Amendments to the Economic Substance Regulations in UAE

• Investment funds;
• UAE branches of foreign companies;
• Licensees that are tax resident outside UAE;
• UAE resident-owned businesses; and
• Any licensee the Minister of Finance decides to give exemption to

A natural or juridical person who is related to one or more juridical person(s) through direct or indirect ownership or control, or common control

• Purchasing from a foreign connected person component parts or materials for goods; or goods ready for sale; and reselling such component parts, materials or goods or;
• Providing services to foreign connected persons

• A Holding Company in accordance with the law applicable to the Licensee carrying out such activity in the State.
• has as its primary function the acquisition and holding of shares or equitable interests in other companies.
• does not carry on any other commercial activity.

• has its sole function the acquisition and holding of shares or equitable interests in other companies; and
• Only earns dividends and capital gains from its equitable interests.

• The Licensee did not create the Intellectual Property Asset which it holds for the purpose of its business, and
• The Licensee acquired the IP Asset from either;
  • A group company, or
  • In consideration of funding research and development by another person situated in foreign jurisdiction, and
• The Licensee licenses or has sold the IP Asset to one or more group companies or otherwise earns separately identifiable gross income (e.g. royalties, license fees) from a foreign group company in respect of the use or exploitation of the IP asset.
• the Licensee does not carry out research and development, or branding, marketing and distribution as part of its State Core Income-Generating Activity.

• Did not create the intellectual property in an intellectual property/ asset which it holds for the purpose of its business;
• Acquired the intellectual property asset either from-
  • A connected person; or
  • In consideration for funding research and development by another person situated in a country other than the state;
    And
  • licenses or has sold the intellectual property asset to one or more connected persons, or otherwise earns separately identifiable income from a foreign connected person in respect of the use or exploitation of the intellectual property asset.

• AED 10,000 to 50,000 if the licensee fails to meet the requirements of the tests in the first year and AED 50,000 to 300,000 if it happens in the second year also.
• AED 10,000 to 50,000 if the information given to RA or FTA is not correct/ accurate.
• AED 10,000 to 50,000 if notification is not submitted.
• License annulment for persisted non-compliance.

• AED 50,000 if the licensee fails to submit report or doesn’t meet the requirements of the tests in the first year and AED 400,000 if it happens in the second year also.
• AED 50,000 if the information given to RA or FTA is not correct/ accurate.
• AED 20,000 if notification is not submitted.
• License annulment for persisted non-compliance.