ESR Assessment & Return Filing Services in Dubai

Vista Corporate Group provides comprehensive ESR (Economic Substance Regulations) Assessment & Return Filing Services in Dubai, ensuring businesses adhere to regulatory requirements effectively. Our experienced team conducts thorough assessments to determine ESR compliance, guiding clients through the intricate process of filing returns accurately and timely.

Notification for ESR Assessment and Compliance

If your business in the UAE is involved in certain activities (Relevant Activities), it’s crucial to file a notification within six months after your financial year ends. This is done through the Ministry of Finance’s online ESR portal or you can contact Vista Corporate Group for assistance. The notification should include information about the activities conducted, any earned income, and whether that income was taxed outside the UAE. If your UAE business has multiple branches, only one consolidated notification must be submitted.

Economic Substance Tests

Core Income Generating Activity (CIGA) Test:

This test requires the core activities to take place in the UAE.

Directed and Managed Test:

Your business should be directed and managed from the UAE

Adequacy Test:

This test demands adequate resources (employees, expenses, and assets) in the UAE.

UAE Economic Substance Regulations Reporting

 

 

Whether the ESR Tests were met.

Information about outsourced service providers, if applicable.

Specific details about conducted CIGAs.

Operating expenditure and the number of full-time employees for each relevant activity.

Details about the parent, ultimate parent, and ultimate beneficial owner.

The Purpose of ESR

The Economic Substance Regulations (ESR) in the UAE are designed to prevent multinational corporations and businesses from artificially transferring profits to low-tax jurisdictions without conducting substantial activities there. The UAE is identified as one such jurisdiction.

As a response, the ESR mandates that businesses engaged in geographically mobile business activities submit a detailed annual report to authorities. The objective is to prove that these businesses have genuine substance and legitimate operations within the UAE. 

Banking

As banking is directly involved in monetary transactions, banks are supposed to follow the ESR regulations.

Lease-finance

Lease financing falls under non-banking financial activity which is also indirect banking but an economic activity required to abide by ESR regulations.

Insurance

Insurance is income-generating activity in the form of charging premiums and so insurance is categorized as a relevant activity for ESR

Headquarters

All the financial decisions and approval are authorized by the Headquarters making them a relevant activity for ESR regulations.

Shipping

The shipping business generates income and so it has been specified as ESR relevant activity.

Fund management

Fund management is a business involved in the buying and selling of investments, which is income-related activity subject to ESR regulations

Intellectual property (IP)

Intellectual property like patents, advertising, endorsements lead to income generation and so as per ESR guidelines IP falls under relevant activity category.

Distribution and service center

Distribution involves purchasing from a person outside UAE and storing in the state and reselling as and when in demand. The reselling part is the income generating relevant activity according to ESR regulations. Service centers carry out activities like providing paid consultation and processing orders which are a source of income. Hence ESR regulations categorized these services as relevant activity.

Holding company

A Holding company earns its income from dividends and capital gains from the equity investment and so it is required to follow ESR regulations.

Economic Substance Regulation (ESR) laid down to ensure the company is physically present in Dubai and is carrying out substantial economic activities.

Companies involved in doing ‘Relevant Activities’ declared by the government are required to follow ESR norms.

Companies engaged in ’Relevant Activities’ are subject to ESR irrelevant of the location.

In general the ESR resorts must be submitted within 12 months from the end of the financial year.

Penalties may be applied if the reports are not submitted in stipulated time.

Non-compliance can result in penalties and legal actions. In some cases it may force the business to shut down all over.

Generally ESR reports are annual so it is a good practice to check for new regulations once a year. Get in touch with us and will help you with up-to-date information on ESR regulations.