ESR applicability in UAE extends to all license and exempted licenses carrying on relevant activity including free zone, thus it is prudent to consult an experienced ESR service provider in Dubai, Abu Dhabi, Sharjah, UAE.
Aviaan Accounting assists companies in determining the impact of Economic Substance Regulation on client’s business, providing professional support and expert advice regarding all aspects of ESR in Dubai, Abu Dhabi, Sharjah, UAE. We offer:
ESR applicability in UAE extends to all license and exempted licenses carrying on relevant activity including free zone, thus it is prudent to consult an experienced ESR service provider in Dubai, Abu Dhabi, Sharjah, UAE.
Economic Substance Regulation in the Dubai is another set of compliance requirement to be followed by all business entities. The Economic Substance Regulations in Abu Dhabi, UAE is in agreement with the global standard set by the Organization for Economic Co-operation and Development (OECD) on Harmful Tax Practices.So with an objective to curb harmful tax competition, on December 1, 1997, the European Union (EU) adopted a resolution on the code of conduct of business taxation. Code of conduct group on business (COCG) was established to assess the tax measures and regimes. In the past years, the world economy has experienced a shift of trade from land-based supplies to internet-based supplies which has produced a slight though complex looking ambiguity in the taxation methods in Dubai, UAE to be followed for the online structures.
In order to formalize the governance schemes in such a scenario, the EU came with a set of economic substance regulations following certain criteria that are aligned with the International standards that other states can comply with them normally.
One main reason and also the basic reason for the deployment of the Economic Substance Regulation into the United Arab Emirates was to keep a check on the harmful tax regimes and that the major corporations and government bodies are not harnessing the profit of surplus producing firms in an unethical manner. This economic substance assessment in Dubai, UAE was also introduced to make sure that corporations are carrying out the real economic activities and are not indulging in just unethical profit gaining acts. DUBAI joined the OECD’s inclusive framework on the BEPS in May 2018. While joining OECD, DUBAI committed to introducing the required economic substance regulation in Abu Dhabi, UAE by the end of the year 2018.
So, the Organization of Economic Corporation and Development is a global forum wherein there are 36 government member states who work together along with 70 non-member economies. The major motive of this organization is to work towards the welfare of the global economy and ensure prosperity along with sustainable development. Working in a way that is environmentally friendly or more specifically employing methods of development that do not compromise with the needs of the future generations is the main aim of the Economic Substance Regulation policy in Dubai, UAE. For assessing and monitoring the essential activities of the all member standards jurisdictions, a sub-body of this inclusive framework known as FHTP is made responsible.
The purpose of economic substance assessment in Abu Dhabi, UAE and regulation is to ensure that the DUBAI based entities that undertake certain activities are not indulged in any artificial means to attract or shift any kind of profits that are not just and proportionate to the relevance of their contribution to the economy of the United Arab Emirates. The Economic Substance Regulation assessment in Sharjah, UAE follows this strategy by confirming that the license is carrying out an activity in the DUBAI that achieves economic substance interest and the state is benefitted by its operations. Apart from this, harmful and unethical tax regimes are also checked by this economic substance assessment in Abu Dhabi, UAE to ensure that the entities are not suppressed under any undue pressure.
The Economic Substance regulation in Dubai, UAE is subject to any of the DUBAI onshore companies or organizations along with free zone companies, branches, partnerships, including offshore companies and other DUBAI based business firms that carry out activities like:
However, entities that are part of any multinational corporation are subjected to the economic substance assessment in Abu Dhabi, UAE but also groups and companies that are based in the DUBAI and carry any relevant activity regardless of whether the entity belongs to a foreign multinational group or not.
If a company is owned directly or indirectly by the government of the DUBAI (The DUBAI federal government or by any Emirate of the DUBAI) to the extent of 51% or above is exempted from the assessment and regulation of the Economic Substance in Dubai, UAE.
All licensee carrying the operations on the relevant activities in the United Arab Emirates, including the free zone and financial free zone are required to follow the economic substance rule in Dubai, UAE which was released on April 30, 2019.
The United Arab Emirates-based companies that are operating any relevant activities in any Emirate must satisfy the following Economic substance requirements in Abu Dhabi, UAE and regulations-
Our expert team and professional staff will facilitate you in economic substance regulation assessment in Dubai, UAE in the most specialized way. Following are the benefits you will get for choosing Aviaan Accounting for Economic Substance Regulation Assessment Process in Abu Dhabi, UAE:
Aviaan Accounting can help you to go through the Economic Substance Regulation assessment in Dubai, UAE without any major complexities and problems with guidance from our expert consultants:
| Financial Year End | Notification Filling Deadline | Report Filling Deadline |
|---|---|---|
| 1 January 2019 - 31 December 2019 | 31 December 2020 | 31 December 2020 |
| 31 January 2020 | 31 December 2020 | 31 January 2021 |
| 29 February 2020 | 31 December 2020 | 28 February 2021 |
| 31 March 2020 | 31 December 2020 | 31 March 2021 |
| 30 April 2020 | 31 December 2020 | 30 April 2021 |
| 31 May 2020 | 31 December 2020 | 31 May 2021 |
| 30 June 2020 | 31 December 2020 | 30 June 2021 |
| 31 July 2020 | 31 January 2021 | 31 July 2021 |
| 31 August 2020 | 28 February 2021 | 31 August 2021 |
| 30 June 2020 | 31 March 2021 | 30 June 2021 |
| 31 October 2020 | 30 April 2021 | 31 October 2021 |
| 30 June 2020 | 31 May 2021 | 30 June 2021 |
| 31 December 2020 | 30 June 2021 | 31 December 2021 |
The failure to meet the Economic Substance Test for the first time leads to a penalty of AED 10k to 50k, whereas AED 50k to 300k for the second consecutive failure. The notification failure leads to a fine of AED 10k to 50k. The failure to provide accurate or complete information leads to a penalty of AED 10k to 50k. The demonstration failure of sufficient economic substance in Dubai for the first time leads to a fine of AED 10k to 50k, whereas AED 100k to 300k for the second consecutive failure.
The matters to be taken into consideration by Licensee under ESR in UAE are the following list of non-exhaustive matters to appraise the relevant activities it has performed, the amount and type of income earned from them, and holding board meetings. The license should ensure board meeting minutes are signed and maintained in Dubai and demonstrate control and supervision over any outsourcing arrangements. The license should also recognize the amount and type of expenses and the number of Dubai-based full-time employees or other personnel and their qualifications.
The failure to meet the Economic Substance Test for the first time leads to a penalty of AED 10k to 50k, whereas AED 50k to 300k for the second consecutive failure. The notification failure leads to a fine of AED 10k to 50k. The failure to provide accurate or complete information leads to a penalty of AED 10k to 50k. The demonstration failure of sufficient economic substance in Dubai for the first time leads to a fine of AED 10k to 50k, whereas AED 100k to 300k for the second consecutive failure.
The goal of filing an ESR Notification is to present the concerned Regulative Authorities with some basic information on the Licensee and its pursuits in the UAE. It is a requirement to file an Economic Substance return for the Reportable Period. While filing the Economic Substance notification in the UAE, the businesses need to show that whether or not they are carrying out the relevant activity in the UAE, whether the company’s earnings are subject to tax outside the UAE, and the date of the financial year-end.
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