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Important! RAK ICC Company Dubai and new rules economic Substance

Well there is something happening as the RAK system went down twice in the last 2 weeks. There has been nearly 8K Company registrations in the last 3 months.
 
i’m my case are mobile phones and electronics

Just read from the govt website and also from an article of Fichte & Co (uae law firm)

Definition of ''Connected Person'': the Amended ESR defines Connected Person as an entity that is part of the same Group as the Licensee or the Exempted Licensee. A natural person is no longer included in the definition of a "connected person". This will have direct implications on relevant activity classifications that involve dealing with connected persons.

Changes to the definitions of certain ''Relevant Activities''

a) Distribution Business: means purchasing from a foreign connected person, component parts or materials for goods; or goods ready for sale; and reselling such component parts, materials, or goods. The requirement of having these goods stored in UAE has been waived with the amended ESR.

b) Service Business: means providing services to foreign connected persons.



If i’ve not misunderstood this esr need to be filled only if you buy or sell services and goods to/from “connected person”

this i’ve copied and pasted from the mof.gov.ae
It’s clear you must fill the ESR report if you fall in relevant activities of “distribution and service business centre”, such as sell/purchace goods and serivces ONLY if you buy/sell to/from foreign entities connected (group of companies)

2.9. 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 Licensee is considered engaged in a “Distribution Business” if it:
A. Purchases raw materials or finished products from a foreign group company; and
B. Distributes those raw materials or finished goods
A Licensee is considered engaged in a “Service Centre Business” if it provides consulting, administrative or other services to a foreign group company.
Licensees that only purchase or distribute goods to third parties, are not considered engaged in a Distribution Business. Likewise, Licensees that are engaged in the business of providing services to third parties are not considered as carrying on a “Service Centre Business”.

Do I understand it correctly from these new definitions that a "Group" is a company and its subsidiaries but NOT a natural person who owns multiple companies?

Situation A: Company B is owned by Company A. These companies purchases services from each other = Connected Person

Situation B: Company A and company B are owned individually by a natural person. Company A purchase services from Company B = NOT Connected Person

I base this on this:
Group: Two or more entities related through ownership or control, such that they are required to prepare consolidated financial statements.
As per my understanding consolidated financial statements are only a requirement in situation A, when a company owns shares in another company but in situation B, you would not do consolidated financial statements, therefore it would not be called a Group per this definition.

Therefore if you are in situation B, you are NOT required to do comply with ERS?