Economic Substance Regulations

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Economic Substance Regulations UAE

The Economic Substance Regulations (ESR) were introduced in the UAE in April 2019 via Cabinet Resolution No. 31 and later refined by Cabinet Decision No. 57 and Ministerial Decision No. 100 of 2020 in September 2020. These regulations require all UAE companies engaged in ‘Relevant Activities’ to demonstrate substantial ‘economic presence’ in the UAE, evaluated through the ES Test.

If your company is involved in relevant activities and generates income from them, it is mandatory to submit an annual ES Notification within six months from the end of the relevant financial period. Additionally, a comprehensive ES Report must be filed within 12 months after the end of the fiscal year.

Consequences of Failing to Submit ES Notification

Failing to submit an ES Notification can result in a fine of AED 20,000. Non-compliance with ESR, including failing to file an ES Report, demonstrating economic substance, or providing inaccurate information, may result in fines up to AED 50,000 in the first year, escalating to AED 400,000 in subsequent years. Additionally, your company could face the spontaneous exchange of information with Foreign Competent Authorities and other sanctions, including the suspension, revocation, or non-renewal of your trade license.

ESR Services we Offer

We ensure precision and compliance at every phase of the ESR requirements.

ES Impact Assessment:

Evaluate your company’s operations to determine the impact of ESR and ensure readiness.

ES Notification Preparation

Assistance in preparing and submitting your ES Notification on time to avoid penalties.

ES Report Preparation

Expert help in compiling and filing your ES Report, ensuring accuracy and compliance.

ESR Appeal Assistance

Support in filing appeals against any penalties or decisions under ESR.

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ESR Compliance

Safeguarding the UAE’s commitment to combating harmful tax practices.
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    As a leading tax consultancy and accounting firm in Dubai, we offer top-tier tax and accounting services at affordable rates, making us an economical choice for SMEs. Our expertise spans Corporate Tax, VAT, Excise Tax, Bookkeeping, and comprehensive business services, ensuring your business stays compliant with UAE laws while supporting your growth.

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