What is Economic Substance Regulation for DSOA in UAE?

Asset Valuation Company in Dubai, UAE & KSA

Dubai Silicon Oasis Authority (DSOA) is an approved Regulatory Authority for Economic Substance Regulation in UAE. DSOA provides a shelter for technology-based sectors. It incorporates world-class innovations, entirely operative infrastructure, reliable transportation of goods and people, and a highly desirable company environment.

The Relevant activity in DSOA includes the Banking Business, Insurance Business, Investment Fund Management Business, Lease-Finance Business, Holding Company, Headquartered Business, Shipping Business, Intellectual Property Business, and Distribution & Service Centre Business.

Economic Substance Notification is a necessity to be listed by all the licensees offering Relevant Activity in UAE as per the rule. DSOA Regulatory Authority superintends the decrees of legality and not liable for investigating the applicability of Economic Substance Regulations in the UAE.

What is required for Economic Substance Notification in DSOA?

Organizations that come under the scope of Economic Substance Regulations UAE should list the Economic Substance Notification with DSOA that includes the following:-

  • State Financial year-end;
  • Manages a Relevant Activity or not;
  • Obtained any income from the Relevant Activity or not;
  • Profits by the Relevant Activity completely or partly subjected to a tax outside of the UAE or not; and
  • Excluded due to Government control or not.

What categories are exempt from ESR in DSOA?

A person in DSOA is exempted from Economic Substance Regulations UAE if at least 51% of the share capital is directly or indirectly owned by – the UAE Federal Government, the Government of any Emirate, any governmental authority, the body of the UAE Federal, or an Emirate Government during the Reportable Period.

What happens in case of exclusion from Exempt Category and handles the Relevant Activity in DSOA?

People who are not exempt from ESR and handle the Relevant Activity in the Reporting Period and also get Returns will have to Comply with the following:

  • Adhere to the Substance Requirements as delivered in Economic Substance Regulations UAE (ESR UAE).
  • To present the Economic Substance Return (ESR return) with DSOA accurately within the Due date.

What is the penalty for Non-compliance with Economic Substance Regulations in DSOA?

If any licensee ignores to comply with the job of preparing the Economic Substance Notification, then such person may have to experience disciplinary outcomes. The penalty extends from AED 10,000 to AED 50,000 in the first year of its Non-Compliance, and for ensuing non-compliance, it extends from AED 50,000 to AED 300,000. Moreover, omission by an entity to comply with Statute can also result in the involuntary transference of Data with Foreign Competent Authority, potential terminus, and non-renewal of registration.

How can Accounting firms help Economic Substance Regulations in UAE?

Accounting firms have a special segment for ESR to maintain and oversee the Dealing with Economic Substance Regulations in UAE to look at business activities in particular and examine the applicability of Economic Substance Regulation (ESR) on the ventures. It also provides administration and guidance on filing Economic Substance Notification with DSOA. Provide coaching and motivation for agreement with the rules of ESR to deliver Impact Study and Gap Analysis.

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Penalties for Non-Compliance with Economic Substance Regulations

Requirements to meet Economic Substance Test

What activities to be conducted for ESR?

Economic Substance Regulations FAQs and Filing Requirement

How to file ESR Notification?