Governments across the globe are tightening their laws against financial frauds like money laundering and making amendments to increase their transparency in the current procedures.
The UAE government doesn't differ in this respect. With the execution of the Economic Substance Regulations (ESR) from Jan 1st, 2020, the UAE government has facilitated tax transparency in the country. The ESR laws apply to all free-zone and offshore businesses, their branches, non-profit enterprises, and partnerships or licenses in the UAE. This calls for all license-holders associated with any of the above mentioned activities in the UAE to submit a notification to their respective regulatory body. The license holder must also undertake an "economic substance test" and submit the reports to the regulatory body for every financial period.
Understanding and implementing the new ESR laws call for guidance from the Fortius team, who are experts in the ESR compliance domain. We offer ESR consultation services for all businesses in the UAE that fulfil the ESR criteria.
ESR reporting can be quite challenging for businesses, but you have nothing to worry about with Fortius's expertise at your disposal. Our team is proficient with ESR regulations for various business operations. Therefore, we are the best source to find the answers and solutions to all your ESR-related queries.
Our ESR reporting covers:
Yes, it is valid for businesses based in both free zones and on the mainland to get ESR consultation services.
In the following scenarios, a licensee's relevant activity in Dubai, UAE, satisfies the Economic Substance Test.
1. If the licensee engages in principal state activity to generate revenue.
2. If the licensee's management and operations are based in the state with respect to the activity in question, and the licensee's board of directors holds regular meetings within the state in light of the volume of decisions that must be made at that level.
3. Whether or not the licensee's activities require a sufficient number of physical assets in the state or an adequate amount of money to be spent on outsourcing to 3rd party service vendors in the state.
4. In the event of state core, ESR consultation services may perform an income-generating activity on behalf of the applicable licensee if the licensee maintains sufficient oversight and control over the third party's performance of the activity.
If your request for a waiver from the Economic Substances Regulations is denied after you submit a Notification, you will have 30 business days from the date of the denial to file your Economic Substance Report. Hire ESR consultation services so your company will not file false exemption claims and may be safe from fines.
Based on the information provided by third-party ESR consultation services, the Economic Substance Filing Portal will determine whether or not you are required to submit an Economic Substance Report. If an exempted licensee or its relevant activity does not generate any revenue, then the answer is yes. However, the answer is a no when the Economic Substance Report needs to be submitted in these instances.
The fiscal year of a licensee should coincide with that of its financial statements if any are prepared. The first fiscal year after a licensee's incorporation can be short or long. This can be a complex process, which is why many companies turn to ESR consultation services for assistance.
If a licensee engages in a relevant activity during a fiscal period but does not generate any revenue from it, the licensee is obligated to file a notification with the Ministry of Finance. During that time, the licensee will not have to submit an Economic Substance Report or prove that it complies with the Economic Substance Test. ESR consultation services can help licensees navigate the complex requirements of Economic Substance Regulations (ESR).
Navigating the requirements of ESR can be complex and challenging, which is why many businesses turn to ESR consultation services for assistance. Neither a minimum nor a maximum income level applies. You must file a notification if you engage in any relevant activity.
Although a licensee must maintain a certain level of physical presence in the UAE to qualify for a UAE tax residency certificate, this does not constitute evidence that the licensee has sufficient economic substance in the UAE concerning its relevant activity and the income generated thereby. Many businesses turn to ESR consultation services to meet these requirements, which can provide guidance and support throughout the compliance process.