UAE Ministry of Finance Cancels Economic Substance Reporting for Companies Post-2022

ABU DHABI: The Ministry of Finance (MoF) has announced significant changes to the economic substance reporting requirements for companies, following the adoption of Cabinet Decision No. (98) of 2024. This decision amends certain provisions of the earlier Cabinet Decision No. (57) of 2020, effectively cancelling the requirement for companies to submit economic substance reports for financial years ending on or after December 31, 2022. According to Emirates News Agency, Younis Haji Al Khoori, the Under-Secretary of the MoF, explained that this amendment was made to simplify the administrative processes for businesses as the UAE implements its federal corporate tax system on business and corporate profits. Al Khoori emphasized that the cancellation of the economic substance reporting requirements would allow companies to concentrate more on adhering to the new tax system. "The amendment aims to enhance efficiency and tax compliance across the country, ensuring accurate application of tax legislation by all ent ities subject to it. This step is also part of the Ministry's ongoing efforts to improve the tax system's efficiency and attract further investments," Al Khoori noted. The Ministry also clarified that while the economic substance notifications and reports will no longer be required for the specified financial years, companies must still fulfill their compliance obligations for previous years. This includes responding to information or amendment requests from regulatory authorities or the Federal Tax Authority and settling any penalties imposed by the same.