The ESR compliance in UAE is an additional substance requirement added to improve the accountability of business entities. The Economic Substance Regulations are to be carried out for the relevant activities in the UAE. In this case, let us look at some of the frequent relevant activities: Banking Insurance Fund Management Finance and Leasing Intellectual Property Holding Company
One should meet the substance requirements at all times to ensure complete compliance with UAE Laws. This includes having sufficient employees, managing activities efficiently, and managing expenses. Furthermore, companies must ensure that the physical premises of their office are also in compliance. Hence, maintaining ESR compliance in UAE is a pivotal task that all entities should undertake with care and diligence.
What are ESR Guidelines?
The UAE is a member of the OECD Inclusive Framework. As a result, the EU assessed the UAE’s tax framework, through the European Union (“EU”) Code of Conduct Group on Business Taxation. Therefore, to obtain a better rating, and improve operations, the UAE introduced a Resolution on the Economic Substance Regulations, Dubai. Hence, the ESR Notification in UAE came into force via the Cabinet of Ministers Resolution No.31 of 2019, the “Regulations” on 30 April 2019.
On September 11, 2019, the guideline that gives more clarity on the application of the Regulations – ESR was provided. Furthermore, the Regulations compel UAE onshore and free zone firms, as well as other UAE business forms, that engage in any of the “Relevant Activities” specified below to maintain an acceptable “economic presence” in the UAE in relation to the activities they engage in.
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Why are Economic Substance Regulations in the UAE?
The UAE introduced Economic Substance Regulations to honour the UAE’s commitment as a member of the OECD Inclusive Framework on BEPS. Furthermore, it was in response to a review of the UAE tax framework by the EU. As a result, UAE was a part of the EU’s list of non-cooperative jurisdictions for tax purposes (EU Blacklist). Hence, this helps cement the UAE’s position as a Business superpower. Also, it helps them have tighter control over business entities based in the UAE.
Additionally, it also makes compliance norms more stringent, leading to better transparency, and efficiency. However, this means that companies will need to ensure they meet the required compliance to continue operations in the UAE. Hence, auditing and financial service providers have become more important than ever before.
For enquiries, call +971 45 570 204 / E-mail: [email protected]ESR Deadlines
All eligible companies must submit an ESR Notification form to their concerned authorities. The UAE Economic Substance deadline varies from zone to zone as the authority in charge differs. Let us now take a look at the UAE Economic Substance deadline set by various authorities for filing the ESR notification form:
- Dubai Airport Free Zone Authority: May 31, 2020
- Hamriyah Free Zone Authority: June 30, 2020
- Dubai Aviation City Corporation: June 07, 2020
- Sharjah Airport International Free Zone: June 30, 2020
- Dubai International Financial Centre: June 12, 2020
- Abu Dhabi Global Market: June 30, 2020
- Dubai Multi Commodities Centre: June 30, 2020
- RAK International Corporate Centre: June 30, 2020
- Ajman Free Zone Authority: June 30, 2020
- Dubai World Trade Centre Authority: June 30, 2020
However, other relevant authorities are yet to announce the due date for filing the ESR Notification form. We expect those to arrive not later than June 30, 2020.The above dates are subjected to change respectively for different zones and regulations implied by the government of UAE or by the UAE entities. But do not worry as we will keep you updated regarding any changes made to the ESR filing deadline.
How can KGRN Chartered Accountants help?
KGRN Chartered Accountants can help you get a clear understanding of the new economic substance regulations in UAE. Furthermore, KGRN Chartered Accountants can conduct an impact analysis – studying and analyzing the effect of the new economic substance regulations -ESR on your existing businesses in the UAE. Additionally, our team can help you rectify errors to ensure complete compliance.
Also, years’ worth of experience helps our team efficiently and effectively manage your records.As a result, we can identify gaps in the level of economic substance in affected entities and consider remediation options where gaps are identified. Hence, KGRN Chartered Accountants can assist in relevant compliances under the new regulations.
For more info please contact :
Contact Person: Gopu Rama Naidu CPA FCA
Email: [email protected] Mobile : +971 50 452 0648 Phone: +971 455 70 204
