ECONOMIC SUBSTANCE REGULATIONS (ESR) IN UAE:
ECONOMIC SUBSTANCE REGULATIONS (ESR) IN UAE:
Laws and Regulations Related to Economic Substance Regulations in the UAE
Annual Economic Substance Notification Filing Guide
· Reports Filing Portal
· Notice regarding ESR Filing Requirements and Deadlines
· Relevant Activities Summary
· Cabinet of Ministers Resolution No (57) of 2020 Concerning Economic Substance Requirements
· Cabinet Resolution No (44) of 2020 Organizing Reports Submitted by Multinational Companies
· Ministerial Decision No (100) for the year 2020 on the Issuance of Directives for the Implementation of the Provisions of the Cabinet Decision No (57) of 2020 Concerning Economic Substance Requirements
The UAE applies Economic Substance Regulations (ESR) to local companies located in the country, including businesses in the free zones and those engaged in any of the defined ‘relevant activities’. These companies must provide the regulatory authorities with economic substance notifications, including preliminary information about the activities. This notification is a prerequisite for submitting an economic substance report by the company.
Activities to which Economic Substance Regulations Apply
Banking Business
Insurance Business
Investment Fund Management Business
Lease-Finance Business
Headquarter Business
Shipping Business
Economic Substance Notifications and Reports
Companies and establishments that are involved in ‘relevant activities’ in the UAE are required to submit economic substance notifications and reports to the regulatory authority on an annual basis, in accordance with the provisions of the Cabinet Resolution, which stipulates the submission of these notifications and reports. Failure to adhere to this will result in sanctions.
Submission Deadlines
Notifications
A maximum period of 6 months is granted from the end of the fiscal year.
Economic Substance Reports
A maximum period of 12 months is granted from the end of the fiscal year.
Penalties
Violation
Failure to submit the ESR Notification
Failure to submit the ESR Report
Administrative Penalty
AED 20,000
AED 50,000
Our Scope of Work
LFL Consultancy provides thorough assistance to guarantee adherence to the Economic Substance Regulations (ESR) in the UAE. Initially, we assess the entity’s ESR obligations through an ESR Assessment, and subsequently, we meet reporting requirements by submitting ESR Notifications and ESR Reports.
Our role in the ESR Assessment is to ascertain the applicability of ESR regulations to the company’s business operations, examine its conformity with Core Income-Generating Activities (CIGAs), and assess the relevance of economic substance in the United Arab Emirates (UAE). This involves a thorough examination of corporate documents, financial records, and operational information. We will identify relevant activities, evaluate CIGAs, review decision-making processes, and assess operating expenditure. It is imperative to maintain meticulous documentation, and a comprehensive report presenting findings, conclusions, and actionable recommendations will be prepared.
Choose LFL Consultancy as your one-stop solution for ESR compliance. Elevate your business with our expertise. Contact us now for further details and take the first step towards seamless Economic Substance Regulations management.