Economic Substance Regulations (ESR)
The ESR is a set of rules and guidelines that were introduced by the UAE government in 2019 to increase transparency and to demonstrate that companies have sufficient substance in terms of employees, physical assets, and activities in the UAE. The ESR is applicable to all the businesses registered in UAE (Mainland and Free Zone companies) carrying out “relevant activities”. These activities refer to the following ones:
Hence, the companies that are involved in the “relevant activities” are required to submit, on a yearly basis, a notification (ESR notification) and a report (ESR report) within 6 months and 12 months the from the company’s financial year end respectively.
Failure to submit a notification may result in a fine of AED 20,000 while failure to submit a report may result in a fine AED 50,000. Additionally, a company providing inaccurate or incomplete information may also get a fine of AED 50,000.
At Innovios, in order to ensure that your company is compliant with the regulations, we will review your activities and fill and submit the notification and report for your business,