UAE (ESR) - What is the linkage between “Relevant Activities” and “Core Income-Generating Activity”?
A Licensee engaged in “Relevant Activities” must carry out its “Core Income-Generating Activities” (CIGA) within United Arab Emirates (UAE) to fulfill the Economic Substance Test (along with other parameters).
At the stage of Notification, reply is required to be provided, if the subject Licensee is in the business of “Relevant Activities” or not. "Core Income-Generating Activity", needs to be validated at the stage of Economic Substance Test.
It's important for Licensee engaged in RA to comply for State-CIGA, however to be reported / tested at the time of Economic Substance Test (i.e. no later than twelve (12) months after the last day of the end of each Financial Year) expected to be submitted to regulatory authority around Dec'20 (for entities following calendar year).
At time of Notification:
Validate if you are conducting the “Relevant Activity” as specified in Article (4) of Cabinet of Ministers Resolution No. 31 of 2019 concerning Economic Substance Regulations.
At time of Economic Substance Test (along with other parameters):
A Licensee engaged in “Relevant Activities” must carry out its “Core Income-Generating Activities” within United Arab Emirates (UAE) to fulfill the Economic Substance Test.
References:
State CIGA defined as per Article (5) of Cabinet of Ministers Resolution No. 31 of 2019 concerning ESR.
As per Article 6 of Cabinet of Ministers Resolution No. 31 of 2019 concerning ESR.
Requirement to meet Economic Substance Test
- A Licensee must satisfy the following criteria to meet the Economic Substance Test in relation to any Relevant Activity carried on by it.
- Save as provided in Clause 4 of this Article, a Licensee meets the Economic Substance Test in relation to a Relevant Activity in the following cases:
(a) The Licensee conducts State CIGA in the State.
Note: This information is based on my personal interpretation, from references used. This content is for informational & knowledge sharing purposes only, and is not intended to provide, and should not be relied on for compliance or accounting advice.