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A Licensee is considered engaged in a “Service Centre Business” if it provides consulting, administrative or other services to a foreign group company. (b) Distributes those raw materials or finished goods. (a) Purchases raw materials or finished products from a foreign group company and Definition of Distribution BusinessĪ Licensee is considered engaged in a “Distribution Business” if it: “Relevant Income” means all of that entity’s gross income from a Relevant Activity as recorded in its books and records under applicable accounting standards, whether earned in the UAE or outside the UAE and irrespective of whether the entity has derived a profit or loss from its activities. (iii) hear and decide on appeals filed by licensees, among others. (ii) impose administrative penalties for non-compliance and (i) assess whether licensees have met the economic substance tests
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The UAE Federal Tax Authority (FTA) has now been appointed as the authority to
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Federal Tax Authority as main authority for ESR In order to enjoy their exempt status for ESR purposes, exempted licensees need to file a notification and provide documentary evidence demonstrating such a position. (d) a Licensee that is a branch of a foreign entity the Relevant Income of which is subject to tax in a jurisdiction other than the State. (ii) all of the entity's activities are only carried out in the UAE (i) the entity is not part of an MNE Group (c) an entity wholly owned by UAE residents and meets the following conditions: (b) an entity that is tax resident in a jurisdiction other than the UAE Exempted licenseesĮxempted licensees have been introduced as a new category of a licensee under the ESR and include, among others:
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(b) an Unincorporated Partnership registered in the State, including a Free Zone and a Financial Free Zone and carries on a Relevant Activity. (a) a juridical person (incorporated inside or outside the State) or 100 of 2020. Some of the changes to the ESR are as follows:Īrticle (1) of the ESR Regulations defines a Licensee as: “an entity that is: The ESR Law has been amended by the UAE Cabinet of Ministers via Cabinet Resolution no (57) dated 10 August 2020 and the updated Guidance was issued on 19 August 2020 as Ministerial Decision No. The Regulations require UAE onshore and free zone companies and certain other business forms that carry out any of the defined Relevant Activities to maintain and demonstrate an adequate “economic presence” in the UAE relative to the activities they undertake (“Economic Substance Test”).
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