Economic substance is a percept in the UAE’s tax framework, introduced in the UAE from January 1st, 2019, that applies to all businesses, including onshore companies, free zone companies, non-partnership companies, and partnership firms. According to Article 4 of Economic Substance Regulations in UAE, every licensee must submit an Economic Substance Regulations UAE form. They can file their periodical report electronically in the official portal of UAE’s Financial Ministry.
For enquiries, call +971 45 570 204 / E-mail: [email protected]
ESR UAE: Relevant Activities
Article 4 is the governing factor on the regulations of the Economic Substance Regulations in the UAE. It mentions the activities that the law identifies as ‘Relevant activities’. The following are the activities that Article 4 of the Economic Substance regulation in the UAE mentions as Relevant:
- Banking Businesses
- Insurance Businesses
- Investment Fund Management Businesses
- Shipping Businesses
- Lease-Finance Businesses
- Distribution & Service Centre Businesses
- Headquarters Businesses
- Intellectual Property Businesses
- Holding Company Businesses
You can recognize the above businesses as licensees. And, they must file their Economic Substance Regulations notification form, UAE.
The economic substance regulations form has to be submitted within the financial year, irrespective of the company’s annual turnover and accumulated profits. Article 4 of the Economic substance regulations form states that the provisions of the law do not apply to companies or businesses in which the Emirati Government or the Federal government has any direct or indirect ownership of over 51% share.
Why is economic substance regulations so important for UAE businesses?
In order for organisations to determine which activities are relevant to their operations, they need to examine each and every transaction with extreme attention and vigilance, and they need to do it by employing a methodology that places an emphasis on substance rather than form. Before you are able to submit the ESR Notification, you must first have an awareness of the organisational structure and business strategy. After that, you must determine whether or not the Relevant Activity is relevant to the situation.
The deadline for filing ESR Notification was June 30, 2020, and it applied to the vast majority of organisations operating in free zones and mainland businesses. This deadline was applicable to the period of time that was subject to reporting, which started on January 1, 2019, and ended on December 31, 2019. Some free zones have decided to extend the deadline until the 31st of July in the year 2020. These free zones are still in operation.
If money is earned from the relevant activity during the reportable period, all licensees must meet the return filing requirements. Licensees must compute income and prepare financial statements in order to compute operational expenses, net profits, and assets held only for relevant activity.
Compliance is required, and records and information must be kept for each reporting period. Noncompliance with the Economic Substance Regulations will result in not only monetary fines, but also the suspension or revocation of the licence, which could cause serious disruptions.
How KGRN can help you file ESR in UAE?
KGRN has a team of well-experienced and knowledgeable professionals who are always ready to provide legal assistance for your business-related queries. We provide excellent service round the clock and consider customer satisfaction as our highest priority. Contact our team for further details on Economic Substance Regulations UAE reporting and its obligations.
For more Detailed information about ESR, Visit: Economic Substance Dubai Guidelines
For enquiries and clarification on ESR, call +971 45 570 204 / E-mail: [email protected]
Tag: esr filing requirements, esr filing abu dhabi, esr filing company dubai, esr filing company in uae, esr notification filing deadline, uae esr filing, esr submission guidelines, esr filing in dubai, esr filing company in dubai, esr return filing uae
