What Is ESR in UAE.

 As part of the UAE’s commitment as a member of the OECD Inclusive Framework, and in response to an assessment of the UAE’s tax framework by the European Union (“EU”) Code of Conduct Group on Business Taxation, the UAE introduced a Resolution on the Economic Substance (Cabinet of Ministers Resolution No.31 of 2019, the “Regulations”) on 30 April 2019.  Guidance that provides further clarity on the application of the Regulations -ESR  was issued on 11 September 2019. 

Scope of the ESR in UAE.

The scope of the Economic Substance Regulations -ESR in Dubai has made it clear that the regulation applies to all the licensee having the commercial license, certificate of incorporation, or any other form of permit necessarily taken from licensing authority to do business. Going with the spirit of the law and the provisions, it is interpreted that Free Zone includes Offshore Companies as well.

What are the Relevant Activities Under ESR In UAE.

FHTP have considered the geographically mobile activities for the substance requirements. Following are the activities falling into this category:

Banking Business

Insurance Business

Lease-finance Business

Headquartered Business

Shipping Business

Holding Company Business

Intellectual Property Business

Investment Fund Management

Distribution and Service

Deadlines For Notification Under ESR

DIFC-31st March 2020

JAFZA-31st  March 2020

DAFZA -03rd  May 2020

RAKICC-30th June 2020

AFZ-30th June 2020

DMCC-30th June 2020

Penalties For Failure to ESR.

Penalties for failing to notify the regulatory authority are between AED 10,000 – And AED 50,000 /

Other Penalties Apply Where Licensees Fail to Provide Accurate Or Complete Information And Demonstrate Sufficient Economic Substance in the UAE

How  KGRN Chartered Accountants Can help -ESR in Dubai?

 KGRN Chartered Accountants can help you get a clear understanding of the new economic   substance regulations in the UAE – requirements applicable. KGRN Chartered Accountants can conduct an impact analysis – studying and analysing the effect of the new economic substance regulations -ESR on your existing businesses in UAE

Identify gaps in level of economic substance in affected entities and consider remediation options where gaps are identified. 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:  Mobile : +971 50 452 0648  Phone: +971 455 70 204

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