Distribution and Service Centre Business means a centre that carries any of the following businesses:
- purchasing from a Foreign Group Company component parts or materials for goods; or goods ready for sale, and reselling such component parts, materials or goods
- providing consulting, administrative or other services to Foreign Group Company
Core Income Generating Activities
A Distribution and Service Centre Business performs any of the following activities:
- transporting and storing component parts, materials or goods ready for sale
- managing inventories
- taking orders
- providing consulting or other administrative services
Special points to consider
To prevent duplicate reporting, Licensees engaged in Banking, Insurance, Investment Fund Management, Lease-Finance, Shipping, Intellectual Property or Headquarter Business and also engaged into Distribution and Service Centre Business shall not be considered as engaged in a Distribution and Service Centre Business.
Regulatory Authority
- Ministry of Economy
- Competent Authority in Financial Free Zone
- Competent Authority in Free Zone
What licensee has to do?
• File notification with the regulatory authority before due date.
• 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 return. Economic substance returns must be filed within 12 months from the end of the relevant financial period.
Who has to file the notification?
The provisions shall apply to a Licensee that carries out any Relevant Activity. However, the notification form will be the way to confirm to the “Regulatory Authority” whether your company has carried out any relevant activity during the reportable financial year or not.
Hence filing of notification is mandatory for all the Licensees and Exempted Licensees.
Consequences due to Failure to Comply with Regulations
- Penalties between AED 20,000 to 400,000
- Exchange of information with foreign competent authority
- Suspension or withdrawal or cancellation of license