Many UAE licence holders received penalty emails from the Ministry of Finance. If you are also one of them do you know how you can solve the problems? In order to resolve these issues, we would need to know exactly why we receive such a contravention from the Authority. We have outlined some of the reasons you may have received penalty emails.


A ) ABC LLC filed a Declaration of Economic Substances and it has engaged in a specific relevant activity. But later, it was noted that the company had carried out no relevant activity. An amendment to the notification of economic substances was therefore requested. ABC LLC did not submit the Economic Substances Report with the knowledge that there were no relevant activities during the period. But when the approval of the modification in the economic substance notification becomes active, the Economic Substance Report tab is generated . Therefore, a penalty for not submitting the Economic Substances Report prior to the deadline may be activated on the dashboard.In some cases, the authority itself requests a new notification on different grounds. In these cases, also if the Economic Substances Report tab is already generated and you have not actually carried out a relevant activity in the previous period , the penalty will be increased for non submission of Economic Substance Report. 


B) There could be a scenario where two reporting tabs on economical substances are generated in the portal. This may occur if there are changes to the relevant activity in the notification of economic substances. In modifying the notification, ABC LLC merely notified the relevant activity as a Distribution and Service Centre. When the modified notification is submitted, the ESR report tab is enabled on the dashboard for the ESR notification with 2 Relevant Activity and another ESR report tab has been turned on to modify the notification with the relevant activity as the only Distribution and Service Center. In such a scenario, ABC LLC filed the second report with Distribution and the Service Centre as a relevant business and no action against the first report generated. A penalty for not submitting the Economic Substances Report by the cut-off date may be activated in the dashboard.


C) As a first step, the reporting of economic substances is presented, reporting a specific relevant activity. Subsequently, the Economic Substances Exemption was sought in the Economic Substances Notification and the Economic Substances Report tab was activated. If so the company is not required to submit the Economic Substances Report. However approval of the amendment in the reporting of Economic substances may have taken time and then the Economic Substances Report Tab becomes active. The Report on Economic Substances has not been submitted since the filing of the Exemption and the supporting evidence and still penalty ticket might increase . 


How can you omit the penalties created by situations like those above?

In the above scenarios, the exempt licensee/licensee will be given the option to appeal . The appeal tab can be found on the dashboard of the Ministry of Finance portal . It is important that all supporting evidence and a comprehensive explanation be required for the appeal.

Pursuant to the Economic Substances Regulations, the reporting and reporting deadline for economic substances is as follows . 

ESR Notification  No later than 6 months from the end of the financial year in question.
ESR Report No later than twelve months from the end of the financial year concerned.
Sections 13 and 14 of the Economic Substances Regulations set out violations and sanctions for failure to notify and report, respectively.The administrative penalty will be applied to a licensee or exempt licensee who fails to file a notice and report (if applicable) as follows:
ESR notification AED 20,000
ESR Report AED 50,000
In case of delay in the submission of a declaration of economic substances or a declaration of economic substances, and if such delay is due to ignorance of the law , the ability to obtain authorization to waive the penalty is not guaranteed by an appeal. But there are authentic cases as mentioned at the beginning of this section, where the sentence can be appealed and suppressed.

Leave a Reply