The initial implementation was always expected to be challenging. Besides, certain stages of the implementation require a structural change in the operations of the business, which was not possible to be executed in the first year itself. The convergence of the change in operating structure to meet the economic substance test is a gradual process.
The challenges have further compounded due to lockdown situations, not just in UAE but at a global level due to the COVID-19 pandemic. It remains to be seen how businesses would be able to meet the stringent substance test requirement in the current environment. For example, the Regulations suggest a key test as 'directed and managed' by conducting board meetings in the UAE. However, due to the lockdown in progress, the board members might not be able to travel. A situation of this proportion calls for certain relaxation from the Ministry's side.