ICB Tax Consultancy provides comprehensive tax services in the United Arab Emirates (UAE). With the recent implementation of the Economic Substance Regulations (ESR) in the UAE, our firm has ensured full compliance to support our clients in meeting their obligations.
ESR compliance refers to the adherence to the Economic Substance Regulations, which were introduced in the UAE to align with international standards set by the Organization for Economic Cooperation and Development (OECD) and the European Union (EU). ESR aims to combat harmful tax practices and ensure that companies within the UAE demonstrate substantial economic activity corresponding to the income earned.
ESR stands for Economic Substance Regulation. In the context of the United Arab Emirates (UAE), the ESR refers to regulations introduced by the UAE government to ensure that companies conducting certain business activities in the country have substantial economic activities within the UAE. The ESR aims to address concerns related to Base Erosion and Profit Shifting (BEPS) and to align the UAE’s tax framework with international standards.
Under the Economic Substance Regulations (ESR) in the UAE, entities that are within the scope of the regulations are required to file an ESR report [1]. These entities need to submit an annual Notification form to their Regulatory Authority, and within 12 months from the end of their financial year, they must complete and submit an Economic Substance Report [1]. The ESR report needs to be filed electronically on the Ministry of Finance ESR portal [2].
Specifically, companies and establishments that are involved in “relevant activities” in the UAE must submit economic substance notifications and reports on an annual basis [3]. Relevant activities include banking, insurance, investment fund management, lease-finance, shipping, and holding company business, among others [3].
It is important for entities engaging in these activities to understand their obligations under the ESR and ensure compliance with the filing requirements to avoid penalties for non-compliance [2] [3].
Sources:
Economic Substance Regulations – Ministry of Finance – United Arab Emirates
The UAE Economic Substance Regulations Guidance on Economic Substance Report
Economic Substance Regulations | Ministry of Economy – UAE
To support our clients in achieving ESR compliance, ICB Tax Consultancy offers a wide range of services, including:
We conduct a comprehensive review of your business activities and classify them as per the designated criteria under the ESR. This analysis helps us determine the level of compliance necessary for your organization.
Our team will assist you in developing an appropriate structure and documentation that aligns with the ESR requirements. This includes guidance on maintaining adequate records, identifying relevant income and expenses, and preparing accurate annual reports.
We assess your business activities to identify any potential risks or gaps in compliance. Our experts offer practical solutions to ensure your organization meets the economic substance test and mitigates any risks associated with non-compliance.
At ICB Tax Consultancy, we understand the importance of ESR compliance for businesses operating in the UAE. With our extensive knowledge of the regulations and experience in the field, we are well-equipped to provide practical solutions and guide you through the complex requirements. We strive to ensure that your business remains compliant, thus avoiding any penalties or reputational risks.
