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As part of the UAE’s commitment as a member of the Organization for Economic Co-operation and Development (OECD) Inclusive Framework and in response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation, the UAE issued Economic Substance Regulations (ESR) in April 2019. The regulation issued in April 2019 was later repealed and replaced by new regulation in August 2020.
Under the ESR, the UAE has identified 9 activities as Relevant Activities. These activities are:
• Banking Business
• Insurance Business
• Investment Fund Management Business
• Lease - Finance Business
• Headquarters Business
• Shipping Business
• Holding Company Business
• Intellectual Property Business
• Distribution and Service Centre Business
If a Licensee carried out any of the above Relevant Activity(ies) in the reportable financial year, it is required to comply with the ESR and accordingly file a Notification and Economic Substance Report with the Authorities.
The regulation came into force from 1 January 2019 and the first reportable financial year is a financial year beginning on or after 1 January 2019 and ending on or after 31 December 2019.
For more information on Economic Substance Regulations, visit Economic Substance Regulations page.