Economic Substance Regulations (ESR)

Our dedicated team of experts is here to assist your business in fulfilling its ESR obligations efficiently and effectively. We are committed to delivering timely and accurate submissions to the regulatory authority.

UAE Economic Substance Regulations (ESR) and ESR Filing in UAE
In the UAE, Economic Substance Regulations (ESR) have been put in place to align with international standards. This move is part of the UAE’s commitment to the Organization for Economic Co-operation and Development (OECD) Framework and in response to an evaluation of the UAE’s tax framework by the European Union (EU).

What UAE-Based Businesses Must Do
According to the regulations, UAE-based businesses engaged in Relevant Activities must notify the regulatory authorities and submit an annual UAE Economic Substance Report. This report confirms that they are indeed conducting these relevant activities and provides details on their economic substance in the UAE.

By adhering to these regulations, the UAE ensures its commitment to international tax standards and transparency, contributing to its position as a global business hub.

Consequences of Non-Compliance with ESR Regulations
Failure to comply would result in following administrative penalties:

Failure or delay to file ESR Notification

AED 20,000

Providing Inaccurate information

AED 50,000

Failure or delay to submit ESR Report

AED 50,000

If submitted report does not meet the requirements of Economic Substance Regulations in the UAE

AED 50,000

If the failure continues for a second consecutive year, the penalty amount is increased to AED 400,000 in the subsequent year. Additionally, regulatory authorities may impose other penalties, including suspension, revocation, or non-renewal of a Licensee’s license. Compliance with ESR regulations is crucial to avoid these penalties and ensure the smooth operation of your business in the UAE.