The Federal Tax Authority (FTA) has announced that businesses must complete Corporate Tax registration within 90 days from the Date of Incorporation / MOA.
Major Relief for Businesses as ESR Requirements Scrapped for Fiscal Years Starting 2023
The United Arab Emirates government will introduce wide-ranging amendments to its Economic Substance Regulations through a new cabinet decision number 98 of 2024. The Cabinet Decision No 98 of 2024 was published in the Official Gazette on September 16, 2024, bringing ease to business operating in this region.
What's Changed?
According to the revised regulations, ESR can only be used for fiscal years beginning on January 1, 2019, and ending on December 31, 2022. Accordingly, companies whose fiscal years begin on or after January 1, 2023, are exempt from filing a UAE economic substance notification and report.
Implications for Your Business
If your business was previously subject to ESR requirements, you can breathe a sigh of relief. The following are the main conclusions:
- Fiscal years ending after December 31, 2022, will no longer be subject to ESR compliance.
- After December 31, 2022, non-compliance fines will be waived.
- Refunds will be issued for fines paid related to fiscal years ending after December 31, 2022.
Economic Substance (ES) Regulation Periods
| Fiscal Period | ES Regulation Applicability Period |
|---|---|
| January to December | 01 Jan 2019 - 31 Dec 2019 to 01 Jan 2022 - 31 Dec 2022 |
| April to March | 01 Apr 2019 - 31 Mar 2020 to 01 Apr 2021 - 31 Mar 2022 |
| September to August | 01 Sep 2019 - 31 Aug 2020 to 01 Sep 2021 - 31 Aug 2022 |
| July to June | 01 Jul 2019 - 30 Jun 2020 to 01 Jul 2021 - 30 Jun 2022 |
Corporate Tax Law Considerations
Even though ESR requirements have been removed, Free Zone businesses aiming for Qualifying Free Zone Person (QFZP) status under UAE corporate tax law must still show they have enough presence or "substance" in the UAE. They must confirm this by including it in their corporate tax return, which they submit through the Federal Tax Authority's EmaraTax portal.
Next Steps
To navigate these changes and ensure compliance with UAE tax regulations, consult with our Reyson Badger’s expert team. We'll guide you through:
- ESR transition and refund processes
- Corporate tax law implications
- QFZP requirements and substance demonstration
Don't miss this opportunity to optimize your business operations. Reach out to us today.
