(Economic Substance Regulations)
Economic Substance Regulation is one of the hottest topics in the business world of the UAE.
Our fees for ESR filing start from 1000 AED onwards.
An entity subject to ESR - Firms whether mainland, free zone offshore, or the financial free zones that conduct relevant activities and generate earnings in UAE, need to file ESR in UAE.
1- If the Licensee conducts State Core Income-Generating Activity in the State.
2- If the Licensee is led and administered in the State in relation to that activity, provided the Licensee’s board of directors meets in the State at an adequate frequency having regard to the amount of decision-making required at that level.
3- If there are adequate physical assets in the State or adequate level of expenditure on outsourcing to third-party service providers in the State, for the activities of the Licensee.
4- In the case of State Core, Income-Generating Activity carried out for the relevant Licensee by another entity, if it is able to monitor and control the carrying out of that activity by the other entity.
Timeline of ESR - ESR report needs to be filed within 12 months of the financial year.
Penalties And Offences - Failure to comply with the ESR (including providing inaccurate or incomplete information) may result in a fine of between AED 10,000 and AED 50,000 in any fiscal year. The fines increase to between AED 50,000 and AED 300,000 for the subsequent fiscal year.