The United Arab Emirates Cabinet recently issued resolution that requires all UAE entities to maintain an economic substance. Economic Substance Regulation was introduced by the UAE government in order to align the entire region with global standards set by the Organization for Economic Cooperation and Development (OECD) Forum on Harmful Trade Practices with prevention of Base Erosion and Profit/Income Shifting (BEPS). According to FHTP, a company should perform substantial business activities in a jurisdiction. The UAE was added to the European Union list of non-cooperative tax jurisdictions by the European Commission, which is the reason for the issuance of the economic substance regulations.
UAE Economic Substance Regulations are similar to the economic substance requirements that were recently implemented in jurisdictions that include Cayman Islands and Jersey.
Economic substance regulation will be applicable to onshore and offshore that engage in any of the below mentioned “Relevant Activities”
In case the business entity has not earned any income from the mentioned relevant activities in the financial period, it does not have to file for any economic substance declaration.
If the business entity meets the specified requirements but fails to comply with the regulations, then they will have to pay a penalty ranging from AED 10,000-50,000.
If the regulatory authority determines that an entity is not meeting the Economic Substance Test repeatedly, a penalty between AED 50,000-300,000 may be imposed. The authority may also suspend, revoke or deny the renewal of the company’s license.
We are one of the leading accounting and auditing firms in UAE and can help in checking up your applicability of ESR and compliance related requirements. Also helping you with the Ongoing ESR compliance and business readiness for the ESR:
Reviewing your activities against ESR requirements. Whether you are compliant or not.
If you are carrying out any business activity covered under ESR, will review the economic substance, make a report and guide you to meet the ESR compliance.
After reviewing all reports from ESR perspective, will file all relevant documents and reports to concerned authority before deadlines.
Enter your information below to receive an email or Contact us today for help on ESR on +9715 010 42665
