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Businesses under the ambit of Economic substance test regulation and the Core Income-Generating Activities include:

1. Banking Businesses as licensed in the State, including Banking Businesses licensed in a Free Zone or a Financial Free Zone.
(a) raising funds, managing risk including credit, currency and interest risk.
(b) taking hedging positions.
(c) providing loans, credit or other financial services to customers.
(d) managing capital and preparing reports to investors or any government authority with functions relating to the supervision or regulation of such business.

2. Insurance Businesses as licensed in the State, including Insurance Businesses licensed in a Free Zone or a Financial Free Zone.
(a) predicting and calculating risk.
(b) insuring or re-insuring against risk and providing Insurance Business services to clients.
(c) Underwriting insurance and reinsurance.

3. Investment Fund Management Businesses as licensed in the State, including Investment Fund Management Businesses licensed in a Free Zone or a Financial Free Zone.
(a) taking decisions on the holding and selling of investments.
(b) calculating risk and reserves.
(c) taking decisions on currency or interest fluctuations and hedging positions.
(d) preparing reports to investors or any government authority with functions relating to the supervision or regulation of such business.

4. Lease-Finance Businesses as licensed in the State, including Lease-Finance Businesses licensed in a Free Zone or a Financial Free Zone.
(a) agreeing funding terms.
(b) identifying and acquiring assets to be leased (in the case of leasing).
(c) setting the terms and duration of any financing or leasing.
(d) monitoring and revising any agreements.
(e) managing any risks.

5. Headquarters Businesses as licensed in the State, including Headquarters Businesses licensed in a Free Zone or a Financial Free Zone.
(a) taking relevant management decisions.
(b) incurring operating expenditures on behalf of group entities.
(c) coordinating group activities.

6. Shipping Businesses as licensed in the State, including Shipping Businesses licensed in a Free Zone or a Financial Free Zone.
(a) managing crew (including hiring, paying and overseeing crew members).
(b) overhauling and maintaining ships.
(c) overseeing and tracking shipping.
(d) determining what goods to order and when to deliver them, organising and overseeing voyages.

7. Holding Company Businesses as licensed in the State, including Holding Businesses licensed in a Free Zone or a Financial Free Zone.
in respect of Holding Company Business, all activities related to that business; and in respect of Holding Company Business that derives income from other sources other than dividends and capital gains from its equity interest, the state Core Income-Generating Activities shall be those activities associated with the income generated.

8. Intellectual Property Businesses as licensed in the State, including Intellectual Property Businesses licensed in a Free Zone or a Financial Free Zone.
(a) where the Intellectual Property Asset is a –
i. patent or an asset that is similar to a patent, research and development.
ii. non-trade intangible (including a trademark), branding, marketing and distribution.
(b) if the Relevant Activity is conducted by a Licensee that is regarded as a High-Risk IP Licensee, the State Core Income-Generating Activity must include any of the following additional activities:
i. taking strategic decisions and managing (as well as bearing) the principal risks related to development and subsequent exploitation of the intangible asset generating income.
ii. taking the strategic decisions and managing (as well as bearing) the principal risks relating to acquisition by third parties and subsequent exploitation and protection of the intangible asset.
iii. carrying on the ancillary trading activities through which the intangible assets are exploited leading to the generation of income from third parties.

9. Distribution and Service Centre’s Businesses as licensed in the State, including Distribution and Service Centres Businesses licensed in a Free Zone or a Free Zone.
(a) transporting and storing component parts, materials or goods ready for sale.
(b) managing inventories.
(c) taking orders.
(d) providing consulting or other administrative services.

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The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn't constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn't accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information's provided herein above.

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