When advising clients on setting up a business in the UAE mainland, one of the most commonly asked questions is what are the compliance requirements in the UAE.
Compliance requirements in the UAE vary from the type of business. Here are some of the major requirements that most businesses in UAE need to be aware of.
The Federal Tax Authority (FTA) is the authority that regulates the tax compliance in the UAE. In the UAE we have a very low rate of VAT at 5%. A business in the UAE must register for VAT once the threshold is crossed. Based on the turnover of the company, a monthly or quarterly VAT return must be filed. There is no corporate or income tax in the UAE, as of now. However, corporate tax will be implemented in the UAE, and must be anticipated.
For mainland companies, it is legally required for businesses to do an audit every year. This is not required to be submitted to any authorities however. Most freezone authorities require a yearly audit to be done and submitted to them at the time of renewal of license. Whichever the case may be, it is always recommended to complete a yearly audit with a reputed audit firm. Seeing that the compliance requirements of UAE are now reaching international standards, it will become mandatory to submit this to the government in the future.
3. Economic Substance Regulations
Economic Substance Regulations (ESR) was implemented in the UAE in 2020. Licenses that conduct relevant activity must submit a notification, 6 months post the financial year end and an Economic Substance Report 12 months post the financial year end. If a license does not conduct a relevant activity then this complaince requirement does not apply to them. The following activities are considered as relevant activities –
Anti-Money Laundering (AML) & Counter Finance Terrorism (CFT) regulations in UAE must also be complied with. A lot of the compliance requirements will be taken care of by the bank itself during the KYC process. However businesses conducting the following activities
– Brokers and Real Estate Agents
– Dealers in Precious Metals and Precious Stones
– Independent Accountants
– Providers of Corporate Services
must register with the GoAML system and report suspicious transactions on this system.
5. Maintain UBO and Shareholder register
Ultimate Beneficial Owner (UBO) and shareholder register needs to be maintained. This needs to be also submitted to the regulatory authorities if any changes have been made to these registers. UBO submission for each emirate is different, you will need to submit this to the relevant regulatory authority.
Make sure to meet the above compliance requirements in the UAE. This is not a complete list, as there may be additional requirements based on the activity of the business. However, this list must be known for most businesses in the UAE to avoid attracting penalties.
Did you know that giving gifts or free samples in the UAE can be taxable?
When advising clients on setting up a business in the UAE mainland, one of the most commonly asked questions is what are the compliance requirements