English
How can I add a partner & what are the document required?From customer portal, click on Company services and under shareholder amendments you can see transfer shares to new shareholders (Add Partner), click on it and create the service request. Document required is: security approval, passport copy of the new owner, visit visa or residence visa, and photo.
What are the steps to obtain new Visa for a new employee?First apply for a new "Entry permit", then apply for "Visa status amendment", and then apply for the "new Residency Visa stamping ".
Where do we get the security approval paper?Proceed to Ajman Free Zone customer service with the required documents: Request letter (signed and stamped), licence copy, establishment card, passport copy and a photograph.
How can I sponsor my family members?You can apply for a "Salary certificate" from Ajman Free Zone portal, and proceed to Immigration for further assistance.
After residence visa cancellation, will I get any grace period time to stay or should I directly leave the country?Yes, you will be granted 30 days grace period after cancellation of residence visa if you cancelled it.
Can you transfer my call to different departments?No, we don't have the option for transferring calls to different department
Where can I do my medical for new visa?Al Hamidiya health center.
After residence visa cancellation, will I get any grace period time to stay or should I directly leave the country?Yes, you will be granted 30 days grace period after cancellation of residence visa if you cancelled it.
Under which conditions can a UAE investor visa holder stay outside of the country?If the profession of the investor or the business partner is outside the UAE with a valid UAE residence visa, he/she can enter the country for a year from the exit date. And if the profession of the investor or the business partner is outside the UAE with an invalid UAE residence visa, he/she can’t enter the country unless he/she has a new visa (visit/tourist), and start the necessary arrangements to change the status.
How many days does it normally take for stamping a new visa?lf you opt for normal service it will take up to 4 days for new visa stamping. However if you opt for urgent service it will be done in 2 days.
Does Ajman Free Zone accept a medical report from any of the other Emirates?No, Ajman Free Zone only accepts a medical report from Al Hamidiya Health Center in Ajman.
What’s the contact number for offshore department?After raising a service request for residence visa renewal, when do I have to submit my Passport?As soon as your service request is submitted, you can go directly and submit your passport to Zajel Courier Service.
I have no shareholder visas and I have requested for cancellation of my company, so why is it pending showing ‘cancel shareholder visas’? And how long does it usually take to proceed from this step?It's under the Government service team for verification, and once the verification is done you will be notified.
When can I go for collecting my passport after I submit the service request?Once your service request is completed and status shows closed you can go and collect it from Zajel Courier Service.
Will the name of the company automatically change after the service request for change license type status is closed?No, the name will stay the same, unless the customer raise a service request to change the company name through the portal, in the "Company Services", under the “Company Amendments". Adv. Period will be for 15 days, after that the company name will be changed
How can I update my registered e-mail and contact number?Through Customer portal settings the edit my contact info.
How do I reset the portal password?From the reset password link which will be sent to your registered e-mail.
What is E-channel?E-channel Registration in the UAE. by commitbiz admin 27, Mar 2018. E-channel is a new smart service system which will help in naturalization's and residency services. The Interior Ministry of the UAE launched this smart service system to improve the speed and precision of issuing visa and residence permits.
What is the contact number for Zajel?Toll Free: 80021111
What is the procedure for applying for a new visa in AFZ if the customer is out of the country?From customer portal, under Employee services the customer has to raise a service request for entry permit and do medical from Al Hamidiya health center and then raise a service request for Residence Visa-New.
Is Ajman Free Zone public or private sector?How can I update my contact details through my portal?For changing the registered E-mail or the phone number, proceed to Ajman Free Zone with a request letter (signed and stamped), with a copy of the licence.
Where do we get the security approval paper?Proceed to Ajman Free Zone customer service with the required documents: Request letter (signed and stamped), licence copy, establishment card, passport copy and a photograph
Why does the employee name not appear in the search column while cancelling the residence visa of the employee?Sometime error on system that time you can create case on your portal. If you create the case within 24 hours it will updated.
I am in UAE on a visit visa or tourist visa, I can apply for residency visa & change my status without exit from country?Yes, you can apply for residency visa & you can change status within the country without exit as per regulation of ICA.
Is there a fixed expiry date for the security approval?Validity of one month from the date of issuing the security approval.
How can I remove other shareholders/partners of a smart office in order to be the only owner?1- A request can be raised and submitted through the customer portal (service request under Removal of Shareholders). 2- You must confirm the directors, and authorized signatory of the company if the current one is the one being removed. 3- Both partners should sign the Signature Card. 4- The signed Signature Card will be verified and approved. Note that the newspaper announcement period with take 14 days.
I want to rent a small office, what are the sizes available and what is the procedure?Raise a service request through your portal under company services change location, It will show the area size and amount.
Do you provide a real estate activity?Yes, it requires a business proposal
Can I renew the establishment card before expire it?You can renew your establishment card before expire it less than two month
The establishment card expire date related the trading license expire date?No the establishment card expire date not related to the date of expire trading license.
How can I get the approval paper for the establishment card cancellation?No report for establishment card cancellation but you can get company cancellation report it is finally clearance.
Why does the employee name not appear in the search column while applying for entry permit amendment – change profession?Sometimes an error can occur on the system. You can raise a case about it on your portal and your case will be updated within 24 hours.
What is the process for changing / replacing / adding of shareholder along with renewal change license type and how much does it cost?A request can be raised and submitted through the customer portal (service request under Replace Shareholders / add partner). Required Documents - Add partner: Security check approval. Shareholder should be above 18 years. Passport copy must be valid for 6 months & Visa Copy Passport Size Photograph. No objection certificate. Required Documents - Replace Shareholders : Allowed for companies with facility types such as business center – smart office – freelancer hub – executive office - retail units. Passport copy / visa page copy / ID copy / Board Resolution / POA Court Authorization, Note that the newspaper announcement period will take 14 days. The costs will be as follows: Replace Shareholders (Registration or Amendment Fees 2000 Dhs / Establishment Card Amendment 535 Dhs / Advertisement Fees 500 Dhs / Amendment Charges 500 Dhs / Registration Fees 500 Dhs / Security Check Dhs( Transfer Shares to New Shareholders (Add Partner) (Partnership Agreement Attestation 2000 Dhs / Establishment Card Amendment 535 Dhs / Amendment Charges 500 Dhs / FZC/FZE Conversion Fee 500 Dhs / Security Check 500 Dhs) Q113. Can I add a corporate partner as a shareholder in a company? Yes. A request can be raised and submitted through the customer portal (service request under add partner) * Required Documents: Memorandum of Association or Article of Association. Board Resolution Certificate of Incorporation Power of attorney. Passport copy (valid for 6 months) of the representative or manager of the company. A Registration Certificate issued by the competent authority in the country in which the company is registered. A Feasibility Study shall be submitted in the case of Industrial & Services Enterprises.
For Replacing shareholder, does the old and the new shareholder have to be present in the country?Yes. But they should sign the Signature Card and attach agreement letter (signed and stamped by all partners (New – Old signatures) or POA + agreement letter
How do I remove my manager without adding any new manager?You can’t remove your manager unless you add a new manager.
What type of services does AFZ provide?Ajman Free Zone services includes License Issuance and Visa processing. Also includes related services to license renewals, amendments, closures and etc.. the same for the visa process related services.
Where can we create Certificate of Origin? Is it to be created from Ajman FZ portal or Chamber of Commerce Portal?From customer portal, click on Letters and certificates, under certificates click on certificate of origin and raise a Service request.
How can I get a template for Memorandum of Association?You can apply for M.O.A through the portal under Company Services (Memorandum of Association)
How to get Police Clearance Certificate?Apply for it through the police website: http://www.ajmanpolice.gov.ae, security clearance.
Where can I find the residence visa cancellation document after the Service request is closed?When the Service request is completed and the status of the SR is closed, you can find it on your service request under SR Documents. “E Print Cancellation Document “
I have applied for entry permit for an employee, it’s been issued already. Is it possible to cancel the entry permit? He is outside the country? (The deposit that I kept for ticket guarantee) will I get that or use that guarantee for some other employee If I arrange a permit for him.From customer portal, open Employee services and you will find Entry permit column, then click on "cancellation- not used" after cancelation SR is closed you can apply for refund. Not aloud use this guarantee for other employee.
Does Ajman Free Zone accepts medical report from any other state of emirates?No, Ajman Free Zone only accepts medical report from Al Hamidiya health center in Ajman
After raising service request for residence visa renewal, when do I have to submit my Passport?As your service request is submitted, you can go directly and submit your passport to Zajel courier service.
Do we require any Educational documents in order to apply for Manager Post?Yes as per the designation.
I need to apply for my wives visa renewal, is insurance compulsory because Ajman is asking for implying insurance.Yes the insurance for family visa is compulsory in Ajman.
If an employee or investor is out of UAE and the visa gets expired, how will the customer renew or cancel the visa while being out of UAE?Any person out of UAE not possible to renew his visa, he can apply for cancellation.
I am in UAE on a visit visa or tourist visa, I can apply for residency visa & change my status without exit from country?Yes, you can apply for residency visa & you can change status within the country without exit as per regulation of ICA.
What are the conditions for sponsoring the family?Conditions The minimum salary should be AED 4,500 for employees Lease contract should be certified by the Department of Economy (Municipality) Electricity bill as proof of residence. Salary certificate issued by the Free Zone. Birth certificate attested and stamped by the UAE Embassy in native country and from the Ministry of Foreign Affairs within the UAE with legal translation (in case of residency application for children) Marriage certificate attested and stamped by the UAE Embassy native country and from the Ministry of Foreign Affairs within UAE with legal translation (in case of residency for wife) Copy of the sponsor's passport along with a copy of the residence permit Copy of the sponsor's EID card. Passport copy of the sponsored. Colour photo in a white background.
Is the investor entitled in the case of sponsoring his family to apply for a maid or driver visaNo, they can’t apply in the Free Zone, but he can apply for the investor himself in in federal authority for identity & citizenship as per the regulation of ICA .
What is the procedure to cancel my investor visa? Do I need to bring you my original passport? Do I need to be in the UAE for my visa cancellation?There's no need to bring your original passport if you completed six months out of UAE or your visa has expired. The only condition is that your company status should be active.
Are any Educational documents required to apply for a Manager’s Post?Yes, you would have to submit the minimum qualification required documents as per designation i.e., IT Manager, Finance Manager, Project Manager, etc..
How can I get the civil defense certificate?You can apply for it from the civil defense department. Please check: https://www.acd.gov.ae/en/index.php.
What if the parties to the dispute refuse to settle the conflict?If the dispute is not resolved, it will be transferred to the court.
How long will it take to get the security approval?It depends on the immigration process.
Is there a grace period for a license in AFZ?Yes, there is a grace period of one month only after the expiry of the license within which you can renew.
While doing any amendments in my license such as add/remove /change manger/transfer, is my physical presence required in AFZ?Yes, after making the payment and re-uploading the form with signatures you have to present yourself at AFZ to verify all signatures.
How can I get a license for starting a company in AFZA?Register through the official website.
What is the process for upgrading/downgrading my office?Raise a Service request through your portal under company services. (Change location)
How can I change my license activity type?Raise a Service request through your portal under company services. (Change Activity)
How to find COC Certificate while renewal of the license?Go to the SR for renewal of trade license and scroll down, you will find the SR of COC Certificate, click on it and under SR documents you will find the COC certificate document.
How can I make an establishment card amendment to activate my trade license on the immigration system?From the customer portal, click on Employee Services and you will find Establishment Card column, under Establishment Card column click on Amendment and choose amendment made as "Activation of the Trade License".
How do I find my renewed documents? (Trade License, Establishment Card, Coc certificate, etc.)When the Service request is completed and the status of the SR is closed, you can find it in the service request for renewal under SR Documents.
Do I have to update the E-channel in order to renew the establishment card?How much is the cost for renewal of my trade license?From customer portal, click on company services then raise a service request for renewal and the cost for renewal of trade license will be shown there in the service request.
Is there any hard copy of trade license?No, there's only soft copies which will be uploaded on the customer portal. PDF
In general trading activity, how much is the maximum no. of activities can be done?Only one activity, if you want to add a new activity you have to change to commercial trade license for adding 1,2,3 activities ( change licence type )
Do we cancel the investor visa before or after cancelling the license of the company?A cancellation service request has to be raised first for investor visa cancellation and after the visa is cancelled the license cancellation document will be generated.
How can I do establishment card amendment to activate my trade license on immigration system?From customer portal, click on Employee services and you will find Establishment Card column, under establishment card column click on amendment and choose amendment made as "Activation of the Trade License".
Is the establishment card expiry date related to trading license expiry date?No the establishment card expiry date is not related to the date of expiry of trading license.
I have an industrial license and I don’t use my warehouse, so can I remove the location and only use the license of my company?Legally, the license cannot be used without location and if you want to change the location you can take a location at a lower price.
What is the procedure to cancel the Company License?A request can be raised and submitted through the customer portal (service request under cancellation). - First step will be an interview with customer care. Once the company status has changed to ‘under cancellation’ the customer can raise the following 3 SRs: - Cancellation of Employee Visas - Cancellation of Establishment Card - Cancellation of Shareholder Visas Note that the customer can only raise the cancellation of shareholder visas and establishment card once the Cancellation SR is at the correct step. *Required Document* Clearance: - - For (Warehouse & Land) you should attach (clearance from Ajman Port & Customs, Etisalat, FEWA and Ajman Sewage. - For China Mall (NOC letter from China Mall management) - For Car Showroom attach letter from Ajman Souq. Note that the newspaper announcement period with take 14 days
How can I apply for the Share Certificate if my license has expired?You should apply for license renewal first, then apply for the certificate.
What type of license does AFZ have?Ajman Free Zone has Industrial/Manufacture, Commercial, Services, Pioneers, Freelancer, E-commerce, and offshore.
Can I add more shareholders after issuing the license?Yes, you can by visiting our customer portal: https://bit.ly/2DHuHHR
Can I change location after issuing the license?Yes, you can by visiting our customer portal: https://bit.ly/2DHuHHR
Can I do any changes to my license after issuance?Yes, you can by visiting our customer portal: https://bit.ly/2DHuHHR
As a freelancer company, can I use my license in the mainland?Q135. Can I import and export from other countries if I have an E-Commerce license?Can I create a website company, if I have an E-Commerce license?Yes, you can have your own website and tie-up with other companies under an E-Commerce license.
Can I Import and Export from other countries, If I have an Industrial License?Q138. Can I hire employees with a Freelance License?You have an option to hire one employee and also provide an Employment Visa under the employee's company.
Can I hire employees with a Pioneer License?You have an option to provide one visa but only for shareholder / License owner.
Can I update my freelance package to the business centre later?No, however you can change your license type.
Can I merge service activity and commercial activity in one license?No, it should be either a service activity or commercial activity license.
Can I apply for a separate license under one company name?Yes, you can apply for a separate license.
Can I lease a facility office or a warehouse in AFZ with current UAE trade license and registration?No, you can’t. You have to be a registered company with AFZ to lease in our facilities.
Can I lease or buy a property out of AFZ with an AFZ license?Yes, you can lease or buy a property out of AFZ.
Can I sell online through a third party to clients outside AFZ ( in UAE and internationally), with a Freelancer Package and an online sale specialist license?No, you have to own an E-commerce license for this activity.
Can I downgrade from a higher package to a freelancer package?No, you can't, you have to cancel and apply for a new package.
Can we sell our product in the local markets and what are the procedures for selling?You can distribute your goods in the UAE through authorized distributors by following the procedures of the Port & Customs organization.
Are there any restrictions to importing and exporting of goods?You have to first request for a Custom Code Letter from the AFZ portal issued to all Ports in UAE to allow you to import or export goods by following the procedures of Port & Customs organization.
Does general trading mean import export of all goods as well?All goods other than Diesel, Oil, Crude Oil, Cars and Garments.
If a customer receives a notification about “Your custom declaration has been approved”, what does that mean?Above does not relate to Ajman Free Zone portal, rather it is a custom import and export related question.
What are the customs duties on entry and exit of cargo trucks?Entry fees are imposed for containers only through the free zone portal. The prescribed fees are determined by the port operator.
What is the mechanism if I want to change the activity of a commercial license and that of import and export?You can change the activity by visiting the customer portal: https://bit.ly/2DHuHHR Change of activity takes place from the point of issuing the license, and the requirements of the customs department are limited to the fact that the exported and imported goods match the same activity mentioned in the commercial license.
Can I import goods from any port in the UAE?Yes, you can import goods.
How can I import goods if I have an E-commerce license?You should apply for a different license with import and export activity.
What is the cost for renewal of E-channel? When should it be renewed?The cost of renewal of E-channel is 1,100 AED annually. It should be renewed 5 Days before the expiry date.
How much is the fee for cancellation of the company license?How can I collect my refund amount?After cancellation, proceed with a request letter duly signed and stamped to Ajman Free Zone with the cancellation certificate, original receipt and apply for refund. (E-Channel) For visa refund, proceed with a request letter duly signed and stamped to Ajman Free zone with the cancellation document with exit stamp or copy from the new visa, & original receipt and apply for refund.
In how many days can I get back my refund amount after requesting it?You should receive your refund amount within 10 working days.
Will I get back the amount which I paid with cheques for rental rate if I only used my location just for 6 months?No, the amount would not be refundable.
Is my refund cheque ready?Yes, once the cheque is ready you will be notified
Q33. What should an investor type in the salary field when applying for the entry permit?Any amount but more than 10,000 AED.
What’s the name the customer should mention in cheque while paying for renewal?Ajman Free Zone Revenue.
How can I replace my cheques?From customer portal click on company services, then raise a service request for Cheque Replacement under the column other services.
Do we have to pay for insurance during Visa renewal?Yes, starting from 1st September 2019, all the employees must pay the insurance fee (265 AED).
How much is the payment for making the change to the company name service request?While raising the service request for changing the company name, the portal will show you the amount to be paid.
Why is my portal balance negative?Due to fines or VAT.
How can I collect my refund e-channel guarantee amount?After cancellation, proceed with a request letter duly signed and stamped to Ajman Free zone with the cancellation certificate, original receipt and apply for refund guarantee of e-channel.
How can I collect my refund office guarantee amount?After cancellation, proceed with a request letter duly signed and stamped to Ajman Free zone with the cancellation certificate, original receipt and apply for refund office guarantee.
How can I collect my refund visa guarantee amount?After cancellation, proceed with a request letter duly signed and stamped to Ajman Free Zone with the cancellation certificate, original receipt and apply for refund office guarantee.
In how many days can I get back my refund amount after requesting for it?Within 10 working days.
How can I know what the outstanding fines are for?Now kindly contact customer service in AFZ or you can create a case, in future this service will be implemented on customer portal.
I am a female investor. Can I sponsor my family? When is the investor entitled to be a female sponsor of her family and what are the conditions?Yes you can sponsor your family as per rules of below. You put in a free zone 20,000 AED guarantee if you have a smart office, business center & put 3000 AED guarantee in federal authority for identity & citizenship for each person. If you have normal office or other location no need guarantee in AFZ
Q100. I have applied for SR but I want to cancel it. Will my SR fee be refunded?No, if you cancel the SR after applying and paying for it the fee is not refundable
How can I know what my outstanding fines are for?Kindly contact Customer Service in AFZ or you can create a case. In future this service will be implemented on the customer portal as well.
What’s the limit for adding an additional visa quota for any location?The quota will be as per the location, but the additional visa processing will be completed as per approval from Immigration.
How many days will it take to change the manager of the company and what are the charges to be paid for it?Manager of the company can be changed on the same day as you wish and the charges would be AED 2,500. (AED 500 towards Amendment Fees and AED 2,000 for Article of Association (F.Z.C) or Memorandum of Association (F.Z.E))
Can I open a bank account?Yes, you can, AFZ has partnered with Mashreq Bank to assist you. You can reach their website: https://bit.ly/2Wk6xJR.
Can I pay for an installment plan?Yes, Easy instalment plans can be availed for up to 6 months depending on your business package.
What is the coverage insurance policy?The total sum assured is up to AED 20,000 for each insured worker.
What happens if I didn’t repay the insurance company?The free zone will suspend the company and freeze new work permits. The employer should provide a bank guarantee upon the renewal of existing work permits.
What is the Receipt of Receivable Settlement for employee and how is it obtained?For employee: Receipt of receivable settlement is the dues form you can download from portal and signed by the owner and the employee of the company.
Where can I find the residence visa cancellation document after the Service request is closed?When the Service request is completed and the status of the SR is closed, you can find it on your service request under SR Documents. “E Print Cancellation Document “
I have applied for entry permit for an employee, it’s been issued already. Is it possible to cancel the entry permit? He is outside the country. Will I get the deposit that I kept for ticket guarantee or can I use that guarantee for some other employee if I arrange a permit for him.From customer portal, open Employee services and you will find Entry permit column, then click on "cancellation- not used" after cancelation SR is closed you can apply for refund. Using this guarantee for another employee is not allowed.
How many days it’ll take for changing the manager of the company?What should investor upload for the visa renewal service request in the labour contract field?Any blank document or copy of trade license.
Where can I find the labour contract?Through the portal open Service Requests, then open the entry permit service request, under "SR document" the labour contract will be provided.
I have a company in AFZ but have never gone there. Where exactly can I find my office or location?A. Through the portal go to "Company Details", then under "Tenancy Contracts" the location is stated. B. You can visit property management team to guide you to your office
I have applied for any SR but I no need to process that one if I cancelled that sr the fee will get for me?Any SR is cancelled and the fee is not refundable never.
I am an investor in Ajman Free Zone, I can get an ID card without transferring my visa to free zone?Yes, you can get after you submit SR for ID card by your portal.
what is the labour card, I can apply for a labour card without visa in AFZ?Yes you can apply for labor card by your portal “employee under agreement “if you have valid residency visa on your relative’s sponsorship
What is the procedure to cancel my investor visa? Do I need to bring you my original passport? Do I need to be in the UAE for my visa cancellation?There's no need to bring your original passport if you completed six months out of UAE or your visa has expired. The only condition is that your company status should be active.
What is the Receipt of Receivable Settlement for an investor?Receipt of receivable settlement is for employee cancellation only.
What should an investor upload for the visa renewal service request in the labour contract field?You will be asked to upload your visa copy only if required.
After my office renewal service request was completed, I received an e-mail that I should visit AFZ and sign the documents. Is there any way to do it online through e-mail by signing and uploading the document or it can only be done with my presence in AFZ?You can upload/attach the signed lease agreement in the same SR (Service request).
If I have raised a SR and already paid, how can I cancel the SR, and can I get a refund for the amount paid?Proceed to Ajman Free Zone with a request letter (signed and stamped) and a copy of the trade license and submit it to customer service.
Under Signature Card with multiple companies, who should be the authorized person to provide the signatures and should the nationality be of the signatory or the main company?The authorized signatory shall be the person agreed upon by the Board resolution and the nationality should be of the main company.
Q124. How many shareholders I can have in freelance and pioneer companies?Freelancer and Pioneer companies license allows only one shareholder. You can also apply for two visas under the freelancer license, and one visa for pioneers license.
What is the visa eligibility for a freelance company?Freelancer Company can apply for two visas.
Can I change the company ownership?Yes, you can by visiting the customer portal: https://bit.ly/2DHuHHR
How many directors/ managers can I appoint in the company?You can appoint up to four directors/ managers. ts also depends on the company package.
As a shareholder, do I have to be resident in the UAE?No, however, the general manager has to be a UAE resident.
How do I raise a Labor Complaint against my Employer?You can apply your complaint through the website, or email [email protected]
What is the insurance scheme?It is an insurance policy that replaces the previously established bank guarantees. This policy ensures labor rights and entitlements. The policy covers: Unpaid end of service benefits. Unpaid wages. The cost of the airfare to the home country. Work compensations– related injuries. Does this mean the bank guarantees system is cancelled? The bank guarantee system will remain for non-compliant companies with labor complaints and financial claims that have not been closed.
What are the required documents to register Absconding?Exit or Entry certification. You must provide correct information, otherwise, your request will be cancelled and the guarantee won’t refund.
Does the employer have the right to take my passport?No, it's not their right.
What is a temporary work permit?A service that is used to create a temporary work permit if you want to work in a different company. You must have a registered complaint (monthly 150AED).
What is the maximum number of overtime hours?Working hours may not be increased to an additional two hours per day.
What is the weekly rest time?Weekly rest time is one day. It may be more than one.
How long is the sick leave to which an employee is entitled? Is it paid?An employee who is infected with an illness is entitled to a paid sick leave after the elapse of the probation period, but not exceeding ninety days as follows: The first fifteen days with full salary. The following thirty days with a half salary. The following periods will be unpaid.
Does the employer have the right to refuse my annual vacation despite completing one year of service with him/her?Yes, the employer has the right to decide when the annual leave begins. In addition, the employer can (in case of very critical work) divide the annual leave period into two periods and transfer the remaining days to the following year.
How is the overtime calculated? Is it upon the basic salary or the gross salary?The overtime is calculated upon the gross salary (basic salary + the agreed allowances) and the employee is entitled to overtime with an increase of not less than 25% of that wage. In case the overtime is performed between the hours of 9 pm and 4 am, then the employee ought to be paid an increase not less than 50 % of that wage.
When I’m entitled to get the return ticket as stipulated in the employment/ Labour contract?In the case of dismissal or leaving the country, you are entitled to get the return ticket to your origin country, as well as in the event of completion of the agreed contract term.
Does the employer have the right to dismiss an employee, who takes more than his/her annual leave credit and is absent for more than two months, immediately after the employee resumes his /her job?Yes, since the days that exceed the balance of annual leave are considered as absence. As stated in the Labour law, article (120); “in case of the absence of more than 7 days, the employer may dismiss the employee without warning, unless there are force major circumstances that prevent the employee from resuming his/her work in time after completion of the annual leave days”.
Does the employer’s refusal to accept my resignation request have any impact on the termination of the employment/Labour relationship?An employer cannot reject your resignation. You should give a notice period and obtain the employer’s signature on your resignation letter or send the resignation letter by fax, email or postal mail. The contract must be completed in order not to lose your end of service gratuity.
Can I shift my contract to work for another company registered under their name?Yes, but only if the companies are owned by the same sponsor.
What is the difference between a limited and an unlimited contract?Limited contracts mention start/end dates, the unlimited ones only specify joining dates, each follows respective provisions depending on the situation.
How is the end of service gratuity calculated, is it based on basic salary or gross salary?End of service gratuity is calculated on the last basic salary only, without any allowances.
What is the wages protection system?It is a system that requires all companies to transfer the salaries of employees through banks and exchange companies, and companies must submit payroll statements through the free zone online portal on every month before the end of day 15th from each month.
What if there is a delay in uploading the payroll in the wages protection system?For the first month of delay, the company will be suspended from all its services and fine will be applied. If the delay lasts for two months, fines and legal action will be taken against the company.
What is the visa allocation policy in AFZ?Every business package chosen has a different number of visas allocated.
What is Money Laundering?Money laundering is the process in which criminals concealing the original ownership and the source of the criminal proceeds derived from illegal acts such as Narcotics, trafficking, embezzlement, arms sale, cyber-crimes, etc. by making such proceed appear to be from a legitimate source to subsequently use such proceeds in both legal and illegal activities.
What are the harms of money laundering?Weak execution of the strict laws towards the illegal activities, absence of executive authorities, as the negligence of the specialized authorities in any country makes it a solid ground for money launderers and criminals to practice their criminal acts easily and extensively. The danger of money laundering including the below: - Crime and corruption are widely spread and noticeable - Negatively affecting the economy by harming the private sector - Bad reputation globally - Imposing international sanctions
What is money laundering process?- The first stage of money laundering called “Placement”: At this stage money launderer smuggle cash across countries to invest in foreign financial institutions for trading or buying rare, expensive, minerals, precious stones and other products or holding that are iconic for their high price such as antiques in which it can be resold with checks or bank transfers, in addition to other ways such as splitting huge amounts into small amounts and making direct deposits in bank accounts. - “Layering” is the second stage of money laundering process: In layering stage many layers of complex financial operations are forged to separate the illicit funds from their original source in order to hide the true source of these returns, which make it difficult for the supervisory and law enforcement authorities to track and audit these transactions. - The last stage of money laundering process is “Integration”: In this stage legal cover proceeded by introducing those illegal revenues into the financial structure to show that they are legally acquired from the returns of the economic cycle, where the integration stage increases the difficulty of separating laundered money, which enable money launderers to invest in money legitimate activities that leads to an opportunity to double their wealth.
Financing terrorismDefined as per the law No. 7 of 2014 as providing, preparing, collecting or facilitating funds for others to obtain them with the intent of use then in committing a terrorism crime, is considered one of the most dangerous means of spreading crime and corruption.
What is Financial Action Task Force (FATF)?- Founded by the G7 (or Group of Seven) in 1989 and headquartered in Paris. - The organization has many international organizations and regional offices, such as MENA FATF for Middle East and North Africa Affairs. - FATF has developed 40 recommendations, which are considered an international standard that countries implement in line with their own circumstances.
What is FATF’s Objectives?• Identifying risks, developing policies and local coordination. • Tracking money laundering , terrorist financing and weapons proliferation activities. • Giving powers and responsibilities to the competent authorities, such as law enforcement and supervisory authorities. • Providing the required information about the ultimate beneficial owners (UBO) of companies and legal and natural persons • Work to issue protective measures for the financial sector and the target sectors. Work to promote international cooperation.
What is the meaning of “Disclosure limit”?Disclosure limit is the maximum limit of cash that allowed to be brought to the country. Exceed of this limit will subject to disclosure system controlled by the central bank.
What is the difference between money laundering and terrorist financing?- money laundering depends on the dirty money gained from the crime on the contrary of the source of funds for the terrorist financing which might be licit and collected to be directed for a terrorist activity. - The customer type: the money launderer is a professional in what he doing. As for the terrorist financier, he often does not know that he is financing a terrorist act. - Money volume: the money laundering has huge amounts that may belong to one person, unlike terrorist financing, which has small amounts belongs to many people (donations money for example). - The money path: In money laundering , the money path is circular as the money starts/ ends from/ to the launderer, but in terrorist financing, it is linear, starts from the donors and ends to the terrorist.
What is the meaning of Ultimate Beneficial Owner (UBO)The natural person who ultimately owns or exercises effective control, directly or indirectly, over a Customer or the natural person on whose behalf a Transaction is being conducted or, the natural person who exercises effective ultimate control over a legal person or Legal Arrangement.
How to identify the beneficial owner?The Beneficial Owner of the Legal Person shall be whoever person that ultimately owns or controls, whether directly through a chain of ownership or control or by other means of control such as the right to appoint or dismiss the majority of its Directors, 25% or more of the shares or 25% or more of the voting rights in the Legal Person.
What if it was difficult to identify the beneficial owner?Where no natural person is identified as a beneficial owner then the natural person who holds the position of a higher management official shall be deemed as the Beneficial Owner.
Why should identify the ultimate beneficial owner?importance of know the ultimate beneficial owner is to prevent the money launderer of hiding the source of the dirty money or the identity of the persons related to this money. Failure to verify the identity of these beneficiaries will facilitate the money laundering process and affect the economy in general.
What is “Hawala Activity” and its arising risk?It is a system for transferring money from one geographical region to another without inserting to the financial system, which leads to a lack of control over it. In 2020, a decision was issued by the Central Bank to make it mandatory to license the Hawala activity, to be controlled and monitored, to mitigate the risks of this activity. Therefore, our clients are requested to verify the legitimacy of the persons or organizations they deal with so that they are not involved in unintentionally money laundering .
Who is the Politically Exposed Persons (PEPs)?Natural persons who are or have been entrusted with prominent public functions in the State or any other foreign country such as Heads of States or Governments, senior politicians, senior government officials, judicial or military officials, senior executive managers of state-owned corporations, and senior officials of political parties and persons who are, or have previously been, entrusted with the management of an international organization or any prominent function within such an organization; and the definition also includes the following: Direct family members (Of the PEP, who are spouses, children, spouses of children, parents). Associates known to be close to the PEP, which include: Individuals having joint ownership rights in a legal person or arrangement or any other close business relationship with the PEP. Individuals having individual ownership rights in a legal person or arrangement established in favor of the PEP
Why PEP is considered a high risk?The risk of politically exposed persons is in the possibility of using their positions to launder or smuggle money or facilitate participation in any financial or terrorist crimes.
What is Designated non-financial business and professions (DNFBP)?Anyone who is engaged in the following trade or business activities shall be considered a DNFBP: • Brokers and real estate. • Dealers in precious metals and precious. • Independent accountants & auditors. • Legal consultancy. • Company service providers. (Only licensee who have one or both of the activities of Corporate Services Provider/ Documents Clearing Services will be able to establish companies on behalf of others.)
Why Dealers of precious metal and stones (DPMS) are considered high risk?DPMS is considered a high risk activity for the below reasons: The ease of trade in diamonds around the world, as well as its small size, ease of transport and high price, make it one of the most threatening gemstones as a factor in money laund. The high value of gold and its retention of its value regardless of its shape, whether in the form of gold artifacts or metal ingots, makes it the forefront of precious metals used in money laundering and terrorist financing.
Why Corporate service providers are considered (CSP) high risk?CSP is considered a high risk activity for the below reasons: - Acting as an agent for establishing companies on behalf of others. - Work and equip for another person to work as a manager or secretary for a company or as a partner or in a similar position in a legal person.
Why DNFBP included independent accountants, auditors and legal consultancy as high risk activities?Independent accountants, auditors and legal consultancy are considered high risk activities because of running the below activities: - Establishing companies with a complicated structure to hide the relation between the crimes' income and the criminals. - The purchase and sale of properties, where the transfer of the ownership is used in the layering stage as well as in the integration stage, through legal investments after the money laundry process. - Make financial transactions on behalf of their customers, such as depositing or withdrawing cash, buying and selling shares, or sending and receiving international funds transfers.
What are the risk factors of the activity of real estate agents?- Executing a series of operations to conceal the illegal source of funds. These operations can be classified under the layering stage. - Investment in large projects such as tourist complexes, to give a legitimate appearance (the integration stage). - Buying and selling real estate in fake names.
What is the requirements of DNFBPs?DNFBPs must comply with the law of anti-money laundering and combating the financing of terrorism and financing of illegal organizations by implementing the requirements of the ministry of economy as below: Appoint an expert compliance officer. Rely on the official website of the committee for goods and material subjected to import & export control to obtain the most recent publication of the local lists issued by the UAE cabinet. In addition, subscribe to the email subscription service provided in the website in order to receive relevant updates to both the UNSC consolidated lists and the local lists. (for subscription, use the below link) https://www.economy.gov.ae/English/aml/pages/circulars-notices.aspx Register for goAML program. goAML is an integrated platform used to file Suspicious Transaction Reports (STRs) and/or Suspicious Activity Reports (for registration, use the below link) https://www.economy.gov.ae/English/aml/pages/circulars-notices.aspx
What is Designated non-financial business and professions (DNFBP)?Anyone who is engaged in the following trade or business activities shall be considered a DNFBP:
• Brokers and real estate.
• Dealers in precious metals and precious.
• Independent accountants & auditors.
• Legal consultancy.
• Company service providers. (Only licensee who have one or both of the activities of Corporate Services Provider/ Documents Clearing Services will be able to establish companies on behalf of others.)
Is management consultancy activity considered one of DNFBPs?
No, as it’s not mentioned as one of DNFBPs.
Why Dealers of precious metal and stones (DPMS) are considered high risk?DPMS is considered a high risk activity for the below reasons:
The ease of trade in diamonds around the world, as well as its small size, ease of transport and high price, make it one of the most threatening gemstones as a factor in money laundering.
The high value of gold and its retention of its value regardless of its shape, whether in the form of gold artifacts or metal ingots, makes it the forefront of precious metals used in money laundering and terrorist financing.
Why Corporate service providers are considered (CSP) high risk?CSP is considered a high risk activity for the below reasons: Acting as an agent for establishing companies on behalf of others.
Work and equip for another person to work as a manager or secretary for a company or as a partner or in a similar position in a legal person without identifying the ultimate beneficial owner.
Why DNFBP included independent accountants, auditors and legal consultancy as high risk activities?Independent accountants, auditors and legal consultancy are considered high risk activities because of running the below activities: Establishing companies with a complicated structure to hide the relation between the crimes' income and the criminals.
The purchase and sale of properties, where the transfer of the ownership is used in the layering stage as well as in the integration stage, through legal investments after the money laundering process.
Make financial transactions on behalf of their customers, such as depositing or withdrawing cash, buying and selling shares, or sending and receiving international funds transfers.
What are the risk factors of the activity of real estate agents?Executing a series of operations to conceal the illegal source of funds. These operations can be classified under the layering stage.
Investment in large projects such as tourist complexes, to give a legitimate appearance (the integration stage).
Buying and selling real estate in fake names.
what is the requirements of DNFBPs?DNFBPs must comply with the law of anti-money laundering and combating the financing of terrorism
and financing of illegal organizations by implementing the requirements of the ministry of economy as below:
Appoint an expert compliance officer.
Rely on the official website of the committee for goods and material subjected to import & export control to obtain the most recent publication of the local lists issued by the UAE cabinet. In addition, subscribe to the email subscription service provided in the website in order to receive relevant updates to both the UNSC consolidated lists and the local lists.
Register for goAML program. goAML is an integrated platform used to file Suspicious Transaction Reports (STRs) and/or Suspicious Activity Reports (SARs)
There is any fee for the registrations?
There are no fees for registrations. The companies can register thru simple steps on the website of the ministry of economy.
When DNFBPs’ customers should do the requirements?
The existing Licensee already registered for goAML after awareness campaign which ended on April 30th 2021, fines will impose by the ministry of economy for those who didn’t comply with the requirements before campaign’s deadline. The new licensees should comply with the requirements once their license been issued to avoid imposing any fines.
What are fines for non-compliance?
AED 50K is a minimum fine, and it may duplicate to be AED 5M and company cancellation
What is DNFBPs Supervisory Boddy?
Ministry of Economy.
Laws & Decree:
• Federal Decree No. (20) of 2018 on anti-money laundering and countering the financing of terrorism.
• Cabinet Decision No. (10) of 2019 concerning the implementing regulation of decree law no. (20) of 2018 on anti- money laundering.
Subscribe to Sanctioned ListgoAML registration steps linkfirst step registrationSecond step registrationFor all inquiries kindly visit the below link for the ministry of economyWho is the Ultimate Beneficial Owner (UBO)?The natural person who ultimately owns or controls the Legal Person, whether directly or through a chain of ownership or control or any-other indirect means, and also the natural person on whose behalf the transactions are being conducted or who exercises ultimate control over a legal person.
How do you identify the UBO?
• The natural person who own 25% or more of the shares
• The natural person who has the right to appoint or dismiss the majority of its Directors.
• Where no natural person is identified as a UBO then the natural person who holds the position of a higher management official shall be deemed as the UBO.
What is Register of the UBO?A Specific Register of the Beneficial Owners in the Legal Person, which include the following data in respect of each Beneficial Owner:
• Full name, nationality, date and place of birth.
• Residential address or the address which the notices shall be sent on it, by virtue of this Decision.
• Number of passport or identity card, the country of issuance, date of issuance and expiry.
• Basis and date on which the person became a Beneficial Owner of the Legal Person.
• Date on which the person ceased to be a Beneficial Owner of the Legal Person.
What is the Register of Partners or Shareholders?It’s the register which includes the data of each of partner or shareholder. The Legal Person must update and record any change to the Register within (15) fifteen days of becoming aware of such change. The Register of Partners and Shareholders shall include:
• Number of shares held by each of them along with their categories and associated voting rights.
• Date on which such partner or shareholder acquire that capacity in the Legal Person.
What is the required information for Register of Partners or Shareholders?• In case of natural partners or shareholders: the full name as it appears on the identity card or the passport, nationality, address, place of birth, name and address of employer and a true copy of the valid passport or ID.
• In case of corporate partners or shareholders:
1- Name, legal form and memorandum of association.
2- Head office address or the principal address of business.
3- In case of a foreign Legal Person, the name and address of its legal representative in the State, with a proof thereof.
4- Articles of Association or any-other similar documents approved by the Relevant Entity in the State.
5- Names of the relevant persons who are holding higher management positions in the Legal Person, providing their data from their passports or identity cards, including such documents’ numbers, issuance and expiry dates and issuing entity.
Who is the Nominee Board Member?Any natural person who acts in accordance with the directives, instructions or wills of another person and the Legal Person shall enter into the Register of Partners or Shareholders the data of any partner(s) or shareholder(s) acting as Nominee Board Member.
What are the fines of non-compliance for the Cabinet resolution of the UBO procedure?As per Cabinet Resolution (53) of 2021 Administrative penalties for violators of the provisions of the Cabinet Resolution (58) of 2020 Regulating Beneficial Owner procedures the penalties start from AED50,000 and may reach to AED100,000 and suspend the license for 12 months.
How do you identify the UBO?
• The natural person who own 25% or more of the shares
• The natural person who has the right to appoint or dismiss the majority of its Directors.
• Where no natural person is identified as a UBO then the natural person who holds the position of a higher management official shall be deemed as the UBO.
Who is the legal representative?
is the natural resident person that authorized by the company to provide any information and documents required from the company.
Trustor/ Settlor
A natural or legal person who transfers the management of his funds to a trustee by virtue of a deed.
Trustee
A natural or legal person who enjoys the rights and authorities granted by the Trustor or the Trust Fund, to manage, use and dispense of the Trustor’s funds in accordance with the conditions imposed on him by either of them.
UBO Working Entity Name & UBO Working Entity address?
If the Ultimate beneficial owner is working for another company, please mention this company name and address. But if not mention the same name and address for the company registered in AFZ.
What is the obligations of establishments regarding the real beneficiary data include?
• Maintain a register of partners or shareholders, containing data of real beneficiaries and a register of the nominal members of the administration.
• Submit this information to the affiliated licensing authority.
• Notify the licensing authority of any changes or amendments that occur to the information provided within 15 days of the occurrence of that change.
• Appoint a contact person (legal representative) for the licensing authority regarding the real beneficiary data.
• Take reasonable steps to ensure transparency, obtain accurate information regarding the beneficial owner, and update the information in the records on a regular basis.
Who excepted?
▪ The establishments owned by the federal government or the local government or any organization affiliated to it.
▪ Establishments in the financial free zones (Abu Dhabi Securities Exchange - Dubai Financial Market).
What is the fines of non-compliance for the Cabinet resolution of the UBO procedure?
As per Cabinet Resolution (53) of 2021 Administrative penalties for violators of the provisions of the Cabinet Resolution (58) of 2020 Regulating Beneficial Owner procedures the penalties start from AED50,000 and may reach to AED100,000 and suspend the license for 12 months.
Why has the UAE introduced Economic Substance Regulations?In April 2019, the UAE issued Cabinet of Ministers Resolution No. 31 of 2019 concerning Economic Substance (“Resolution 31") as part of its commitment as a member of the OECD Inclusive Framework, and in response to an assessment of the UAE's tax framework by the European Union Code of Conduct Group on Business Taxation.
On 10 August 2020, the Cabinet of Ministers issued Resolution No.57 of 2020 Concerning Economic Substance Regulations (“Resolution 57"). Resolution 57 amends and repeals Resolution 31, Cabinet of Ministers Resolution No. 58 of 2019, and Cabinet of Ministers Resolution No. 7 of 2020. Following the issuance of Resolution 57, H.E. the Minister of Finance issued new Guidance by way of Ministerial Decision No. 100 of 2020, which also includes an updated Relevant Activities Guide appended as Schedule 1 (“Ministerial Decision 100").
The Regulations require UAE onshore and free zone companies and certain other business forms that carry out certain activities (Licensees - See Question 5) to maintain and demonstrate an adequate “economic presence" in the UAE relative to the activities they undertake. The purpose of the Regulations is to ensure that UAE entities report actual profits that are commensurate with the economic activity undertaken within the UAE.
Resolution 57 and Ministerial Decision 100 (collectively, the “Regulations") have been prepared in consultation with the Organisation for Economic Cooperation & Development ('OECD') and the European Union ('EU').
When do the Regulations enter into force?
The Regulations apply to financial years starting on or after 1 January 2019.
Example 1: A UAE company with 1 January 2019 - 31 December 2019 financial year:
First assessable period would be 1 January 2019 - 31 December 2019.
Example 2: A UAE company with 1 April 2019 - 31 March 2020 financial year:
First assessable period would be 1 April 2019 - 31 March 2020.
No need to comply with the Regulations for the period 1 January 2019 - 31 March 2019.
Example 3: A UAE company with 1 July 2018 - 30 June 2019 financial year:
First assessable period would be 1 July 2019 - 30 June 2020.
No need to comply with the Regulations for the period 1 July 2018 - 30 June 2019.
Who is the “National Assessing Authority”?The assessment and determination on whether a Licensee has economic substance in the UAE is made by the Federal Tax Authority, in its capacity as the “National Assessing Authority" under the Regulations.
Who is subject to the Regulations?The Regulations apply to Licensees that carry out any of the following Relevant Activities. ● Banking Businesses
● Insurance Businesses
● Investment Fund Management Businesses
● Lease-Finance Businesses
● Headquarter Businesses
● Shipping Businesses
● Holding Company Businesses
● Intellectual Property Businesses
● Distribution and Service center Businesses
Please refer to Schedule 1 of Ministerial Decision 100 for an explanation and examples of each activity.
What is a Licensee?A Licensee is a juridical person or an unincorporated partnership that is registered in the UAE and that undertakes a Relevant Activity. By way of example, a Licensee can be:
● A limited liability company
● A private shareholding company
● A public shareholding company
● A joint venture company
● A partnership (e.g. a limited liability partnership, a limited partnership, a general partnership, etc.)
The following persons are not considered “Licensees" under the Regulations:
● A natural person
● A sole proprietorship
● A Trust
● A Foundation
Are branches subject to the Regulations?Branches registered in the UAE are an extension of their “parent" or “head office" and do not have separate legal personality.
As such, the “parent" or “head office" registered in the UAE must file as a single Licensee, reporting the Relevant Activities of itself and all its branches in one composite Notification and / or Economic Substance Report.
A UAE branch of a foreign entity that carries out a Relevant Activity would be required to comply with the Regulations as if it was a separate legal person, unless the Relevant Income of the branch is within the scope of taxation in the jurisdiction of the foreign parent / head office. The “subject to tax" test is met where the income of the UAE branch is taken into account when calculating the taxable income of the foreign parent / head office or other relevant group entity reporting the Relevant Income of the UAE branch for corporate income tax purposes, irrespective of whether the income of the UAE branch can benefit from an exemption or other form of corporate tax relief in the foreign jurisdiction under domestic tax law or a double tax agreement.
Where a UAE entity carries on a Relevant Activity through a branch registered outside the UAE, the UAE entity is not required to consolidate the activities and income of the foreign branch for purposes of the Regulations, provided the Relevant Income of the foreign branch is subject to tax in the foreign jurisdiction where the branch is located. In this context, a branch can include a permanent establishment or any other form of taxable presence for corporate income tax purposes which is not a separate legal entity.
What does it mean to be subject to the Regulations?Administration (For additional information refer to Section K)
Licensees that undertake a Relevant Activity are required to file an annual Notification within six months from the end of the relevant financial period (see Administration).
In addition, Licensees that earn income from their Relevant Activity(ies) are also required to file an Economic Substance Report within 12 months from the end of the relevant financial period (see Administration).
Demonstrating substance
For each financial period in which a Licensee earns income from a Relevant Activity, it will need to meet an Economic Substance Test in relation to that activity.
The Economic Substance Test requires a Licensee to demonstrating that:
● the Licensee and Relevant Activity are being directed and managed in the UAE;
● the relevant Core Income Generating Activities (CIGAs) are being conducted in the UAE; and
● the Licensee has adequate people, premises and expenditure in the UAE.
Do the Regulations only apply to UAE entities that are part of a foreign multinational group?No. The Regulations impose economic substance requirements on any UAE entity which carries on a Relevant Activity, regardless of whether the UAE entity belongs to a foreign multinational group. However, a UAE based Distribution Business, Service center Business, Headquarter Business or High-Risk IP Business would only be within the scope of the Regulations if the UAE entity transacts with foreign group companies. Distribution, Service center, Headquarter and High-Risk IP activities and transactions between UAE entities are not subject to Regulations.
Is a company registered under an ‘offshore’ free zone company regime subject to the Regulations?Yes, if the ‘offshore’ company undertakes a Relevant Activity.
Do the activities listed on the commercial license determine whether a Licensee undertakes a Relevant Activity?No. Whilst the commercial license may indeed state the Relevant Activity, a 'substance over form' approach must be used to determine whether a Licensee undertakes a Relevant Activity and is within the scope of the Regulations. This means looking beyond what is stated on the commercial licence to the activities actually undertaken by the Licensee during a financial period.
When should a Licensee assess whether it undertakes a Relevant Activity?This assessment needs to be done for each financial period starting on or after 1 January 2019, and should take into account the activities undertaken by the Licensee at any time throughout the relevant financial period.
Who is exempt from the Regulations?The following Exempted Licensees are exempt from filing an Economic Substance Report and the requirement to demonstrate substance in the UAE:
● A Licensee that is tax resident outside the UAE;
● An Investment fund and its underlying SPVs / investment holding entities;
● A wholly UAE resident-owned business that is not part of a multinational group and that only carries on business in the UAE;
● A branch of a foreign entity that is subject to tax on all of its Relevant Income in a foreign jurisdiction.
Sufficient evidence must be submitted along with the Notification form to claim any of the above exemptions. Please refer to Ministerial Decision 100 for more information.
What if a Licensee does not undertake a Relevant Activity during a financial period?If a Licensee does not undertake a Relevant Activity during a financial period, it does not need to meet the Economic Substance Test.
The Licensee would not be required to submit a Notification (see Question 43) or submit an Economic Substance Report (see Question 45) for the relevant financial period.
What if a Licensee undertakes a Relevant Activity, but does not earn any income from that activity during a financial period?A Licensee that undertakes a Relevant Activity but that does not earn income from this activity in a financial period, is not required to meet the Economic Substance Test or file an Economic Substance Report for that period.
However, the Licensee would still need to submit a Notification on the Ministry of Finance filing portal.
What if all income from the Relevant Activity is earned from outside the UAE, is the Licensee exempt from the Regulations?No. Income from a Relevant Activity for which the Licensee needs to demonstrate economic substance in the UAE includes all income, including income that is generated by the Licensee outside of the UAE. However, please refer to Question 7 for the treatment of a foreign branch of a UAE entity that earns income from a Relevant Activity.
What is “adequate” or “appropriate” economic substance?The UAE acknowledges that businesses vary in size and nature, and what is adequate and appropriate will depend on the nature and level of activities carried out, and the level of income earned by the Licensee. The Regulations therefore do not provide a “minimum" standard for what is considered “adequate" or “appropriate".
The FTA is expected to take a pragmatic approach when assessing whether a Licensee has met the Economic Substance Test, recognizing that the type and level of activity of a Licensee may fluctuate during the course of a financial period and from year to year.
Will economic substance be assessed on a Licensee by Licensee basis, or can Licensees that are part of the same group elect to be assessed on a ‘consolidated’ basis?No. The Regulations do not allow Licensees that are part of the same group to be aggregated for economic substance purposes. Each Licensee will need to comply with the Regulations, and demonstrate economic substance on an individual basis. That being said, relevant economic substance (staff, functions, assets, etc.) maintained in the UAE by other group companies can be taken into account if that economic substance is made available to the Licensee under a service / outsourcing type arrangement (see Question 24).
Does a Licensee need to hold board meetings in the UAE?Yes, an adequate number of board meetings should be held in the UAE. What is considered an adequate number of board meetings will depend on the nature of the Relevant Activity being undertaken by the Licensee, but for each board meeting held in the UAE:
● A quorum of directors must be physically present in the UAE; and
● Meeting minutes must be maintained and signed in the UAE; and
● Directors attending the board meeting must have the necessary skills and expertise to discharge their fiduciary duties.
A Holding Company Business is not required to be directed and managed in the UAE, except where this is a requirement of the relevant licensing authority.
What are the risk factors of the activity of real estate agents?Executing a series of operations to conceal the illegal source of funds. These operations can be classified under the layering stage.
Investment in large projects such as tourist complexes, to give a legitimate appearance (the integration stage).
Buying and selling real estate in fake names.
Do employees who perform the CIGAs need to be resident in the UAE?Employees who perform the CIGAs of a Licensee would in principle need to be resident in the UAE. Non-resident employees or other persons would count towards the economic substance of a Licensee in the UAE only if (i) the relevant activities are performed while the individual is physically present in the UAE and under the direction of the Licensee, and (ii) the Licensee bears the relevant costs of the non-resident individual.
Do the directors of the Licensee need to be resident in the UAE?No, but the directors do need to be physically present in the UAE to attend the relevant board meetings of the Licensee.
Can directors be counted as employees?Yes, directors who in addition to performing their fiduciary duties also perform CIGAs can be counted as employees of the Licensee for purposes of meeting the Economic Substance Test.
Is having a UAE Tax Residency Certificate for a financial period proof of meeting the Economic Substance Test for that relevant period?No, whilst obtaining a UAE Tax Residency Certificate requires certain minimum presence in the UAE, a UAE Tax Residency Certificate in itself is not proof of a Licensee having adequate economic substance in the UAE in relation to its Relevant Activity and the income earned from this activity.
What can a Licensee outsource?A Licensee can outsource any or all of its CIGAs so long as the outsourced activities are performed in the UAE. This means that a Licensee can use UAE based (i) employees and (ii) physical assets (including premises) of third parties or related entities to satisfy the Economic Substance Test. A Licensee cannot outsource “directed and managed", as the Licensee is required to demonstrate oversight and control of its Relevant Activity in the UAE.
To whom can a Licensee outsource?A Licensee can outsource, contract or delegate CIGAs to related parties or to third party service providers, as long as the Licensee monitors and retains the ability to control the outsourced activities.
What should a Licensee do under an outsourcing arrangement?A Licensee should:
● Have adequate supervision of the outsourced activity; and
● Ensure the outsourced activity is conducted in the UAE; and
● Ensure the outsourcing provider has adequate substance in the UAE; and
● Ensure there is no double counting of the outsourcing provider's resources.
The above can be evidenced through the contractual agreements that govern the relationship and responsibilities of each party and the correspondence with the outsourcing provider.
Can a Licensee outsource any of its activities to a foreign person?Activities that are not CIGAs (e.g. back office functions) can be outsourced to related parties or third party service providers that are located outside the UAE without adversely impacting the economic substance of the Licensee in the UAE.
What is a “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 UAE entity is considered engaged in a Distribution Business if it:
● Purchases goods from a Foreign Connected Person; and
● Distributes those goods
A UAE entity is considered engaged in a Service Centre Business if it:
● Provides services to a Foreign Connected Person
The economic substance requirements for a Distribution and Service Centre Business are applicable to UAE entities whose main activity is distribution and/or service centre operations. Licensees that are mainly engaged in Banking, Insurance, Investment Fund Management, Lease-Finance, Shipping, Intellectual Property or Headquarter Business may also purchase goods for, and/or provide services to foreign group companies as a normal part of their business operations. To prevent duplicate reporting, such Licensees are not also considered engaged in a Distribution and Service Centre Business.
UAE entities that only purchase goods from third parties, or that only provide services to third parties, are not subject to the Regulations (as a Distribution and Service Centre Business).
Does a business that purchases goods from a foreign group company and sells such goods (in or outside the UAE) fall within the scope of a Distribution and Service Centre Business, if the goods are directly dispatched to the customer by the foreign group company?Yes, the amended definition of a Distribution and Service Centre Business would apply in such cases, as the goods are no longer required to be imported into the UAE, meaning “bill-to-ship" transactions may fall within the scope of the Regulations as a Distribution and Service Centre Business. Further, the removal of the requirement for the goods to be resold outside the UAE, means that the local distribution of goods (purchased from a foreign group company) would also be within the scope of the Regulations as a Distribution and Service Centre Business.
What is a Holding Company Business?A UAE entity is considered engaged in a Holding Company Business if it:
● Only holds equity interest(s) in juridical person(s); and
● Only earns dividend and capital gains from its equity interest(s)
A UAE entity that holds other assets or earns other forms of income will not be considered a Holding Company Business. Where the holding of such other assets or the performance of other commercial activities constitute a different “Relevant Activity" (e.g. a Lease-Finance Business), the UAE entity would be subject to the Regulations in respect of that other Relevant Activity.
Are investment funds subject to the Regulations as a Holding Company Business?No, an investment fund is not considered a Holding Company Business.
Does a Holding Company Business need to demonstrate economic substance?Yes, although a Holding Company Business is subject to reduced substance requirements as follows:
● Comply with existing reporting / compliance requirements under the regulations applicable to the Licensee; and
● Have adequate employees and physical assets (e.g. premises)
A Holding Company Business does not require:
● to be “directed and managed" in the UAE (subject to each Regulatory Authority's own regulations); or
● To have / demonstrate adequate expenditure in the UAE
What are the conditions for an IP Business to be considered as “High Risk”?All of the following conditions must be met for an IP Business to be considered as “High Risk":
1) The Licensee did not create the IP asset which it holds for the purposes of its business;
2) The Licensee acquired the IP asset either from:
▪ a Connected Person, or
▪ in consideration for funding research and development by another person situated in a country other than the UAE;
3) The Licensee:
▪ licenses the IP asset to one or more Connected Persons, or
▪ otherwise generates income from the asset in consequence of activities performed by Foreign Connected Persons
What does it mean if a Licensee has a “High Risk” IP Business?1) Information is automatically shared with the foreign competent authority of the parent company, ultimate company and ultimate beneficial owner; and
2) The Licensee is presumed to not have met the Economic Substance Test, unless the Licensee meets the increased substance requirements.
The increased substance requirements (in addition to those set out under Question 8) require a High Risk IP Licensee to demonstrate that it has (and historically had) a high degree of control over the development, exploitation, maintenance, protection, and enhancement of the IP Asset, and to submit proof that:
▪ It has adequate full-time employees with the necessary qualifications that permanently reside and perform their activities in the UAE - relevant employee information (e.g. experience, contracts, qualifications etc.) would need to be provided; and
▪ It has a business plan showing the reasons for holding the IP in the UAE; and
▪ Relevant decision making has and continues to take place in the UAE
What is a UAE Investment Management Business?A UAE entity that provides discretionary investment management services to Investment Funds located in the UAE or in a different jurisdiction.
An Investment Fund Management Business includes making discretionary investment, divestment and risk related decisions on behalf of an investment fund. UAE entities providing other types of investment fund related services such as fund administration, investment advisory and custodian services are not considered engaged in an Investment Fund Management Business.
The Investment Fund itself is not considered an Investment Fund Management Business, unless it is a self-managed fund (the Investment Manager and the Investment Fund are part of the same entity).
What is a Lease-Finance Business?A UAE entity is considered engaged in a Lease-Finance Business if it offers credit or financing for any kind of consideration.
Providing credit includes making loans and entering into other financing arrangements such as hire purchase agreements and finance leases.
Licensees engaged in Banking, Insurance, Headquarters and Investment Fund Management Business may also perform lease or financing activities as a normal part of their business operations. To prevent duplicate reporting, such Licensees are not also considered engaged in a Lease-Finance Business and will not need to separately demonstrate economic substance in respect of any ancillary Lease-Finance activities.
Is lending to another group entity considered a “Lease-Finance Business”?Yes, a UAE entity that makes a loan or provides any other form of credit to a UAE or foreign group company for consideration (e.g. interest) will be considered engaged in a Lease-Finance Business.
Is investing and trading in debt securities considered undertaking a Lease-Finance Business?No, UAE entities that invest and hold bonds and other debt securities that are traded on a regulated exchange are not considered engaged in a Lease-Finance Business.
What does consideration for the purposes of a Lease-Finance Business include?Consideration includes interest, origination and processing fees, gains upon conversion of a loan into the share capital of the debtor, and late payments penalties. The grant of security in favour of the lender would not constitute consideration.
What is a Headquarter Business?A UAE entity that provides services to other foreign group entities, and through the provision of such services:
● has taken on the responsibility for the overall success of the group; or
● is responsible for an important aspect of the group's performance.
Does an entity need to be the ‘parent’ company to be considered a Headquarter Business?No, a group's corporate structure is not relevant in determining whether a UAE entity within the group is engaged in a Headquarter Business. Whether an entity is engaged in a Headquarter Business is entirely dependent on the nature of the services provided to foreign group companies.
Can an entity be considered engaged in a Headquarter Business in addition to carrying on another Relevant Activity?Possibly, if the Relevant Activities form two or more distinct business activities. However, if an activity that might otherwise fall within the definition of a Headquarters Business forms part of another main Relevant Activity of the Licensee, the Licensee would not be considered to also be engaged in a Headquarter Business. For example, a UAE entity that undertakes captive insurance activities will not be considered to carry on a “Headquarter Business" simply because it assumes material risk on behalf of the group.
Who needs to submit a Notification and by when?Licensees and Exempted Licensees that undertake a Relevant Activity (irrespective of whether the Licensee or exempt Licensee has earned income from the Relevant Activity during the financial period) are required to file a Notification within six months from the end of the relevant financial period. All Notifications must be submitted on the Ministry of Finance filing portal.
Will a business that has already submitted a Notification to a Regulatory Authority be required to resubmit on the MoF Portal, and if so, by when?Yes, the deadline for resubmission is 31 December 2020 at the latest. Please refer to the Notice on the applicable filing requirements and deadlines for more information.
Who needs to file an Economic Substance Report and by when?Only Licensees that earn income from a Relevant Activity during the relevant financial period and that are not exempt from the Regulations are required to demonstrate economic substance in the UAE and file an Economic Substance Report. Economic Substance Reports must be filed within 12 months from the end of the relevant financial period.
When will the Ministry of Finance filing portal be available for businesses to submit their Notifications and Economic Substance Reports?The Ministry of Finance filing portal will go live in the first week of December 2020 and will allow businesses to file both their Notifications and Economic Substance Reports. More information regarding applicable filing requirements and associated deadlines is included in the Notice published on the MoF website
Are copies of the updated Notification and Economic Substance Report forms available?Yes, you can find the template Notification form and Economic Substance Report and associated guidance on the Ministry of Finance website
What are the penalties for non-compliance?Failure to submit a Notification: AED 20k
Failure to submit an Economic Substance Report:
● Penalty of AED 50k; and
● Deemed failure to demonstrate economic substance in the UAE
Failure to provide accurate or complete information:
● Penalty of 50k; and
● Deemed failure to demonstrate economic substance in the UAE
Failure to demonstrate sufficient economic substance in the UAE for the relevant Financial Year:First failure
● Penalty of AED 50k; and
● Information exchange with foreign competent authority of:
1) parent company,
2) ultimate parent company, and
3) ultimate beneficial owner
Second consecutive instance of failure
● Information exchange with foreign competent authority of:
1) parent company,
2) ultimate parent company, and
3) ultimate beneficial owner; and
● Penalty of AED 400k; and
● Trade / commercial licence could be; suspended, withdrawn or not renewed
What should a Licensee consider before the end of a financial period?The following is meant as a non-exhaustive list of matters a Licensee should consider (and action, where relevant) before the end of a financial period:
● Assess what (if any) Relevant Activities it has performed during the financial period (applying a “substance over form" approach);
● Assess the amount and type of income earned (if any) from the Relevant Activity during the financial period;
● Hold board meetings with a quorum of directors physically present in the UAE;
● Ensure board meeting minutes are signed and maintained in the UAE;
● Identify the amount and type of expenses and UAE based assets (incl. premises) in respect of the Relevant Activity, and ensure access to assets (incl. premises) can be demonstrated (through agreements and financial records)
● Identify the number of UAE based full-time employees or other personnel (and their qualifications) responsible for carrying on the Licensee's Relevant Activity; and
● Ensure control and supervision over any outsourcing arrangements can be demonstrated, e.g. through contractual agreements.
Additional actions may be required to ensure a Licensee can demonstrate sufficient economic substance in the UAE for a relevant financial period, and the considerations above may differ where a Licensee has either a Holding Company or a High Risk IP Business.
Why should a business comply with the Economic Substance requirements?Why should a business comply with the Economic Substance requirements? If you are within the scope of the Economic Substance Regulations (see Section B), you must submit a Notification and Economic Substance Report, and meet the Economic Substance Test. Failure to do so will result in penalties (see Question 48).
What help can the MoF call center provide?The MoF call center can only support businesses with questions regarding MoF account registration or login issues.
If you have any Economic Substance filing portal related technical issues (e.g. the Notification filed does not appear on the Licensee dashboard, etc.) please contact [email protected].
For questions regarding the scope and application of the Economic Substance Regulations, please review the information on this webpage, or obtain professional advice.
I called a Regulatory Authority and was told they are unable to support me with my Economic Substance query, what should I do?Please send an email to [email protected] and include the following information:
• Details of your businesses (name, legal form, main activity)
• Nature of your query / reason for contacting the Regulatory Authority
• Name of Regulatory Authority
• Name of representative at the Regulatory Authority
We note that your Regulatory Authority and the Ministry of Finance cannot assist you in determining if and how the Economic Substance Regulations apply to your business. For such questions, you should seek professional advice.
The business activities that I undertake do not meet the requirements of any of the Relevant Activities listed, am I subject to the Economic Substance Regulations?No, only businesses that undertake a Relevant Activity are subject to the Economic Substance Regulations and are required to file a Notification and Economic Substance Report.
My business was just set up, if I undertake a Relevant Activity (or plan to) by when should I file?• Notifications must be filed within six months from the end of the relevant financial period; and
• Economic Substance Reports must be filed within 12 months from the end of the relevant financial period.
Will the Regulatory Authorities tell businesses if they are subject to the Regulations?No, businesses are responsible to self-assess whether they undertake a Relevant Activity and have a filing requirement under the Economic Substance Regulations and cannot rely on Regulatory Authorities to inform them of their requirements under the Economic Substance regulations.
Please refer to Schedule 1 of Ministerial Decision 100 for an explanation and examples of each Relevant Activity.
Should I file a Notification even if I did not earn any income during this financial period?Yes, Businesses that carry out a Relevant Activity during a financial period are required to submit a Notification irrespective of whether they earned income from that Relevant Activity.
If my business carries out multiple Relevant Activities should I submit individual Notifications and Economic Substance Reports for each Relevant Activity?No, businesses that have more than one Relevant Activity during a financial period should submit a single Notification and Economic Substance Report and report all their Relevant Activities in that single Notification and Economic Substance Report.
Can the Ministry of Finance recommend a company to help us with Economic Substance?No, the Ministry of Finance cannot recommend a company to assist you with Economic Substance. There are numerous professional services firms in the UAE that should be able to support you
I have made a request to amend my Notification (or Economic Substance Report), when will the request be approved?Your Regulatory Authority is responsible for approving your request for amendment, please contact them for an update on when your request will be processed.
If my business is subject to Country by Country Reporting, will I also be required to comply with the Economic Substance Regulations?If your business carries out a Relevant Activity you are also required to comply with the Economic Substance Regulations.
Will my Notification submitted to my Regulatory Authority in June 2020 be available when I log in to the MoF filing portal, or will I be required to submit a new Notification?You will be required to submit a new Notification on the MoF filing portal.
By when do you need to file your Notification?Notifications for financial periods ending on or before 30 June 2020 must be submitted by 31 January 2021.
Notifications for financial periods ending after 30 June 2020 must be submitted within six months from the end of the financial period.
By when do you need to file your Economic Substance Report?Economic substance reports for the 2019 financial period are due by 31 January 2020. For subsequent financial periods, the Economic Substance Report must be filed within twelve months from the end of the financial period.
Can you file an Economic Substance Report immediately after filing a Notification?Yes, the Economic Substance Filing Portal allows businesses to file an Economic Substance Report immediately after having filed their Notification. Please note that in some cases there may be a delay in the generation of the Economic Substance Report following submission of the Notification due to high demand. Where your Economic Substance Report is not generated immediately, please do not submit another Notification. The Economic Substance Report will be generated in due course and you will be notified when it is available on your dashboard.
Are there cases where a business is only required to submit a Notification and not file an Economic Substance Report?Yes, if the Licensee is an Exempted Licensee or does not earn income from its Relevant Activity. In these cases, there is no requirement to file an Economic Substance Report. The Economic Substance Filing Portal will automatically assess whether you need to file an Economic Substance Report based on your Notification, and only create a Report if you are required to submit one.
Are branches subject to the Economic Substance Regulations?Yes, but there is no separate filing requirement for UAE branches. The “parent" or “head office" of the branch will need to file a Notification and Economic Substance return to report the relevant information of its branch or branches that undertake a relevant activity in the UAE.
Do the Financial Statements to be submitted along with the Economic Substance Report need to be audited?No. In the absence of audited financial statements, you can submit unaudited financial statements or management accounts.
Is there a minimum level of income that must be met for the Economic Substance Regulations to apply?No, there is no minimum income requirement or threshold. If you carry out a Relevant Activity you are required to submit a Notification.
If you generate revenue from a Relevant Activity - even if that was just a single dirham - you are required to file an Economic Substance Report and demonstrate economic substance in the UAE
The Economic Substance Report does not require me to provide evidence regarding assets, expenditure, board meetings held in the UAE and other questions asked. Do I need to keep this information on file and if so for how long?Yes, all businesses should keep relevant supporting information and documentary evidence on file and be ready to provide this information if and when asked by their Regulatory Authority or the FTA. At a minimum, information should be kept on file for a period of six years.
Will a business face a late filing penalty if its Exempted Status is denied after the original Economic Substance Report filing deadline for the relevant financial period?No. If you submit a Notification claiming an exemption from the Economic Substance Regulations and this exemption is denied, you will be given 30 business days to submit your Economic Substance Report from the date the exemption claim was denied. Businesses that willfully, knowingly and intentionally submit improper exemption claims may face penalties.
Is a company that is registered as an offshore free zone company considered tax resident outside of the UAE for ESR purposes?No, offshore free zone companies are subject to the Economic Substance Regulations in the same way as regular free zone companies or as a company established in mainland UAE.
Do the supporting documents for an exemption have to be notarized / certified by a public notary or relevant government authority?No, there is no need for documents to be certified or notarised, but documents to support tax residency in a foreign country or documents to evidence that the income of the UAE branch of foreign company is taxed outside the UAE will need to be issued by the relevant foreign tax authority.
Will I be required to answer all the questions included in the Economic Substance Report template available on the Ministry of Finance website?No, the Economic Substance Report is a smart form that automatically selects the relevant questions that must be completed by a Licensee based on the previous responses and information provided.
Do I need to file a Notification every year?Yes, if you continue to undertake a Relevant Activity.
If my licensing authority is a DED, which Regulatory Authority should I select?This depends on your Relevant Activity, but in most cases, this will be the Ministry of Economy.
If your main Relevant Activity is Banking or Lease-Finance, you will need to select the Central Bank.
If your main activity is Insurance, you will need to select the Insurance Authority, and for Investment Fund Management activities you will need to select the Securities and Commodities Authority.
Why can’t I select a Holding Company Business and another Relevant Activity?A business is only considered a Holding Company Business if it does not undertake any other Relevant Activity. If you are a Holding Company Business but also undertake another Relevant Activity, you should select the other Relevant Activity when filing your Notification
I currently do not undertake a Relevant Activity, but this may change in 6 or 10 months’ time. Am I required to file a Notification now?You will need to submit a Notification for the Reportable Period during which a Relevant Activity was undertaken. Notifications must be filed within six months after the relevant Financial Year end, and Economic Substance Reports must be filed twelve months after the end of the relevant financial period.
If the UBO of the Licensee is a UAE national or UAE resident individual, does the company still need to file a Notification?Yes, a business that undertakes a Relevant Activity will be required to file a Notification, irrespective of the nationality or residency of its direct or ultimate owners.
I can’t log in because I haven’t received my activation email after creating my MoF accountPlease check your junk or spam email folder as sometimes the activation email ends up being blocked by spam filters. Otherwise, please send an email to [email protected]
Will my Regulatory Authority receive my Notification and Economic Substance Report through the Economic Substance Filing PortalYes, your Regulatory Authority will have access to all your submissions made on the Economic Substance Filing Portal.
The Economic Substance Report template refers to the ESR Registration number - where can I find this?The ESR Registration Number has been removed from the Economic Substance Report form and is no longer required to be included.
If a business previously filed a Notification in June directly with its Regulatory Authority confirming that it did not carry out a Relevant Activity as per the original Economic Substance Regulations (Cabinet Resolution No.31 of 2019), is the business required to file a Notification with the Ministry of Finance via the Economic Substance Filing Portal if it now undertakes a Relevant Activity based on the amended Economic Substance Regulations?In most cases, the amendments to the Economic Substance Regulations have resulted in businesses no longer being within the scope of the rules. However, in limited cases, businesses that did not need to file under the old regulations may now be within scope of the economic substance rules. In these cases, a business will need to file a Notification on the Ministry of Finance Filing Portal.
If a Notification in June 2020 was filed confirming that no Relevant Activity was carried out, are we required to re-file a Notification on the Economic Substance Filing PortalNo, only businesses that undertake a Relevant Activity are required to resubmit their Notification on the Ministry of Finance Filing Portal.
Where do I report the details of my branch?When completing the Notification and Economic Substance Report on the Economic Substance Filing Portal, you will be able to include details of your branches that carry out a Relevant Activity in Section B of each form.
