Economic Substance Regulation (ESR)

Economic Substance Regulation (ESR)

UAE Economic Substance Regulations were introduced on 30 April 2019 requiring companies & other businesses registered in UAE that carry on one or more “Relevant Activities” to have economic substance in UAE in relation to those “Relevant Activities” & comply with “Annual Information Submission” & “Economic Substance Report”.

Under the UAE’s Ministry of Finance guidelines on ESR, the businesses must submit a Notification within 6 months & ESR Report within 12 months from Financial Year-end. Failure to submit could result in penalties.

Our team has been assisting companies by providing:

  • A review ascertaining the applicability of regulations on the company.
  • Analysing the gaps to fulfill the requirements of Economic Substance Test.
  • Restructuring & recommendations to enhance economic substance.
  • Submission of Report within 12 months from the end of the Financial Year.

In adherence to its membership in the Organization for Economic Co-operation and Development (OECD) Inclusive Framework and following an evaluation of its tax framework by the European Union Code of Conduct Group on Business Taxation, the UAE has issued the Economic Substance Regulations. The goal is to prevent the attraction of profits from specific mobile activities without any corresponding economic activity, thereby avoiding harmful tax practices.

The Economic Substance Regulations mandate that companies and other registered businesses in the UAE, engaged in one or more “relevant activities” maintain and exhibit an adequate “economic presence” in the UAE relative to their activities. The regulations aim to guarantee that UAE entities report actual profits that align with the economic activity carried out within the UAE.

Under the UAE’s Ministry of Finance guidelines on ESR, businesses must submit a notification within 6 months and an ESR report within 12 months from the financial year’s end. Penalties could be assessed if a submission is missed.

Certified Anti Money Laundering Specialist

Our team of professionals specializes in navigating the complexities of ESR regulations, ensuring that your organization meets all the necessary criteria. We offer comprehensive services, including ESR compliance assessment, preparation of the Economic Substance Regulations report, and ongoing support to help you maintain compliance. With a deep understanding of the evolving ESR landscape, we stay up to date with the latest regulations and provide proactive solutions tailored to your specific industry and jurisdiction.

  1. Conduct a review to ascertain the applicability of regulations to the company.
  2. Analysing the gaps to fulfil the requirements of the Economic Substance Test
  3. Reorganization and suggestions to improve the economic substance
  4. Submission of the report within 12 months from the end of the financial year

Professional support for your business

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