Things to be notified in Economic Substance Notification Form

The economic substance notification form is an initial requirement of Economic Substance Regulations in the UAE. ESR regulations in the UAE require all the businesses that fall under its scope and execute one or more relevant activities to file an ESR notification in every single reportable period. The licensees and exempted licensees are required to submit the notification to their relevant regulatory authority six months before their financial year-end date to avoid penalties. The purpose of acquiring this notification is to provide some important pieces of information about the licensee and the business to the regulatory authority. This notification submission is a prerequisite to any other ESR requirements such as the ESR report or ESR test in the UAE. This notification aims to notify the regulatory authorities;

  • Whether or not the business is performing relevant activities in the UAE.
  • Whether or not the business is earning relevant income from relevant activities.
  • Whether or not the business complies with ESR regulations in the UAE.

Information Required in Economic Substance Notification Form

The notification form is designed in such a way that it acquires some initial pieces of information about the licensee, the business, and the present state of business before proceeding to the reporting and testing requirements. It is important to note that both the licensees and exempted licensees are required to file this notification to their regulatory authorities before the due date. Also, the notification needs to be filed for every reportable period. Following are the instances of the things that the notification form will acquire;

Details about the Licensee

In this section, the notification form acquires the following;

  • First, you have to choose whether or not you have submitted a notification previously or faced a penalty for not submitting the notification.
  • You will need to mention the name of the licensee, trade license, a commercial license or permit number for your business, etc. Also, you need to choose whether or not you have a dual license.
  • You need to select under which authority your business has been licensed and which regulatory authority is regulating ESR for your business. 
  • You need to mention where your business has been established, the complete address of your office along with the city and country.
  • You need to choose whether or not your business is registered for Value Added Tax (VAT) in the UAE.
  • You will need to mention some of this information repeatedly in this section.

Details about Branches

In this section, the notification form acquires the following;

  • If your business has one or more branches that are performing relevant activities in the UAE, you need to provide details of your branches in this section.
  • You need to give a trade license or commercial license of your branch or branches.
  • You also need to mention the licensing authority for your branch or branches.
  • Usually, one column is available for branch details, if you have more than one branch you can add more columns. 

Details about Reportable Period

The financial period of a business is considered as its reportable period which started on 1 January 2019 or after that. The financial year-end is equal to the end of the reportable period. The licensees and exempted licensees basically file the ESR notification form for this reportable period six months before the year-end date.

In this section, the notification form acquires the following;

  • You need to carefully mention the date of commencement of the financial period and the date on which it will end. 
Read also : Economic Substance Regulations Filing in UAE

Details about Relevant Activities

In this section, the notification form acquires the following;

  • You need to mention whether or not any of the relevant activities (as defined by the Cabinet Decision no. 100) were performed in the relevant reportable period.
  • You need to select from the already available list of relevant activities that were performed by your business. 
  • You need to mention whether or not your business earned any relevant income from the relevant activities it performed.
  • You need to mention whether or not the income generated by the licensee is subject to tax in a foreign jurisdiction.
  • You need to mention the regulatory authority that regulates ESR for the relevant activity the licensee is performing.

Details about Exemption

In this section, the notification form acquires the following;

  • If you have not earned any relevant income from relevant activities, you need to confirm that your business falls under the exemption for the relevant reportable period and must meet any one of the five conditions given in the form.
  • For this, the exempted licensee needs to confirm that the business is completely owned by national UAE residents, is not a member of any multinational entity, and executes the activities in UAE only (condition 1).
  • If the exempted licensee is executing an investment fund management business, it needs to confirm it (condition 2).
  • If the exempted licensee is executing investment holding, it needs to confirm (condition 3).
  • If the exempted licensee is subject to tax in any foreign jurisdiction as a resident, it needs to confirm it (condition 4).
  • If the exempted licensee runs a branch of its UAE business in a foreign country and pays tax in that jurisdiction, it needs to confirm (condition 5).

You should know : How to submit ESR Appeal Request

Details about Business Ownership

In this section, the notification form acquires the following;

  • The licensee needs to mention the details of the parent office including its name, address, country, and tax identification number.
  • The same information needs to be mentioned for the ultimate parent office (if any).
  • The licensee needs to mention if there exists any UBO (ultimate business owner) for the business.
  • If UBO is available then the information such as name, type, address, country, and tax identification number needs to be mentioned. 

Declaration Form

In this section, the economic substance notification form acquires the following;

  • Lastly, the licensee needs to mention the details of the “designated contact person” who is the person that is responsible to answer anytime the regulatory authorities question something. It can be a compliance officer, director, or manager of the business.

Choose the Best Services

If you have any queries about notification form filing or reporting, contact our experts for complete guidance. Most people find it difficult to fulfill ESR requirements on their own such as submitting notifications correctly and often make errors. In the case of ESR regulations, minor errors can attract penalties. Choose Economic Substance Regulations  qualified service providers to run your business smoothly without worrying about compliance with ESR.

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