ESR Compliance Services Economic Substance Regulations – ESR compliance in UAE is a mandatory requirement. ESR in UAE ensures you do not adopt tax evasion and avoidance strategies to save your money. By following ESR regulations, you prove that your core business activity is in UAE. You are generating revenues from it, and paying relevant taxes in the country. So, it is mandatory for entities to show their UAE ESR compliance.
We have been helping its clients with ESR compliance in the UAE. We help you analyze the need for UAE ESR compliance for your business. Our ESR specialists also handle the submission of ESR notifications and ESR returns. Thus, you get end-to-end services to ensure your compliance with ESR UAE.
You can enjoy hassle-free compliance with ESR in UAE with our guidance. UAE ESR compliance helps improve your company goodwill and prevent tax-specific issues or penalties. It lets you contribute to the country’s economy and ensure fair competition. Text us on WhatsApp or call us today to get started.
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The primary goal of implementing ESR regulations in the UAE is to combat harmful tax practices like tax evasion. These regulations require companies involved in relevant activities to demonstrate sufficient economic presence in the UAE, aligning their reported profits with actual economic activity within the country.
A licensee under ESR regulations can be a juridical person incorporated inside or outside the UAE or an unincorporated partnership registered in the UAE, including free zones and financial free zones, and engaged in relevant activities.
Permissible licensee entities include limited liability companies, private shareholding companies, public shareholding companies, joint venture companies, or partnerships. Natural persons, sole proprietorships, foundations, and trusts cannot be licensees.
Exempted licensees include:
- Investment funds
- Entities tax resident in another jurisdiction
- Branches of foreign firms subject to tax outside the UAE
- Wholly-owned UAE residents not part of an MNE Group operating solely in the UAE
- Any other exempted category defined by the Ministry of Finance.
The following activities are considered as “Relevant Activities” under ESR Regulations:
The ESR Report aims to capture details about the Licensee's business operations related to Relevant Activities, including income, expenses, assets, employees, and governance structure.
No, the Head Office of the entity is responsible for filing a single consolidated ESR notification covering all branches in the UAE.
A juridical person, which is a corporate legal entity with a separate legal identity from its owners, and an unincorporated partnership firm, which operates in the UAE without forming a separate legal body, are both considered "Licensees" and are subject to Economic Substance Regulations (ESR) in the UAE.
Correct, for each financial year during which you engage in relevant activities, you must submit both the Economic Substance Report and Notification. However, if you are an exempted licensee or do not conduct relevant activities in a specific financial year, you only need to submit the Notification.
Licensees and exempted licensees are required to retain the information and documents submitted to relevant authorities under ESR Regulations for a period of six years from the date of submission.
Yes, if they operate in any of the relevant activities.
Under ESR Regulations, an entity claiming exempted licensee status must provide proof to the relevant regulatory authority. This includes submitting a notification and one of the following for each financial year:
- A letter or certificate from a foreign jurisdiction's competent authority confirming the entity's tax residence for corporate income tax purposes.
- Evidence of tax payment to the competent authority of the foreign jurisdiction where the entity claims tax residence.
