Ras Al Khaimah ICC economic substance requirements
In January 2019, the UAE government passed new economic substance requirements for companies registered in the UAE.
Ras Al Khaimah International Corporate Centre (RAK ICC) companies engaged in relevant activities must i) maintain economic substance in the UAE and annually submit ii) an economic substance notification and iii) an economic substance declaration report to the UAE authorities.
New reporting requirements
- From January 2019, RAK ICC companies must submit to the government evidence the company conducts income-generating activities in the UAE, and they have a physical office, staff and active directors in the UAE. Healy Consultants Group PLC will assist our Clients with the same.
- The new rules apply to RAK ICC companies that are i) holding companies ii) headquarters companies iii) Intellectual property iv) investment fund management v) lease-finance businesses vi) shipping vii) banking viii) insurance and ix) distribution and service centres.
- Effective 2020, all RAK ICC companies are required to complete an annual economic substance notification to the RAK ICC Regulatory Authority within six months of the company’s financial year-end.
- The notification will declare i) if the company carried out any relevant activity ii) if any part of the gross income pertaining to the relevant activity is subject to tax in a jurisdiction outside of the UAE and iii) the date of the financial year-end.
- Moreover, companies carrying out a relevant activity must submit a report within 12 months of the last financial year-end containing i) type of relevant activity conducted ii) amount and type of income received from the relevant activity iii) amount and type of operating expenses and assets iv) exact location and place of business v) number of full time employees and their location and vi) a declaration as to whether or not the company satisfies the economic substance test.
- Intellectual property business and companies outsourcing tasks related to the relevant activity, must supply additional information.
- Failure to timely comply with the above may result in the UAE government sharing our Client’s business and personal information to the foreign government in the country where the entity is incorporated, or where the parent company or UBO are resident. There may also be penalties and potential suspension, revocation or non-renewal of the business licence.
- Economic substance requirements imposed in the UAE helped prompt the EU to remove the UAE from its blacklist of tax havens and improve the country’s international reputation.
What does this mean for our Clients?
- Our Clients must be aware of i) the new economic substance regulations as well ii) their personal and corporate accounting, reporting and tax obligations in the country of residence and domicile and that they fulfill those obligations annually.
- While the preparation of financial statements for an RAK ICC company is not legally required, Healy Consultants Group PLC recommends our Clients prepare the same.
- Let us know if you need Healy Consultants Group PLC help to clarify your local and international reporting obligations. If required, the estimate of fees to accurately prepare and complete financial statements for your RAK ICC company are outlined on this webpage. Following receipt of accounting numbers from your Firm, we will more accurately advise exact accounting fees.
- Our fees to complete and submit to the authorities the economic substance requirements amount to US$550 for a dormant company and US$750 for an active one.
- Despite the UAE’s efforts, over the coming years there is a 50% probability that the country will be blacklisted again by the EU or another western government, increasing the challenges to secure and maintain multi-currency corporate bank accounts for your UAE entity.
- Consequently we recommend our Clients conduct international business via alternative reputable zero tax jurisdictions, including Singapore or Delaware.
Alternative solutionsIf you are not going to conduct any relevant business activity, engage Healy Consultants Group PLC to register an RAK ICC entity to conduct international business. Alternatively, engage us to register your company in a reputable zero tax country.