5 Most Important Compliance Requirements in the UAE You Must Know About

1. Taxation

The Federal Tax Authority (FTA) is the authority that regulates tax compliance in the UAE. We have the following two tax systems in the UAE -

VAT - The VAT rate is very low at 5%. The voluntary registration threshold is AED 187,500 & the mandatory registration threshold is AED 375,000. The VAT returns must be filed every quarter post the registration date. We have discussed here in detail, when you must apply for the VAT registration to avoid penalties.
Corporate Tax - The Corporate tax rate is 9%. Every business in the UAE must register for corporate taxes.

2. Audit

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. Most freezone authorities require a yearly audit to be done and submitted to them at the time of renewal of license. Certain freezone companies are required to maintain an audited book of accounts with the FTA at the time of the tax returns. 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 the 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. The following activities are considered as relevant activities

Banking Businesses
Insurance business
Investment Fund Management Businesses
Lease-Finance Businesses
Headquarters Businesses
Shipping Businesses
Holding Company Businesses
Intellectual Property Businesses
Distribution and Service Centre Businesses

4. AML/CFT

Anti-Money Laundering (AML) & Counter-Finance Terrorism (CFT) regulations in UAE must also be complied with. A lot of the compliance 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 need 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.

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