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Economic Substance Regulations UAE

In line with the UAE's commitment as a member of the Organization for Economic Co-operation and Development (OECD) Inclusive Framework and in response to an evaluation of the UAE's tax framework by the European Union Code of Conduct Group on Business Taxation, the UAE has enacted Economic Substance Regulations. The primary goal is to deter harmful tax practices and prevent low-tax jurisdictions from attracting profits from specific mobile activities without corresponding economic activity.

The Economic Substance Regulations mandate that UAE onshore and free zone companies, along with certain other business entities engaged in specified activities, establish and demonstrate a sufficient "economic presence" in the UAE relative to their undertaken activities. The Regulations are designed to ensure that UAE entities report actual profits aligned with the economic activity conducted within the UAE.

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