of each activity, unless these activities are secondary to the main related activities. The ESR regulation also allows for the strengthening of sub activities of major related activities to ensure that economic substantive reporting is not repeated eventually.
Penalties for non-compliance with economic material reporting in the UAE
If companies in Dubai, UAE fail to comply with the economic substance report, the ESR regulations may impose fines on UAE regulators. The next company will be fined 10000 to 50000 dirhams.
Failed to send notification.
There is no need for a more practical approach than form.
The UAE economic material report failed.
Dubai, the United Arab Emirates, failed to report economic materials for the relevant fiscal year.
If these companies fail to use economic material reporting for many times in the UAE, they will be fined up to AED 3000. In addition, due to repeated failures, the commercial license may be delayed, invalid or unrecoverable. For more information, please click here to contact today’s Economic Material Regulations.
