ESR Registration
KWS Fintech Services is one of the leading independent specialist VAT firms in the UAE
ESR:
Economic Substance Regulations in UAE
We provide ESR UAE services to assist businesses in remaining compliant with the requirements of the UAE Economic Substance Regulations. We begin by reviewing group structure and activities, determining ESR applicability, and assessing compliance with ESR UAE. We then decide on remedial steps, create ESR-compliant procedures, and aid with notification and Economic Substance Regulations. In addition, we offer training on Economic Substance rules and policies.
Economic Substance Regulations in UAE
As part of its obligation as an OECD member, the UAE adopted the OECD Inclusive Framework on BEPS in May 2018. On 30 April 2019, H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, released the Cabinet of Ministers Resolution No. (31) for 2019 concerning Economic Substance Regulations (ESR/Regulations). The Ministry of Finance released directions (Ministerial Decision No. 215) with the goal of providing additional information about the legislation of Economic Substance Regulations in the UAE.
The objective of ESR UAE
The main goal of the ESR UAE is to protect the reputation of the State and its entities that operate within the UAE- whether onshore, Free Zone, or offshore- by ensuring that income generated from Relevant Activity has economic substance and providing evidence that incorporation in the UAE was not motivated by the privileged tax regime.
What are the Economic Substance Regulations/ Test?
The Economic Substance Regulations are founded on three critical pillars that a Licensee/Company must meet to meet the Economic Substance Regulations/Test in regard to any Relevant Activity.
• Core Income Generating Activity (“CIGA”) associated with the activities covered by the ESR should be carried out in the UAE;
• The Licensee/Company’s activities must be carried out with adequate local “Economic Substance” in relation to the level of relevant activity in the UAE.
The economic substance is made up of the following components:
• Full-time employees
• Expenditure
• Premises