The Ministry of Finance (MoF) has officially announced the cancellation of economic substance reporting requirements for companies with financial years ending after December 31, 2022.
This decision follows Cabinet Decision No. (98) of 2024, which amends certain provisions of Cabinet Decision No. (57) of 2020 concerning economic substance requirements.
This significant amendment aligns with the UAE’s implementation of a federal corporate tax system that applies to business and corporate profits. Younis Haji Al Khoori, Under-Secretary of the MoF, emphasized that this change allows businesses to concentrate on compliance with the new corporate tax framework.
“The amendment aims to enhance efficiency and tax compliance across the country, ensuring accurate application of tax legislation by all entities subject to it,”
Al Khoori stated.
“This step is also part of the Ministry’s ongoing efforts to improve the tax system's efficiency and attract further investments.”
While companies are no longer required to submit economic substance notifications or reports for the specified financial years, the MoF clarified that businesses must still comply with obligations for prior years. This includes responding to information or amendment requests from regulatory authorities or the Federal Tax Authority (FTA) and addressing any penalties imposed by the FTA.
This decision marks a pivotal shift in the UAE's regulatory landscape, aiming to streamline compliance and bolster the business environment as the nation adapts to its evolving tax structure.
News Source: Emirates News Agency
