The UAE issued Economic Substance Regulations (Cabinet of Ministers Resolution No. 31 of 2019) (the “Regulations”) on 30 April 2019. These regulations are brought as a part of UAE’s commitment as a committee member of the OECD Inclusive Framework and in response to an assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation.
The ESR is an annual compliance requirement in the UAE and it is applied to all UAE onshore and free zone companies and certain other business forms that undertake one or more “Relevant Activity” for financial years commencing on or after 1 January 2019.
- Investment Fund management Business
- Intellectual property Business (“IP")
- Distribution and Service Centre Business
Businesses should get prepared to
- Assess their business activities to report any changes in relevant activities.
- Determine whether they would be in-scope or exempt from filing an ES Report for the financial year.
- If they fall under exempt licensees, businesses should produce appropriate evidence to substantiate their exemption.
Failure to comply with the ESR as a business could result in penalties of up to AED 400,000 and other administrative sanctions such as the suspension, revocation, or non-renewal of the entity’s trade license or permit.
How Alliott Management Consulting will assist the Licensee:
With the assistance of the best ESR consultants in the UAE such as Alliott Management Consulting.
- We will provide effective advisory in filling ESR Notification and report with sufficient documents.
- We will advise the licensee on how to meet the ESR Test in compliance with the existing laws.