Login

Lost your password?
Don't have an account? Sign Up

ECONOMIC SUBSTANCE REGULATION

The United Arab Emirates (UAE) introduced Economic Substance Regulations (ESR) to warrant that UAE entities that commence certain activities are not used to artificially attract profits, which are not in line with the economic activities undertaken in the UAE. The ESR regulations apply to the following business sectors:

  • Banking
  • Insurance
  • Investment Fund Management
  • Lease-Finance
  • Headquarter
  • Shipping
  • Holding Company
  • Intellectual Property
  • Distribution and Service Centre

Our experts assist you in understanding the ESR and help you ensure the compliance of the ESR. Under the requirements of ESR, companies need to submit a notification to the relevant regulatory authority. ESR Report is an essential requirement of the ESR and non-compliance to the same can attract heavy penalties for businesses. Our proficient team of Chartered Accountants is well versed with all the requirements of ESR and help you prepare the required notifications in compliance with the ESR and undertake the submission of the ESR Report with relevant authorities.

  • Detailed Consulting on Economic Substance Regulation.
  • Analyzing and identifying the qualifying entities for ESR compliance.
  • Identify which business segments qualify for ESR compliance.
  • Report and advise on the overall ESR readiness of your organization.
  • Assist with the ongoing ESR compliance.
  • We offer administrative and secretarial services with the maintenance of the ESR
  • Our team of experts assists you with the ESR filing with the authorities in the proper /prescribed format.

The job is not complete with just the ESR notification filing process; it is just the beginning. Organizations that carry out the Relevant Activity are required to submit an annual report within a year of the end of the fiscal year of the business. The report should include detailed information about the relevant activity. ESR reporting must be done within the time prescribed by the regulatory authority and should follow the form and manner specified by the authority. Our team of experts undertakes this entire process for you, leaving you with enough time to focus on other aspects of your business.

Who is exempted from the Regulations?

The following Licensees are exempt from Economic Substance Regulation:

  • Licensees that are directly or indirectly at least 51% owned by the Federal or
  • an Emirate Government, or
  • a UAE Government body or authority,

How to meet the prerequisites for the compliance of E.S.R

For a licensee to demonstrate that its activities in the UAE have adequate substance, it must meet the following:

Directed and Managed Test: The regulation contains specific instructions and requirements of how a company has to be directed and managed in the UAE.

Test Related to the Core Income Generating Activities (CIGA): The UAE ESR guidelines have linked particular tasks with each core income-generating activities (CIGA). These include:

  • Raising funds, managing risk including currency, interest, and credit risk.
  • Taking hedging positions.
  • Providing credit or other financial services.
  • Preparing reports or managing capital for investors or government authority.

Adequate Tests: An entity or a business needs to have an adequate number of qualified full-time employees in the UAE, it should incur an operating cost and hold physical assets in the UAE.

Our skilled team will help you determine whether you are within the rules and guide you as to what activities are required to ensure full compliance. We are here to help you from creating ESR Notification until generating the final report.