Economic Substance Regulation Services
Under the Legislation, every Licensee conducting a Relevant Activity must file and submit an ESR notification and report.
If your business receives income from a Relevant Activity and requires expert support, we can help to minimise risks and costs.
As an FTA Approved Muwafaq Tax Agency Partner, our service packages comply to UAE Tax Legislative and FTA Muwafaq principals.
Base Erosion and Profit Shifting (BEPS) is the use of aggressive tax planning strategies by companies to artificially shift profits to low or no-tax jurisdictions. BEPS laws and regulations proposed by the OECD are now enacted into the United Arab Emirates Legislation.
The United Arab Emirates Cabinet of Ministers has issued the Economic Substance Regulations supplemented by guidelines issued on September 11 2019, which applies to all entities carrying on a Relevant Activity in the UAE, including entities established in Free Zones and Financial Free Zones.
Such entities must exhibit demonstrable Economic Substance as of April 30, 2019, and make reports and notification to the Regulatory Authority from the financial year 2019 and thereafter or will risk fines and administrative penalties.
*Initial Consultation is FREE
What Sets Our Service Apart
Methodology & Clear Advice
Knowledge of UAE Legislation & BEPs
Experience of MOF & FTA Processes
How We Deliver
Our advisor will undertake an assessment to review your entity to determine Central Management & Control and Relevant Activities
We can support your notification or exemption submission and provide a high level analysis
We clarify your reporting obligations and support you to prepare the submission.
Want to Improve Cost & Performance?
We’ll provide best practice quality processes, expertise and platforms to run your business more effectively.
Am I affected by the Legislation?
This is dependent on whether you entity conducts a Relevant Activity. We recommend an assessment to ensure you are clear and can manage your obligations.
When are you required to file the reporting?
Affected Licensees must comply with the following two annual filing requirements: Affected Licensees must comply with the following two annual filing requirements:
1. Notification: File a notification within 6 months from the end of the relevant financial year (FY)
2. Report: File a report within 12 months from the end of the relevant FY if earning income from a RA during the FY
What are the penalties?
Penalties for non-compliance with the ESR are broad and significant. Financial penalties include the failure to Penalties for non-compliance with the ESR are broad and significant. Financial penalties include the failure to:
|Submit a notification||20k|
|Submit a report||50k|
|Provide accurate or complete information||50k|
|Demonstrate sufficient substance in the UAE- the first failure is||50k|
|and the second consecutive instance of failure is AED||400k|
How do we support you?
We can provide comprehensive assistance to We can provide comprehensive assistance to
• Assessment of ESR Relevant Activities & obligations
• Compliance and reporting obligations and assistance
• Drafting responses to enquiries from the UAE authorities
• Supporting the appeals process, and
• Advice in relation to areas of non-compliance and actions to move the entity into a compliant position.
Economic Substance Regulations Resources
If your business is subject to an FTA audit, we have experience and understanding with a structured approach to assess, prepare and support you through the audit procedures.
If a Qualifying Corproate Tax Free Zone Person fails to meet any of the conditions or makes an election to be subject to the regular CT regime, it will be subject to the 9% corporate tax rate.
Operate & Free Zone and wish to maximize the eligible benefits & reduce compliance risks. We can provide a free consultation to ensure your business is optimizing for Corporate Tax Law.
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