One Stop ESR Notification Provider Solution in UAE

We provide ESR UAE services to help companies remain compliant with the requirements of Economic Substance Regulations UAE. We start with a review of group structure and activities, determine ESR applicability, and evaluate compliance with ESR UAE. We then decide on corrective actions, establish ESR compliant policies, assist in filing notifications, and Economic Substance Regulations. We also provide training on Economic Substance regulations and policies.

In May 2018, UAE joined the OECD Inclusive Framework on BEPS as a part of its commitment as a member of OECD. H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai has announced the Resolution of the Cabinet of Ministers No. (31) for 2019 concerning Economic Substance Regulations (ESR/Regulations) on 30 April 2019. Ministry of Finance issued directives (Ministerial decision No. 215) with an objective to make available more details regarding the legislation of Economic Substance Regulations in UAE.

The main purpose of the ESR UAE is to protect the reputation of the State and whose entities that operate within UAE- whether onshore, Free Zone or offshore by ensuring that income generated from Relevant Activity has economic substance and give a base to support that the incorporation in the UAE was not motivated to benefit from the privileged tax regime.

The Economic Substance Regulations is established on the three crucial pillars that a Licensee/Company must fulfill the criteria as under, to meet the Economic Substance Regulations/Test in relation to any Relevant Activity.

• Core Income Generating Activity (“CIGA”) associated with the activities covered by the ESR should be undertaken in the UAE;
• Licensee/Company should be directed and controlled from the UAE;
• The Licensee’s activities must be carried out with adequate local “Economic Substance” with regard to the level of relevant activity in the UAE. The Economic substance consists of:
• Full-time employees
• Expenditure
• Premises

It was implemented from 1st April 2019 and for the licenses on and after January 2019.

• The purpose of the ESR is to prevent businesses, typically multinational corporations, from artificially shifting profits to jurisdictions that impose little or no income tax without having substantial activities in that jurisdiction to take advantage of their tax laws.
• It is to prevent the transparent UAE country's tax and globally as well.
• There is no threshold limit is for ESR.
• Failing to do ESR will results in sanctions and also license revocation (i.e) The flow of the economy within one's incorporation of the company subjecting inside UAE must report without any failure of gaps and mismatches of income platforms.
• ESR Notification must be applied within 6 months from the fiscal/Budget year ESR Filing must be applied within 12 months from the fiscal/Budget year

The UAE Economic Substance Regulations (ESR) apply to all companies registered in the Mainland or Free Zones or offshore in the UAE that are licensed to perform activities as mentioned below:

• Banking Business
• Insurance Business
• Investment Fund Management Business
• Lease Finance Business
• Holding Company Business
• Headquarters Business
• Distribution & Service Centre Business
• Intellectual Property Business
• Shipping Business

• Trade license
• Passport copy of all partners
• EID of all partners
• Business brief
• Bank statements
• Visa copy of all partners

• Failure to submit the ESR Notification - AED 20,000
• Failure to submit the ESR Report - AED 50,000
• Failure to meet the Economic Substance Test - 1st year – AED 50,000 2nd consecutive year – AED 40,000
• Failure to provide accurate and complete information - AED 20,000 up to 4,00,00