Important! RAK ICC Company Dubai and new rules economic Substance

[JustAnotherNomad]

Yes. But of course if they have reason to believe you’re still mostly in⁠ Morocco, they may still send information there.

You can do what you want. If it’s︀ not your own company, you don’t have to worry about transfer pricing either. But if︁ there is an audit, they may ask who is behind the other company and what︂ you paid for. And they might want to see proof that you received what you︃ paid for. They may want to see emails, contracts. So if you lie and say︄ it was somebody else’s company and they find out, you have committed a crime. And︅ if you’re honest and say it’s your own company, they’ll probably ask for where the︆ substance is. Either way they probably won’t accept it. But of course I have no︇ idea how strict they are and how much they would usually dig.

 

[wheelspin]

If the freelance visa comes with a FZE company what about the liability?
What is‌ the difference between the freelance visa and opening a Freezone company?

 

[JustAnotherNomad]

Those are questions you should ask the individual free zones. They have sales teams that‌ will answer all such questions.
I guess the biggest difference will be that you might‍ not be allowed to have employees as a freelancer, and then of course what type⁠ of license you are even eligible for will depend on your business activities.

 

[smartcard]

An amended set of︂ regulations was issued recently and it has some major changes with regards to "Connected Person"︃ Tax Flash

Definition of “Connected person” and “group”

Previous ESR Connected person: A natural or juridical person who is related to one or more juridical person(s) through direct or indirect︄ ownership or control, or common control. Group: Not defined.

New ESR Connected person: An entity forming part of the same group to which the licensee or the excluded licensee belongs.︅ Group: Two or more entities related through ownership or control, such that they are required to prepare consolidated financial statements.

 

[Davis123]

There are some ways to avoid even this. I think CaptK and some others︄ in Mentor Group can give you better advices.

 

[Davis123]

B
yes I agreed. I filled out too last week for my company. It's straightforward⁠ for me since all my activities are in UAE.

 

[smartcard]

Is there a new guideline issued by the Ministry of Finance requiring all eligible entities‌ to now re-file and re-submit their ESR notifications?

I believe it is only for companies‍ that are falling under the listed activities and not for all companies?

 

[rowena]

No. All companies have to file ESR notifications regardless of the activity. Ministry⁠ of Finance unified ESR Filling portal went live for all FZs and mainland companies. You⁤ need to file an ESR Notification via the portal.

https://esr.mof.gov.ae/SelfService/mycases/show/MOF_ESR_Dashboard

 

[AMD]

What does it mean for RAK ICC - the privacy is gone with the wind‌ or can we still count on it?

 

[CaptK]

For now it's ok, but I wouldn't count on it for much longer. Back to‌ Seychelles we go for this type of company structure.

 

[Runway]

Portal seems⁠ already gone offline...

 

[rowena]

I don't know when you‌ checked but it is working maybe a temporary issue.

 

[Runway]

Thank you, indeed it was probably a temporary issue yesterday.

In doubt I have filled out the notification, however it looks like the interpretation on who‍ needs to fill out the notification has changed once again. According to this note that⁠ appears when filing the notification only businesses active in these domains need to fill out⁤ a notification:

Who needs to submit a Notification?
A Notification must be filed if you⁣ are a corporate entity (Limited Liability Company, Public Joint Stock Company, Private Joint Stock Company,⁢ etc.) or a partnership (Limited Liability Partnership, General Partnership etc.) that undertakes any of the︀ following Relevant Activities in the UAE during the relevant accounting period (see Section C, Question︁ 1):

Banking Businesses
Insurance Businesses
Investment Fund Management Businesses
Lease-Finance Businesses
Headquartered Businesses
Shipping Businesses︂
Holding Company Businesses
Intellectual Property Businesses
Distribution and Service Centre Businesses
A UAE business that︃ undertakes one or more of the above activities during the relevant accounting period is referred︄ to as a Licensee.

Please refer to the Relevant Activities Guide in Schedule 1 of︅ Ministerial Decision 100 of 2020 issued by the Ministry of Finance for further information and︆ an explanation of each of the above Relevant Activities.

 

[rowena]

@Runway
They changed rules again... I think this is the fourth time. UAE messed up‌ about ESR totally.

After the latest change, If you didn't involve in a relevant activity‍ you don't need to file a notification. Basically, you don't need to take any action⁠ regarding ESR. It is much better but it took 9 months and 4 rule changes⁤ to came to that point doh948""

 

[Osleak]

if I’ve understood well the⁣ Free Zone company that sell goods fall under ESR report right?

But are not required⁢ to do so if the company still not have income right?

 

[rowena]

It depends on what you sell. Check the relevant⁠ activities.

https://www.mof.gov.ae/ar/StrategicPartnerships/Documents/Relevant+Activities+Guide+_April+2020.pdf

 

[Osleak]

i’m my case are mobile phones and electronics

Just read from the govt website and‌ also from an article of Fichte & Co (uae law firm)

Definition of ''Connected Person'':‍ the Amended ESR defines Connected Person as an entity that is part of the same⁠ Group as the Licensee or the Exempted Licensee. A natural person is no longer included⁤ in the definition of a "connected person". This will have direct implications on relevant activity⁣ classifications that involve dealing with connected persons.

Changes to the definitions of certain ''Relevant Activities''⁢​

a) Distribution Business: means purchasing from a foreign connected person, component parts or materials︀ for goods; or goods ready for sale; and reselling such component parts, materials, or goods.︁ The requirement of having these goods stored in UAE has been waived with the amended︂ ESR.

b) Service Business: means providing services to foreign connected persons.

If i’ve not misunderstood︃ this esr need to be filled only if you buy or sell services and goods︄ to/from “connected person”

 

[Osleak]

this i’ve copied and pasted from the mof.gov.ae
It’s clear you must fill the ESR‌ report if you fall in relevant activities of “distribution and service business centre”, such as‍ sell/purchace goods and serivces ONLY if you buy/sell to/from foreign entities connected (group of companies)⁠

2.9. Distribution and Service Centre Business
A “Distribution and Service Centre” Business refers to two⁤ distinct activities that are covered under one “Relevant Activity” heading.
A Licensee is considered engaged⁣ in a “Distribution Business” if it:
A. Purchases raw materials or finished products from a⁢ foreign group company; and
B. Distributes those raw materials or finished goods
A Licensee is︀ considered engaged in a “Service Centre Business” if it provides consulting, administrative or other services︁ to a foreign group company.
Licensees that only purchase or distribute goods to third parties,︂ are not considered engaged in a Distribution Business. Likewise, Licensees that are engaged in the︃ business of providing services to third parties are not considered as carrying on a “Service︄ Centre Business”.

 

[BlueMist]

ESR deadline has been extended once more, this time until 31st January 2021, apparently no‌ further extensions will be given.

 

[Osleak]

Yes postponed to 31th January,‍ but the good thing is that no report is needed for service and trading of⁠ goods, maybe just notification, but just to inform the mof that the company is out⁤ of scope and it’s not doing relevant activity (only if you trade or offer servo⁣ to connected companies of the group)