Economic Substance Regulation (ESR) Compliance
Ensure your business meets UAE's economic substance requirements seamlessly.
Service Overview
Ensure Compliance with UAE’s Economic Substance Regulations.
n response to global initiatives promoting tax transparency and fair competition, the United Arab Emirates introduced the Economic Substance Regulations (ESR) in 2019, further refined by Cabinet Resolution No. 57 of 2020. These regulations mandate that UAE-based entities engaged in specific “Relevant Activities” demonstrate substantial economic presence within the country. Compliance involves conducting core income-generating activities (CIGAs) in the UAE, maintaining adequate staff, physical assets, and incurring operating expenditures locally.
Our ESR Compliance service is designed to guide your business through the intricacies of these regulations, ensuring adherence and mitigating the risk of penalties.
UAE Regulations/Compliance
Understanding the Economic Substance Test
To comply with ESR, entities must satisfy the Economic Substance Test, which includes:
Directed and Managed in the UAE: Regular board meetings with a quorum of directors physically present in the UAE.
Conducting Core Income-Generating Activities (CIGAs): Performing essential activities related to the relevant business within the UAE.
Adequate Physical Presence: Maintaining sufficient employees, premises, and expenditure in the UAE commensurate with the activities conducted.
Failure to meet these requirements can result in penalties ranging from AED 50,000 to AED 400,000, along with potential exchange of information with foreign tax authorities.
Required Documents
To initiate our ESR Compliance service
Please prepare and upload the following
Trade License copy (Mainland/Free Zone/Offshore)
Memorandum & Articles of Association (MOA)
Shareholder and Board member passport & Emirates ID copies
Details of Business Activities
Financial Statements
Organizational Structure
Information on Board Meetings and Decision-Making Processes
Employee Details and Payroll Information
What’s Included
Our ESR Compliance services are designed to ensure your business meets all regulatory requirements efficiently and effectively. Here’s what we offer:
- Applicability Assessment.
Relevant Activity Identification.
- Economic Substance Test Evaluation.
- ESR Notification Filing.
Economic Substance Report Preparation.
Exemption Analysis and Support.
Gap Analysis and Compliance Strategy.
Documentation and Record-Keeping Assistance.
Regulatory Updates and Ongoing Support.
- Audit Preparation and Representation.
By leveraging our comprehensive ESR Compliance services, your business can confidently navigate the complexities of the UAE’s Economic Substance Regulations, ensuring full compliance and avoiding potential penalties.
If you need further assistance or additional information, feel free to ask!
Why Choosing us?
Why Businesses Trust Honaffa for Bookkeeping & Financial Statements?
Partnering with us ensures that your business not only complies with the UAE’s ESR but also aligns with global standards, enhancing your reputation and operational integrity. Contact US Now
Process (Step‑by‑Step)
How It Works?
Simple steps, full support — from start to finish and beyond,
Reach out through our website, WhatsApp, phone Call, or email us what documents you need processed.
24/7 Free Consultation
Our experts will guide you through the requirements, pricing, and timeline for your case.
We Handle Everything
We collect your documents, fill out all required forms, and submit them to the right authorities.
Approval & Verification
We follow up with UAE ministries and departments to get your approvals finalized.
Receive Your Docs
You receive your cleared, stamped, or attested documents via delivery or in person.
Streamlining Your (ESR) Compliance in 6 Simple Steps
Our process is designed to ensure accuracy, compliance, and clarity in your (ESR) Compliance
Initial Consultation
Schedule a consultation to understand your business structure and activities.
Activity Assessment
Determine if your operations fall under ESR’s Relevant Activities.
Economic Substance Evaluation
Analyze your company’s substance in the UAE to ensure compliance.
Documentation Preparation
Compile necessary information for notifications and reports.
Submission
Description: File ESR notifications and reports with the appropriate authorities
Regular reviews to ensure continued compliance and adapt to any regulatory changes.
Frequently Asked Questions
FAQ
Clear answers to the most common questions we receive about (ESR) Compliance.
The ESR applies to businesses engaged in specific activities, including banking, insurance, investment fund management, lease-finance, headquarters, shipping, holding company, intellectual property, and distribution and service center businesses.
Yes, certain entities, such as investment funds, entities tax resident outside the UAE, and UAE-based entities wholly owned by UAE residents not part of a multinational group, may be exempt but must still file a notification and provide sufficient evidence to support their exemption status.
Penalties for failing to meet ESR requirements can range from AED 50,000 to AED 400,000, depending on the nature and severity of the non-compliance.
Entities are required to submit an annual ESR notification within six months and, if applicable, an Economic Substance Report within 12 months from the end of their financial year.
This FAQ section is designed to provide clear and concise information to users seeking details about ESR Compliance in the UAE. For further assistance or specific inquiries, don’t hesitate to get in touch with our compliance team, or leave a question, and we will answer shortly
Ready to Take the Next Step?
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Contact US and our experts will get back to you within 30 min.
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