Wed 25-11-2020 15:21 PM
ABU DHABI, 25th November, 2020 (WAM) -- The Ministry of Finance, MoF, participated in the Organisation for Economic Cooperation and Development, OECD’s Forum on Harmful Tax Practice, FHTP, which was held virtually over the course of three days. The forum – which is the OECD’s competent authority to evaluate all ESR activities - announced that the UAE has met all the Economic Substance Regulations, ESR, requirements.
The UAE (represented by MoF’s delegation); the OECD forum's secretariat; the European Union Code of Conduct Group; and representatives from other countries - including Arab countries such as Bahrain, Jordan and Morocco – participated in the forum.
Younis Haji Al Khoori, Undersecretary of MoF, noted that fulfilling the ESR requirements underpins the effectiveness of the measures taken by the UAE to develop the legislative and legal framework for ESR activities. He said, "This positive evaluation reaffirms the UAE’s commitment to adopting the best international standards for tax purposes, and its keenness to devise sound mechanisms to address tax evasion."
In August 2020, the UAE Cabinet, in coordination with MoF, who collaborated with the OECD and the EU Code of Conduct Group, issued certain laws aimed at complying with the ESR activities requirements. These laws include the Cabinet Resolution No. (57) of 2020 concerning Economic Substance Regulations, and the Ministerial Resolution No. (100) of 2020, which was issued by MoF and included an updated guide to the relevant regulations, in order to direct companies that engage in one or more relevant activities.
According to Cabinet Resolution No. (57) of 2020, MoF - as a competent authority in the UAE - has formed and managed a permanent committee that includes more than 37 entities in the country, to discuss issues of ESR activities. Additionally, the ministry held a workshop in cooperation with the OECD on ESR activities in February 2020. The ministry also prepared the management and implementation working paper to support the regulatory authorities and the Federal Tax Authority, FTA, to regulate and standardise procedures on implementing ESR activities in the country and ensure the entities’ readiness. MoF also enabled the regulatory authorities in the country through training workshops held for registered companies. The Ministry is currently establishing an electronic system to serve the private sector and the regulatory authorities. The first phase of this system is scheduled to launch in the beginning of December of this year, where companies will be able to submit ESR notifications and reports.
According to the Resolution, the Federal Tax Authority has been appointed as the national authority in charge of evaluating the ESR activities in the UAE. Also, the regulatory authorities - represented by the Central Bank of the UAE, CBUAE; the Ministry of Economy, MoE; the Securities and Commodities Authority, SCA; the Insurance Authority; and all free zones in the country - have built on their previous supervision and auditing capabilities, and strengthened them to serve the ESR requirements. They also ensured that the entities implemented the management and implementation working paper, including the Compliance and Risk Assessment Register, and the training workshops for registered companies.