Economic Substance Notification Due Date Declared for JAFZA

ESR Notification Due Date for JAFZA – 30^th June 2020

Economic Substance Notification (ESR Notification) due date has been now declared for Jebel Ali Free Zone (JAFZA) in the UAE. Economic Substance Notification (ESR Notification) due date for JAFZA is 30^th June 2020. JAFZA is one of the Regulatory Authority as per the Economic Substance Regulation UAE (ESR UAE).

In the UAE, JAFZA holds a vigorous base for thousands of businesses from over 100 countries in the world.

Do you know what Economic Substance Notification (ESR Notification) is?

Economic Substance Notification (ESR Notification) is the requirement by Regulation which should be filed by all the licensees who are conducting “Relevant Activity” under Economic Substance Regulation UAE (ESR UAE) within the due dates specified by the respective Authority, for JAFZA it is 30^th June 2020.

What are the Relevant Activities under Economic Substance Regulations UAE (ESR UAE)?  

As per Cabinet Resolution No. 31 of 2019, Relevant Activity means following:

1. Banking Business
2. Insurance Business
3. Investment Fund Management Business
4. Lease-Finance Business
5. Holding Company
6. Headquartered Business
7. Shipping Business
8. Intellectual Property Business
9. Distribution & Service Centre Business

The above mentioned are the Relevant Activities that fall under the purview of Economic Substance Regulations UAE (ESR UAE). All license holder in JAFZA who are conducting any of the Relevant Activities mentioned above in the Financial year 2019, should file the Economic Substance Notification (ESR Notification) on or before 30^th June 2020.

It is the licensees (license holder’s) responsibility to conduct the assessment on whether they carry a Relevant Activity or not. In no circumstance, the Regulatory Authority which is JAFZA shall not be responsible to conduct an assessment on the applicability of Economic Substance Regulations UAE (ESR UAE).

Should all the businesses in JAFZA submit the Economic Substance Notification (ESR Notification)?

No, not all businesses in JAFZA require to submit the Economic Substance Notification (ESR Notification).  Only businesses conducting “Relevant Activity” in JAFZA as per Economic Substance Regulation UAE (ESR UAE) should mandatorily file the Economic Substance Notification (ESR Notification) on or before 30^th June 2020.

The deadline to submit the Economic Substance Notification (ESR Notification) has been mentioned for the financial year 2019. 

Is the given deadline 30th June 2020, applicable to all entities in JAFZA falling under Economic Substance Regulation UAE (ESR UAE)?

No, the deadline for Economic Substance Regulation UAE (ESR UAE) in JAFZA is applicable to only those entities falling under this law during the Financial Year 2019 and their Financial year-end is 31^st December 2019.

For example, if an entity in JAFZA has their Financial Year from 1^st October 2018 till 30^th September 2019, such entity need not file the Economic Substance Notification (ESR Notification) on 30^th June 2020.

The law will not be applicable for such companies between 1^st January 2019 till 30^th September 2019. The first applicable period to file the Economic Substance Notification (ESR Notification)  in this case will be 1^st October 2019 to 30^th September 2020.

Please note that the first applicable period to file the Economic Substance Notification (ESR Notification)  is for Financial Years commencing on or after 1^st January 2019.

What happens in case of Non-compliance with Economic Substance Regulations UAE (ESR UAE)?

 If any licensee in JAFZA does not comply with the requirement of filing the Economic Substance Notification (ESR Notification), then such Licensee may have to face Penal Consequences as provided in Article 11 of the Cabinet Resolution No. 31 of 2019. The penalty for non-compliance of Economic Substance Regulations UAE (ESR UAE):

• AED 10,000 to AED 50,000 in the first year
• AED 50,000 to AED 300,000 from the subsequent year

Further, failure by a license holder to comply with Economic Substance Regulations UAE (ESR UAE) can also result in:

• Spontaneous Exchange of Information with Foreign Competent Authority
• potential suspension
• revocation or non-renewal of the registration

How can Emirates Chartered Accountants Group support you with Economic Substance Regulations UAE (ESR UAE)?

 We, Emirates Chartered Accountants Group have a specialized team on the subject to support and guide you on the Compliance with Economic Substance Regulations UAE (ESR UAE) with the following roadmap:

Phase I:  

 To study your Business Activities in detail and assess the applicability of Economic Substance Regulation (ESR) on your activities. Also, to provide support and guidance on filing Economic Substance Notification (ESR Notification) with JAFZA.

Phase II:  

To provide the guidance and support for compliance with the provisions of the Regulation, if your activity is falling under the regulation. To conduct Impact Study and Gap Analysis in order to assess whether the Business meets the Compliance test and to provide the recommendations.

Phase III:

Economic Substance Reporting/Declaration with JAFZA Authority on or before the Due Date. At Emirates Chartered Accountants Group, we have quality-driven professionals who are well versed with practical knowledge of assisting businesses with the applicability of Economic Substance Regulation in the UAE & Bahrain. They shall help you determine the applicability of this law and support you with Economic Substance Notification for your business.

For your enquiries on Economic Substance Notification in JAFZA

Contact Persons:

CA. Manu Palerichal
Email: manu@emiratesca.com
Mobile:+971 50 282 8727

CA. Dhara Yagnik
Email: dhara@emiratesca.com
Mobile: +971 56 595 6836