Economic Substance Regulations For IP Rights Holders

Following a review conducted by the European Union on countries with low or nominal corporate tax, the committee prescribed the 'Economic Substance Regulations' and requested that the low tax jurisdictions review their own regulations and make efforts to ensure their compliance with best practices. The purpose of the regulations is to impede potentially harmful tax practices by requiring entities within low tax jurisdictions to demonstrate they carry out a substantial amount of economic activity in the country in which they are incorporated.

As a result, on 30 April 2019, the UAE Cabinet issued Cabinet of Ministers Resolution No 31 of 2019, which concerns economic substance regulations in the UAE, requiring all qualifying UAE entities that conduct 'relevant activities' to demonstrate their economic substance in the UAE on an annual basis.