At the start of 2019, new Economic Substance regulations have come into force in some key offshore jurisdictions. These regulations have been initiated by the European Union and have been in the works since 2017, as a measure to regulate companies that generate too much profit without having appropriate substance in tax-free or low-tax jurisdictions.
Many international financial centers and offshore jurisdictions have therefore introduced their own Economic Substance legislation, working closely with the EU Code of Conduct Group in order to adequately address their concerns about the so-called economic substance of the entities registered in these jurisdictions.
The United Arab Emirates are among the most prominent and popular jurisdictions to have already implemented economic substance legislation, in order to continue their successful development as a world-class financial center.
The economic substance requirement applies to only a number of relevant business activities:
Our financial experts can assist you with identifying the reporting obligations of your existing company or with incorporating a fully compliant company in a favorable jurisdiction.