Our first edition of 2022 focuses on Healthcare and Life Sciences. It is a sector that will once again have the spotlight on it this year as we continue to tackle COVID-19 and its subsequent variants. While the pandemic continues to challenge the sector, governments across the region forge ahead with their plans to expand and upgrade healthcare systems and develop robust world-class healthcare infrastructure.
For the region, healthcare is a vital pillar in diversifying its economies, both locally and as medical tourism hubs. To underpin this, healthcare authorities across the region continue to implement frameworks and regulations that provide structure and accountability.
In this edition, you have unique access to great insights and expert commentary on a number of pertinent healthcare regulatory developments. You will find a topical mix of articles; for example, our lawyers discuss vaccines and returning to work during the pandemic. They take you through several other areas, including stem cell research in Bahrain, clinical research laws in Egypt, and Saudi medical device and pharmaceutical laws.Take a read of the edition
Due to the light taxation regime, the UAE has been a preferred choice for many businesses as a jurisdiction in which to firm their operations. The UAE is a member of the Organisation for Economic Co-operation and Development (‘OECD’) and as such, it is subject to the Base Erosion and Profit Shifting (‘BEPS’) regime.
The BEPS particularly looks after globally adopted measures to tackle tax avoidance, improvement of the coherence of international tax rules and ensures a more transparent tax environment. As part of the UAE’s commitment as a member of the OECD Inclusive Framework, and in response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation, the UAE introduced the Economic Substance Regulations (‘ESR’), on 30 April 2019 under Cabinet of Ministers Resolution No 31 of 2019 and Guidance to the application of the ESR.
Recently, the UAE Cabinet of Ministers made certain amendments to the ESR to ensure regular recording and reporting of all the economic activities undertaken by UAE entities, including companies, branches and representative offices.
On 10 August 2020, the UAE Cabinet of Ministers issued Resolution No. 57 of 2020 (‘New Regulation’) where it addressed those changes. The New Regulation replaced the original legislation, in particular the Cabinet of Ministers Resolution No. 31 of 2019. The New Regulation has a retrospective application to licensees, from financial years starting on or after 1 January 2019.
Subsequently, on 19 August 2020, the Ministry of Finance (‘Ministry’) issued the revised guidelines, under Ministerial Decision No. 100 of 2020 (‘New Guidelines’). Finally, the Ministry, on their website, made available a helpful set of sample questions with answers concerning the economic substance regime. In this article, we will highlight some of the more prominent provisions introduced under the New Regulation and the New Guidelines.
The key developments under the economic substance regime introduced under the New Regulation and New Guidelines are as follows:
Entities directly or indirectly owned at least 51 per cent by the UAE government are no longer specifically exempted from the application of the regime.
The regime is still new to the overall UAE legal framework. Businesses, their advisors as well as authorities are yet to understand the various aspects of this regime and how to best approach the requirements in practice. As with many legislative novelties, most would agree that the key will be to achieve a balance between encouraging businesses to comply, but at the same time, adopting a sufficiently flexible approach that can fit the variety of business models that function in today’s business world.
As far as the immediate future is concerned, it is critical for businesses in the UAE to commence preparations immediately, re- assess their UAE position under the New Regulation and consider whether any restructuring of its business operations should be undertaken to satisfy the economic substance test, to avoid potentially substantial sanctions being imposed.