Continuing the topic of economic substance in the UAE, let's look at step-by-step instructions on how to prepare reporting to ensure maximum transparency of your business activities and avoid attracting the attention of tax authorities.
First and foremost, it is necessary to submit a notification to the Ministry of Finance within six months after the end of the financial year (by June 30 of each year), confirming the nature of the relevant activity, whether it generates appropriate income, the date of the financial year-end, and so on.
Then, you need to undergo the Economic Substance Test.
The final step is to submit the Economic Substance Report within 12 months after the end of the financial year (by December 31 of each year).
Failure to follow this algorithm will result in penalty sanctions for the entrepreneur.
These figures are unpleasant, so it is better to prepare Economic Substance reporting carefully and attentively and, if necessary, seek advice from consultants.
First and foremost, it is necessary to submit a notification to the Ministry of Finance within six months after the end of the financial year (by June 30 of each year), confirming the nature of the relevant activity, whether it generates appropriate income, the date of the financial year-end, and so on.
Then, you need to undergo the Economic Substance Test.
The final step is to submit the Economic Substance Report within 12 months after the end of the financial year (by December 31 of each year).
Failure to follow this algorithm will result in penalty sanctions for the entrepreneur.
- Failure to submit a notification - 20,000 (AED)
- Non-compliance with the economic substance test - 50,000 (AED)
- Failure to submit an economic substance report or provision of inaccurate information - 50,000 (AED)
- Non-compliance with economic substance test (repeat offense) - 400,000 (AED)
These figures are unpleasant, so it is better to prepare Economic Substance reporting carefully and attentively and, if necessary, seek advice from consultants.