ESR Consultation Services In UAE

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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 Services

ESR Applicability Assessment

A regulated tax regime would allow businesses to generate surplus profits without paying extra taxes, thereby promoting industrial growth. Under the new ESR rules, all onshore, offshore and free zone businesses, partnerships, and license holders must opt for ESR assessment and come up with a satisfactory report which then needs to be produced before the regulatory authority. In the UAE, Fortius is one of the leading ESR reporting and assessment firms helping clients with their ESR application assessments.

Our ESR Applicability Assessment services comprise:

Assessing the UAE ESR applicability by understanding your business structure, transactions, and activities done in the UAE
Identifying if your business is listed under the UAE ESR's prescribed list of businesses and industries

ESR Reporting

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:

Prompt filing of UAE ESR notifications and compilation of details as required
Timely compliance with UAE ESR reporting requirements
Accurate collection of details in the reporting form and other declarations

Talk to Team Fortius for better professional engagement.

ESR Benchmarking

The business must demonstrate economic substance as part of UAE's ESR notification and reporting process. Benchmarking is one of the key methods used in such an assessment, which is crucial during the assessment by the authorities. The ESR benchmarking should be complete before claiming the economic substance and submitting the ESR report.

Economic Substance Mapping

Businesses have unique needs, which require unique solutions. You will need to use a checklist-based approach to prove the UAE's economic substance. Our team reviews your business and provides easy checklist-based tasks to prove your substance in the UAE.

Gap and Remediation Analysis

We are proficient in analysing, collecting and collating data regarding business activities, booked revenues, number of staff members, etc. We collaborate with your management to identify gaps based on factual study and requirements.

FAQs on ESR Assessments & Reporting Services

List out the goal of ESR (Economic Substance Regulation).

Economic Substance Regulation (ESR) aims to protect the economy. The ESR consultation services’ primary objective is to ensure that UAE-incorporated companies meet specific criteria and introduce new ones to prove that they are engaged in legitimate, economically beneficial activities and not just there to take advantage of the country's favorable tax climate.

To what extent do the ESR consultation services cover specific activities?

Below is a list of the applicable actions covered by ESR consultation services:
• Insurance business
• Lease- Finance business
• Banking business
• Holding company business
• Shipping business
• Intellectual property business
• Investment fund management business
• Distribution and service center business
• Headquarters business

Can companies based on the mainland be subject to the Economic Substances Regulation (ESR)?

Yes, it is valid for businesses based in both free zones and on the mainland to get ESR consultation services.

How can economic substance test needs be met in the United Arab Emirates (UAE), including Dubai, Abu Dhabi, and Sharjah?

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 my company's exempted Status is rejected after its original Economic Substance Report reporting deadline for the applicable financial period, will it be subject to a late filing penalty?

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.

Can an organization avoid filing an Economic Substance Report and get away with just submitting a notification instead?

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.

How can a licensee choose its fiscal year to ensure it has Economic Substance?

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 my business is not making money from the applicable activity, do I still need to file ESR reporting?

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).

What minimum salary threshold triggers the application of Economic Substance Regulations?

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.

Can the Economic Substance Test be considered to have been met if a person has a UAE tax residency certificate for a particular, fiscal year?

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.

Fortius ESR Assessments & Reporting