Welcome to the Saudi Arabia focus edition of Law Update.
One of the key markets in the Middle East and North Africa (MENA) that continues to lead from the front is the Kingdom of Saudi Arabia (KSA). As the largest country in the Middle East and the 18th largest economy in the world, the progress KSA continues to make is underpinned by its Vision 2030 that envisions developing the country as an investment powerhouse and hub that ultimately connects Asia, Europe, and Africa. Given Saudi Arabia’s significance to the regional economy, our team of experts have prepared a range of pertinent articles that provide insights into new laws, regulations, and the legal landscape in the Kingdom.
This edition will provide you with an up-to-date guide on matters such as; the framework issued by the Saudi Central Bank on IT governance, the anti-corruption landscape under Vision 2030; we also provide practical tips for dispute avoidance. This is only a snapshot; there are many more articles within the KSA focus section for you to read, which we hope you will find valuable and enjoyable.Read the edition
Pursuant to the Cabinet of Ministers Resolution No. 31 of 2019, the UAE has introduced economic substance regulations (“Regulations”) which set out the requirements for entities to have an actual economic presence in the UAE. The introduction of the Regulations follows the UAE’s commitment to comply with EU requirements in order to be removed from the EU’s list of non-cooperative tax jurisdictions (“EU Tax Blacklist”) .
The Regulations came into effect on 30 April 2019.
The key obligations imposed on UAE companies under the Regulations are as follows:
Failing to meet the Economic Substance Test:
Should a Licensee fail to meet the Economic Substance Test for a financial year, an administrative penalty of between AED 10,000 and AED 50,000 can be imposed by the Regulatory Authority. Repeated failure to meet the Economic Substance Test may lead to a penalty of up to AED 300,000.
Failing to provide information or providing inaccurate information:
Licensees who fail to provide information or provide inaccurate information under the Report may be subject to an administrative penalty of up to AED 50,000.
As the framework prescribed under the Regulations is of a high-level nature only, we expect:
It is important for your UAE businesses to (i) understand the economic substance requirements and the obligation to annually prepare the Report and file it with the Relevant Authority; and (ii) undertake a “health check” on your existing level of economic substance in the UAE.
The key areas of your operation that the Regulations may impact concern corporate structuring and tax aspects.
As the largest law firm in the Middle East and with strong corporate structuring and tax expertise and significant corporate structuring and tax experience across all industry sectors in the Middle East, Al Tamimi & Company is well placed to assess the impact of the recently introduced Regulations on your organisation and assist you to comply with the new Regulations.
Click here to follow Al Tamimi’s Tax Team’s LinkedIn page for more updates on tax developments in the Middle East.