ESR Assessment
Complying with the Economic Substance Regulations (ESR) in the UAE can be a complex and challenging process. Navigating the intricacies of ESR requires expertise, accuracy, and timely compliance.
Al Fakher Accounting can assist you with a thorough ESR assessment. Our ESR Assessment Services in Dubai help you determine whether your business meets the standards set by the UAE authorities in alignment with the Organisation for Economic Co-operation and Development (OECD) guidelines. We also provide reliable ESR compliance services for Dubai businesses to ensure ongoing adherence to the regulatory framework.
What is Economic Substance Regulation?
The UAE introduced the Economic Substance Regulations (ESR) to align with international standards aimed at combating base erosion and profit shifting (BEPS). Under ESR, companies carrying out relevant activities are required to demonstrate adequate economic substance and legitimate operations within the UAE.
The nine Relevant Activities covered under the ESR are:
Banking Business
Insurance Business
Investment Fund Management Business
Shipping Business
Lease-Finance Business
Distribution & Service Center Business
Headquarters Business
Intellectual Property Business
Holding Company Business
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What is Economic Substance Regulation?
The UAE introduced ESR to comply with standards for combating base erosion and profit shifting. ESR requires the companies that carry out relevant activities to demonstrate they have adequate substance and legitimate operations in the UAE.
The Nine Relevant Activities under the ESR are:
- Banking Business
- Insurance Business
- Investment Fund Management Business
- Shipping Business
- Lease-Finance Business
- Distribution & Service Center Business
- Headquarters Business
- Intellectual Property Business
- Holding Company Business
ESR Requirements for UAE Businesses
Mainland, free zone and offshore companies need to meet the key ESR requirements in the UAE such as:
- Notify the regulatory authorities which relevant activities they are carrying out within 6 months from the end of financial period
- Undergo the Economic Substance (ES) Test, if they carry out relevant activities and
- Submit an annual Economic Substance Report within 12 months from the end of financial period
We assist with the preparation and submission of ESR reports as part of our ESR annual reporting services to ensure accurate and timely filing.
The Penalties for Non-Complying with the Law:
- AED 20,000 – Non-submission of the Notification.
- AED 50,000 – Non-submission of the ES Report or documents and failure to meet ES Test.
- AED 400,000 – Repeated violation of Point No. 2
- AED 50,000 – Submission of inaccurate information.
The Following Tests must be Passed to Meet the ESR Test:
- Core Income Generating Activities’ (“CIGA”)
- Directed and Managed
- Adequate
- Outsourcing OF CIGA (Applicable if outsourcing is done)
Our Economic Substance Assessment Services
We offer a comprehensive suite of services tailored to your business needs to ensure full ESR compliance:
Initial Assessment
We conduct an in-depth analysis of your business activities to determine whether your company falls under the scope of the ESR. This initial assessment helps you understand the obligations and requirements specific to your business.
Gap Analysis
Our experts will evaluate your current operational structure against the requirements of the ESR to identify any gaps. We will then recommend the necessary steps to align your business with these regulations.
Economic Substance Report Preparation
We assist in preparing and submitting the Economic Substance Report, ensuring all relevant information is accurately reflected and meets the UAE regulatory standards. These tasks are integral to our ESR annual reporting services.
Ongoing Compliance Monitoring
Compliance with ESR is an ongoing process. We provide continuous monitoring and support to ensure your business remains compliant year-round. This includes regular updates on any regulatory changes and their impact on your business. Our ESR compliance services Dubai packages include proactive tracking and advisory support.
Advisory Services
Our team of experts is on hand to provide tailored advice on structuring your operations to optimize economic substance compliance while maintaining operational efficiency.
Why Choose Us for ESR Assessment in the UAE?
Expertise: Our team consists of seasoned professionals with extensive experience in UAE regulatory compliance, ensuring that your business receives accurate and reliable guidance.
Tailored Solutions: We understand that every business is unique, and our services are customized to fit your specific needs.
End-to-End Support: From the initial assessment to ongoing compliance, we provide comprehensive support to ensure your business remains fully compliant with ESR.
Timely and Accurate Filing: We guarantee timely and precise submissions to avoid penalties or compliance issues.