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 businesses
- 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. Licensing, PRO services, and more Get in touch with us today!
Find out how much it cost you to setup your Dream Business
Other Recent Blogs
There’s no doubt that the pandemic has impacted the way that businesses operate. Business owners in Dubai and from all around the world had to change their structure and uncover new opportunities to succeed during the pandemic. While this is a new way of doing...
Officials in the UAE are hoping for an explosion of foreign investment, that’s because they’ve revamped their company laws to allow foreign investors to fully own local companies without the need of an Emirati sponsor. This is a huge deal for foreign entrepreneurs! Up...
If you’re thinking of starting a business in Dubai, you can’t go wrong with a travel agency. The tourism industry is booming due to the popular shopping spots, stunning architecture, dining, and other tourist sites. And there’s no better time than now to start your...
If you’re a female entrepreneur, the United Arab Emirates is the place to be. That’s because the country offers greater gender equality than any other country in the region. And women entrepreneurs are noticing because now, more than ever before, women are taking...
One of the main advantages of doing business in the United Arab Emirates is the preferential tax treatment that businesses get. The UAE has a 0% corporate income tax for individuals and legal entities, which is ideal for anyone wanting to own their own business. But,...
If you’re looking for a place to set up a business, the Dubai Multi Commodities Centre (DMCC) is the place to be! The location is growing at such a rapid pace. There are over 15,000 registered businesses in the area, making it the largest free trade zone in the UAE....
Subscribe to Our Newsletter
We’ll keep you updated on the latest trends and news