The ESR Consultants in Dubai, Abu Dhabi and the UAE are part of our tax advisory solutions that we offer in Dubai, Abu Dhabi and the UAE.
In the introduction, the Regulations stipulate that all relevant UAE entities who perform certain commercial activities prove economic substance in the UAE on April 30, 2019.
Why Have These Regulations Been Introduced?
The issuance of the Regulations comes in the wake of the European Union (EU) including the UAE on the list of countries not cooperating for tax reasons. Additionally, the Regulations reflect the continued determination of the UAE to comply with all EU requirements and the most stringent international standards for taxation, including taxation under the Organisation for Economic Co-operation and Development (OECD) requirements.
Frequently Asked Questions: ESR in the UAE
The ESR Consultants in Dubai stipulate that UAE free zone and onshore businesses and other forms of business involved in certain activities demonstrate and maintain an appropriate “economic presence” in the UAE about the business they conduct. The goal of these Regulations will be to guarantee that UAE companies can report their actual earnings that are in line with the business activities they carry out within the UAE. Here are a few frequently asked questions on these regulations. Economic Substance Regulations (ESR) to help to understand the rules better.
Who is required to make the Economic Substance Report and when?
Only licensees who earn revenue from a relevant activity in a period of financial concern and cannot be exempted from Regulations must prove an economic basis in UAE and submit the Economic Substance Report. Economic Substance Reports must be filed within 12 months after the close of the relevant financial year.
What do you know to tell if you are a licensed person?
A licensee can be a legally-constituted entity or unincorporated partnership that has been licensed with the UAE and engages in the relevant activities and may be:
- Limited liability companies
- Private shareholding companies
- companies that hold public shares
Are there any exceptions to making an ESR?
At Bizzmosis, we are pleased to be a group of highly experienced and knowledgeable professionals. With our vast knowledge of the incorporation of companies and government lobbying, as well as complex corporate structures and business matters, as well as our extensive network and connections among the various authorities and departments, we are proficient in delivering remarkable results.
Holding Company Business
Holding Company Holding Company would need to satisfy its requirements for economic substance if its operations involve acquiring or holding shares and equity interests in other businesses and do not engage in any other commercial activities. Suppose the business of a holding company is an additional activity. In that case, it must be able to meet the requirements of the economic substance of the relevant activity category (if it falls within the CIGA range in the Regulations).
Headquarters Business
The company is considered a headquarters enterprise when it offers this CIGA to foreign group companies, about whether the business is the ultimate or direct head of the company or is involved in a different business or industry nature.
- I am making relevant management decisions.
- The purchase of significant assets or services for the group companies.
- The coordination of functions for the various group entities like marketing and IT, HR, and Finance, among others.
Read more: Auditing Firms in Dubai Freezones
