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
Get a Trade License and Start Doing Business in Dubai Today!
Are you thinking about starting a business in Dubai? There is no better time than now! The economy in the UAE is booming, and there are several big events planned in the city for 2021 that are expected to bring in even more business to the area. So, if you’re ready to...
Accelerate Your Business Growth with 2021 Business Events in Dubai
Covid-19 may have stopped events dead in their tracks in 2020, but Dubai is planning to make up for the lost time in 2021. The city has scored a number of major bids for big events that will bring in professionals from all over the world. The Dubai Business Expo 2021...
VAT Registration in the UAE: What You Need to Know
Are you wondering if your company needs to register for Value Added Tax? Value Added Tax, or VAT, is one of the most common types of tax around the world. More than 180 countries have implemented this tax, including the UAE. While some countries have raised their tax...
What Does Foreign Direct Investment (FDI) in the UAE Mean for Your Business?
The United Arab Emirates is known around the world for its business-friendly environment. Over the years, the country has put new rules and regulations into place to attract foreign investors, and it has paid off big time! Switzerland, the United Kingdom, India, the...
Top 10 Profitable Business Ideas in UAE for 2021
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.
What Does the UAE’s New Company Ownership Rule Mean for Your Business?
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!
Subscribe to Our Newsletter
We’ll keep you updated on the latest trends and news