On 30th April 2019, the UAE issued Economic Substance Regulations (Cabinet of Ministers Resolution No. 31 of 2019), (the "Regulations") as part of its commitment as a member of the 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 introduction of the Economic Substance Regulations brings the UAE in line on the global forefront with other jurisdictions that have recently issued Economic Substance Regulations (e.g., Cayman Islands and Bermuda). It affirms the UAE’s commitment to addressing concerns about shifting profits derived from certain mobile business activities to "no or nominal tax jurisdictions" without corresponding local economic activities.
UAE entities will need to assess whether and which of their activities fall within the scope of the Economic Substance Regulations and how to ensure they meet them with respect to each Relevant Activity. This qualitative and quantitative assessment involves operational, financial, tax/transfer pricing, legal and governance matters.
Different Economic Substance Regulations apply depending on the Relevant Activity. For instance, pure holding companies are subject to less stringent Economic Substance Regulations; however, additional regulations apply to high-risk IP related activities.
The goAML system was developed by the United Nations Office on Drugs and Crime (UNODC) to combat money laundering and the financing of terrorism. It is considered an integrated system used by the Financial Intelligence Unit (FIU) to receive, analyse, and distribute suspicious transaction reports (STRs) quickly and efficiently.
Many financial intelligence units worldwide are currently using it, and the United Arab Emirates is the first Gulf country to apply this modern system.
If the answer to the above questions is yes, then you fall under the "Designated Non-Financial Business and Professions"(DNFBP) activities and are subject to goAML registration.
Our expert advisors can advise, guide, and assist you with these requirements so that you can remain fully compliant while operating your business in the UAE.