ESR Services

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ESR Compliance Services

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.

The Purpose of ESR in UAE

Many jurisdictions have no corporate tax or low taxation. Businesses, specifically MNCs, try to take advantage of these tax benefits by showing their profits in these jurisdictions instead of their actual base. Thus, despite their main base and substantial activities in some other countries, they show their profits in jurisdictions with little to no tax to benefit.

Economic substance regulations aim to prevent such actions by MNCs. Since the UAE has lower taxes, the government introduced ESR in the UAE in 2019. In April 2019, the UAE implemented the Economic Substance Regulations (Cabinet of Ministers Resolution No. 31 of 2019). Later, they also introduced the Guidance on implementing the Regulations in September 2019 (Ministerial Decision No. 215 of 2019).

UAE ESR compliance is mandatory for reported entities. Accordingly, firms must perform an Economic Substance Test and submit relevant reports every year. They must also file a notification for it. All these are essential to show your economic activity in the country concerning relevant activities.

By submitting the ESR notification and ESR return, businesses can prove that they carry out core income generating activities in UAE and have substance. The UAE aims to fight tax evasion and tax avoidance by implementing these regulations.
Thus, with ESR in UAE ,the government aims to stop fraudulent tax practices in international trade activities in alignment with the OECD’s international commitment to remove unfair tax practices. It also ensures correct tax payments and facilitates businesses engaging in legal business practices.

It is critical for reporting entities to achieve ESR compliance in the UAE. Reporting entities include businesses in mainland, free zone, and offshore UAE carrying out relevant activities and core income generating activities in the following verticals:

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Our UAE ESR compliance services

Unicorn Global Services (UGS) is an expert in providing compliance services in various areas in the UAE. Our professionals help you comply with AML, VAT, and corporate tax regulations. Besides, our UAE ESR compliance services are a hit with our clients. We help you by providing support in the following aspects

We help you by providing support in the following aspects:

Checking ESR eligibility

You must find whether economic substance regulations are applicable to you or not. By checking your eligibility for ESR, you can know whether you need to follow its requirements. Its requirements include submitting an ESR notification and an Annual Return.

UGS helps you with eligibility check. We study your business and understand the nature of your business activities. An assessment of the different types of transactions you conduct across the UAE is essential. Based on this assessment, we classify your activities as relevant or not under ESR regulations.

Gap Analysis and Remedial actions

Your ESR compliance in UAE might suffer from deficiencies. Either the reports are not in order, or not submitted on time, or you have not performed the test. In these cases, you must understand that there are gaps and you need to fill them for ESR compliance in UAE.

Our ESR experts can identify these gaps and correct them With respect to your core income generating activity, there might be loopholes in the data points required to be submitted. For example, the exact data and information related to conducting a relevant activity, revenues, expenditure, number of employees, etc., are critical data points, which need accurate handling.

We recommend necessary actions if we find any gaps related to ESR test parameters. These remedies can be in the direction of legal, commercial, or regulatory sense. You receive end-to-end handholding in implementing these remedial measures.

ESR compliance services
Per the regulations of ESR in UAE, you must submit the ESR notification no later than six months after the end of the financial year. Also, you must file the ESR report annually before the end of the 12 months after the financial year. ESR compliance services include submission of accurate reports on time.

With timely and correct submission, you prove your relevant activities in UAE. You show that your income is subject to tax in UAE and declare if otherwise. These reports also show that you have adequate resources to carry out these core income generating activities. However, the corporate tax regime in the UAE, as outlined in the public consultation paper, includes a list of items that will not be recognized as deductions for calculating taxable income:

    • The ESR notification includes the following points:
    • Relevant activities
    • Income statement
    • Declaration of whether the income is subject to tax outside the UAE
    • The ESR reportincludes the following elements:
    • Core Income Generating Activity test showing that you carry out core activities in UAE
    • Directed and Managed test showing that you direct and manage the business’s relevant activities in the UAE
    • Adequacy test showing that you have adequate resources (assets, employees, and expenses) in UAE
    • Number of full-time employees
    • List of outsourced service providers
    • Details of core income generating activities
    • Operating expenditure
    • Relevant income earned
    • List of parent, ultimate parent, and ultimate beneficial owner with details
    With our expert’s help, you can file the notification and report accurately in the prescribed format. We ensure you manage these compliance requirements on time without any hassles.

Why Choose Us

Unicorn Global Solutions is a professional firm that provides accounting services to businesses all around the UAE. The slightest mistake in the form may lead to starting all over again. For this reason, contact us to get best VAT Registration service in Dubai as it boasts a team of professionals who ensures that your company’s documents are transparent, up to date, and professional.

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Common Questions

Frequently Asked Questions

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:

  • Banking
  • Insurance
  • Shipping
  • Lease finance
  • Intellectual property (IP)
  • Fund management
  • Distribution and service centers
  • Headquarters
  • Holding Company

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.

For free zone enterprises to rent an office in the mainland, the most important prerequisite is to obtain a NOC (No Objection Certificate) from the appropriate UAE free zone government. The procedures set forth by the relevant free zone authorities in the United Arab Emirates govern how to get a NOC from a free zone.

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.

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.

In IFZA, the initial startup costs for businesses are AED 14,900*. There are zero visa packages and six visa packages among them. The Dubai Department of Economic Development (DED) is the source for all economic activity allowed in the International Financial Zone (IFZA).

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