Economic substance regulations (ESR)
In April 2019, the UAE introduced economic substance regulations, updated in August 2020, requiring companies to have a substantial presence in the UAE based on their activities.
Who Needs to Follow ESR?
These rules apply to UAE onshore and free zone companies involved in:
- Banking,
- Insurance,
- Investment fund management,
- Shipping,
- Lease – Finance,
- Headquarters business,
- Distribution and service centre
- Holding Company,
- Intellectual property providing services.
Companies not engaged in these activities or meeting substance requirements elsewhere are exempt but must still notify authorities and provide proof of their exempt status. This aligns the UAE with international standards to prevent profit shifting to low-tax regions without real economic activity.
Notification and Reporting
All businesses licensed in the UAE, including partnerships, free zone companies, and branches, must notify the competent authorities by filing ESR Notification form on or before June 30th each year, following the end of the relevant financial year.ESR reports must be submitted on or before December 31st each year, following the end of the relevant financial year.
How Can We Help You?
Acuvat Auditing provides a comprehensive range of Anti-Money Laundering (AML) services to help businesses comply with regulatory requirements. Here’s a list of some key AML services that we offer:
- Assist with ESR registration and document filing while ensuring compliance with all requirements.
- Assist with preparing and filing annual economic substance reports.
- Manage submission of notifications to regulatory bodies.
- Perform internal reviews to ensure adherence to ESR.
- Offer continuous support for regulatory changes and updates.
- Analyse and align your business practices with ESR.
- Implement strategies to manage and reduce compliance risks.
- Ensure full adherence to ESR regulations.