The Ministry of Finance (MoF) has cancelled the economic substance reporting requirements for companies with financial years concluding after 31 December 2022.
This update follows Cabinet Decision No. (98) of 2024, which revises certain aspects of Cabinet Decision No. (57) of 2020 concerning economic substance regulations. This cancellation is part of the implementation of the UAE’s federal corporate tax system, which takes effect for financial years starting on or after 1 June 2023.
While companies are relieved from submitting economic substance notifications or reports for financial years ending after 31 December 2022, they are still accountable for fulfilling compliance obligations for prior years. This includes responding to information requests from regulatory bodies and the Federal Tax Authority, as well as managing any penalties that may arise.
Younis Haji Al Khoori, Under-Secretary of the MoF, explained that the removal of these reporting obligations enables businesses to shift their focus towards complying with the new corporate tax laws.
“The amendment aims to enhance efficiency and tax compliance across the country, ensuring accurate application of tax legislation by all entities subject to it. This step is also part of the Ministry’s ongoing efforts to improve the tax system’s efficiency and attract further investments.”
This regulatory shift is expected to simplify the operational landscape for businesses in the UAE as they adapt to the new corporate tax system.
