Economic Substance Registration [ESR] is one of the initiatives established by the UAE with regards to the requirements of the Organization for Economic Co-operation and Development [OECD]. It is mainly introduced in countries with no corporate tax for complying with international initiatives to combat harmful tax practices. ESR aims to ensure the UAE is conducting certain activities report actual profits in proportion with the economic activity.
Who are subject to the Economic Substance Regulations [ESR}?
- Banking Business
- Insurance businesses
- Lease-finance businesses
- Shipping businesses
- Intellectual property businesses
- Holding company businesses
Are the ESR applicable to Dubai International Financial Centre [DIFC]?
Dubai International Financial Centre [DIFC] is a global financial hub that develops a diverse pool of industry talent in the region. It provides venture capital environments and funding for startups.
The ESR regulations apply to DIFC entities administered by the Registrar of Companies. All the other entities whether located at the on-shore of freezone are subject to regulations.
What is the Economic Substance Test?
The Economic Substance Test requires a DIFC entity to demonstrate the entity and its relevant activity managed in the UAE; it has adequate employees and expenditure in the UAE. The Core Income Generating Activities [CIGA] are conducted in the UAE.
Other requirements of Economic Substance Test:
Assess the relevant activities performed during the financial period Analyze the income earned during the relevant financial period Conduct board meetings Identify the expenses and expenditures
Why is Economic Substance Registration important to necessary activities?
ESR helps in complying with the requirements of entities incorporated in the UAE to indicate that the companies are conducting the economic activities in the UAE.
How can MSZ Consultancy assist you?
MSZ Consultancy is one of the leading business consultancies in Dubai. Our team offers specified accounting services for your financial needs in the international market. We also safeguard the interests of the company by complying with the Economic Substance Registration and help submit the ESR reports on time to the authorities. We also provide supervision on the contractual agreements and conduct a study on the business activities to guide with the ESR. Our other services include business setup in Dubai, company formation, professional licensing, PRO services, and more Get in touch with us today!
Contact us at +971 52 544 1248 today!
Mohammed Sultan Zubair
CEO - MSZ Corporate Services
Mohammed Sultan Zubair is a seasoned business consultant specializing in company formation and regulatory compliance in the UAE and Saudi Arabia. With over 15 years of experience, he has guided entrepreneurs, SMEs, and multinational firms through the complexities of regional business laws and market entry strategies. His deep understanding of local licensing, taxation, and free zone structures ensures clients make informed, strategic decisions. Mohammed Sultan Zubair regularly contributes insights on corporate setup, investment trends, and regional economic developments.
