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The UAE introduced Economic Substance Regulations (“the Regulations”) that became effective as of 1 January 2019. There are potentially two broad filing requirements under the Regulations: 

(i) Notification form and 

(ii) Annual substance return. 

Under the Economic Substance Regulations (ECR), all filing requirements fall under the remit of the relevant Regulatory Authority, and as such it is the Regulatory Authorities that set the requirements, deadlines and format for notification filing as they believe is appropriate and which may vary. Below, we have summarised the most up to date filing requirements as released by some of the Regulatory Authorities.

What Are the Relevant Activities for UAE Economic Substance Reporting?

UAE Economic Substance Regulations (ECR) apply to the businesses that carry out the following 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

Who is required to file 1	How to file	When to file
DIFC	All entities/ licensees, including those who do not undertake relevant activity	Via DIFC portal	Yes
ADGM	Only entities/ licensees that are carrying out relevant activity	Via email	Yes
DAFZ	All entities/ licensees, including those who do not undertake relevant activity	Via DAFZ portal	Yes
DMCC	All entities/ licensees, including those who do not undertake relevant activity	Via DMCC portal	Yes
RAK ICC	All entities/ licensees, including those who do not undertake relevant activity	Via RAK ICC portal by a registered agent only (online form)	Yes
Securities and Commodities Authority (SCA)	SCA have contacted via email all Investment Management Firms, Management Company Firms regulated by SCA requesting submission of the notification form	Via e-mail	Yes
AJMAN FZ	All entities/ licensees, including those who do not undertake relevant activity	Via email	Yes
RAK EZ	All entities/ licensees, including those who do not undertake relevant activity	Via RAK EZ portal (online form)	Yes
Dubai World Trade Centre	All entities/ licensees, including those who do not undertake relevant activity	Via email	Yes
Dubai Aviation City Corporation	All entities/ licensees, including those who do not undertake relevant activity	Via email	Yes
Dubai Healthcare City (DHCC)	Only entities/ licensees that are carrying out relevant activity	Via DHCC portal (online form)	Yes
Ministry of Economy	Only entities/ licensees that are carrying out relevant activity	Online form here	Yes
Hamriyah Free Zone Authority (HFZA)	Only entities/ licensees that are carrying out relevant activity	TBC	TBC
Sharjah Airport International Free Zone (SAIF)	All entities/ licensees, including those who do not undertake relevant activity	Online form here	Yes
International Free Zone Authorities (IFZA)	Only entities/ licensees that are carrying out relevant activity	Online form here	Yes
Dubai Silicon Oasis (DSO)	All entities/ licensees, including those who do not undertake relevant activity	Via email	Yes
Dubai Development Authority (DDA)	Only entities/ licensees that are carrying out relevant activity	Via portal link here (excel form to be downloaded and uploaded once completed)	Yes
Abu Dhabi Media Zone Authority	All entities/ licensees, including those who do not undertake relevant activity	Online form here	Yes
Umm Al Quwain Free Trade Zone (UAQ)	All entities/ licensees, including those who do not undertake relevant activity	Via UAQ portal	Yes
Fujairah Freezone	All entities/ licensees, including those who do not undertake relevant activity	Via email	Yes
KIZAD	All entities/ licensees, including those who do not undertake relevant activity	Via email	Yes
Jebel Ali Freezone (JAFZA)	All entities/ licensees, including those who do not undertake relevant activity	Via email	Yes
Central Bank	All banks and other licenses financial institutions	Via CBUAEIRR – CBUAE Integrated Regulatory Reporting System hosted in Central Bank Service Portal (online form)	Yes
Insurance Authority (IA)	TBC	Via IA’s portal	Yes

The Regulations are administered by the Regulatory Authorities listed in Article 4 of the Regulations, and set out below:

​Federal Entities Ministry of Economy Central Bank Insurance Authority Security and Commodities Authority

​Free Zones Abu Dhabi Abu Dhabi Global Market Media Zone Authority Dhabi Abu Dhabi Airports Free Zone Abu Dhabi Ports MASDAR City Dubai  Dubai Airport Free Zone Dubai Healthcare City Authority Dubai International Financial Center Meydan Dubai South / Dubai Aviation City  Jebel Ali Free Zone Authority/ DP World Dubai World Trade Center Dubai Humanitarian City Dubai Development Authority Dubai Silicon Oasis Dubai Maritime City Dubai Multi Commodities Centre

​Sharjah Sharjah Airport International Free Zone Authority ​​Hamriyah Free Zone Authority Sharjah Media City (Shams) Sharjah Publishing City Sharjah Research Technology and Innovation Park Sharjah Healthcare City   Ajman Ajman Free Zone Authority Ajman Media Free Zone Authority Ras Al-Khaimah RAK International Corporate Centre Ras Al Khaimah Economic Zone RAK Maritime City  Um Al-Quwain UAQ Free Trade Zone Fujairah Fujairah Free Zone International Free Zone Authority  Fujairah Creative City

The approach of the different authorities in relation to which entities should be filing the initial notification is currently inconsistent, and therefore it is important to monitor announcements/ clarifications that are made by the relevant Regulatory Authorities.

We expect the authorities to clarify this and other points as and when they release notification forms.

Immediate actions

To avoid non-compliance with these rules and potential penalties, as a first and immediate step all UAE entities (both companies and branches) should assess whether they fall under the UAE Economic Substance rules (in 2019) and which of the below compliance obligations they may have (if any):

• Notification filing
• Having sufficient substance in the UAE and how to demonstrate this
• Filing of an annual substance return
• If the entity does fall under these rules and has to demonstrate sufficient substance in the UAE, it should also make an assessment as to whether it can satisfy the economic substance tests prescribed by the regulations.

Are you ready?

• Does your UAE entity (company or a branch) fall under these Economic Substance Regulations (ECR) rules?
• What compliance obligation does it have in respect to the financial year?
• Can your UAE entity satisfy the economic substance (ECR) test?
• If you haven’t yet considered the impact of the UAE Economic Substance Regulations on your company/ branch in the UAE and require any of the below:
• Assessment on whether you fall within the rules
• Assessment on whether you can satisfy the Economic Substance test
• Notification filing assistance

Penalties for Non-Compliance

What are the penalties for non-compliance?

Failure to submit a Notification: AED 20k

Failure to submit an Economic Substance Report:

• Penalty of AED 50k; and
• Deemed failure to demonstrate economic substance in the UAE

Failure to provide accurate or complete information:

• Penalty of AED 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 50k; and
• Information exchange with foreign competent authority of:
  • parent company,
  • ultimate parent company, and
  • ultimate beneficial owner

Second consecutive instance of failure

• Information exchange with foreign competent authority of:
  • parent company,
  • ultimate parent company, and
  • ultimate beneficial owner; and
• Penalty of AED 400k; and
• Trade / commercial licence could be; suspended, withdrawn or not renewed

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