Filling reply to notice or query ESR

The Federal Tax Authority (FTA) is the UAE’s National Assessing Authority for Economic Substance Regulations (ESR). The FTA may send notices or raise queries to Licensees, mostly related to an ESR audit. Additionally, license issuing authorities may also raise queries regarding the ESR Notification/Report submitted by businesses.

Responding to ESR Notices from the FTA
Licensees (businesses in the UAE) typically receive notices via their registered email. Sometimes, the notice may be sent through multiple channels. The notice usually specifies submission requirements.

Contents of the ESR Audit Notice
If your business is under audit, the FTA will send a “YOU ARE UNDER AUDIT” email containing:

• Notification that the Licensee is under audit

• List of required documents and information

• Submission deadline

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ESR Notification/Report Notices
Businesses may receive requests from Licensing Authorities regarding ESR Notifications or ESR Reports. The authorities may ask for additional information supporting the submissions.

Information Requested Under ESR Audit Notice
The FTA may request:

• General company documents (Trade License, Lease Agreement)

• Constitutional documents (Memorandum of Association, UBO declaration)

• Employee details (CVs, timesheets, contracts, passport, visa, Emirates ID, working papers for full-time employee calculations)

• Financial information (audited financials, management accounts, working papers for relevant income and profit/loss attributable to the relevant activity)

• Asset details (physical assets in the UAE, lease agreements, title deeds/purchase agreements)

• Relevant activity information (type of relevant activity and justification of how the business activity meets the criteria)

• Board meetings (number held in UAE and outside, number and details of resident/non-resident directors, explanations if no meetings were held during the year)

• Outsourcing details (information on outsourced activities, the entity receiving the outsourced work, and related information)